2019-TIOL-NEWS-233, Dated: Thursday, October 03, 2019

ST - (i) Whether the amount paid to UK-India Education and Research Initiative [UKEIRI] can be considered as fees for "sponsorship services" leviable to ST (ii) Whether the amounts paid as membership fees to Society of Petroleum Engineers [SPE] can be considered liable to ST under the category "Club or Association Services" (iii) Whether the benefit under Notification 17/2004-ST is admissible to the recipient of service (respondent) (iv) Whether penalty under section 78 of the Finance Act, 1994[Act] can be imposed on the appellants

Held: (i) Whether the amounts paid to UKEIRI can be considered as fees for "sponsorship service" leviable to ST - Appellants have claimed that the amounts paid by them to UKEIRI were towards donations made by them to UKEIRI - in their appeal,Revenue has stated that the invoice itself is sufficient to prove that appellants have not paid this amount as donation but have made payments towards certain services which they would have got in return of such payment and hence would not be covered by the exclusion clause to section 65 (99a) of the Act - from the perusal of the invoice itself following is evident that the invoice has been indicating "British Council Trading" and is issued against the contract number: UKIERI for an amount of GBP 100,000/- towards "payment of the fourth year re: sponsorship fee for UKIERI" - the invoice itself justifies the correctness of the stand taken by revenue -if the invoice has been issued against a contract, appellant could have easily contradicted the stand taken by the revenue by producing the contract "UKEIRI" referred to in invoice -since the contract against which the payments have been made has been not produced, just by looking at antecedents of project UKEIRI, this amount can never be called as donation made - however, these details do not clearly establish the nature of the payments made -in absence of any conclusive evidence coming on record in respect of the payments made the Bench is left with no option but to remit the matter back to Commissioner, after looking into contract under which this payment has been made: CESTAT

(ii) Whether the amounts paid as membership fees to SPE can be considered liable to service tax under the category "Club or Association Services " - Respondents have contended that the payments made to SPE were towards membership of that organization -this membership comes without any benefits to them and hence cannot be considered as "Club or Association Services" as defined under the Act - Commissioner has in his order discussed the issue and held that the membership of SPE is covered by the definition of "Club or Association Services" -for coming to such a finding, he has relied upon the information available on website of SPE -these findings of the Commissioner have not been challenged by the appellant by way of an appeal or by filing the cross objections in the matter -hence this finding of Commissioner against the appellants has become final - Commissioner has held that the demand is barred by limitation - Revenue has challenged this finding of the Commissioner in their appeal -for holding so, Commissioner has held that issue is completely revenue neutral and any amounts appellant pay on the reverse charge basis will available as credit to them -the Bench is not in agreement with such finding of Commissioner, as it is against the basic scheme of payment of ST on reverse charge basis -admissibility ofCENVAT credit cannot be reason for non-payment of tax -appellants have relied upon series of the decisions in which it has been held that revenue neutrality can be the ground for holding that extended period of limitation is not applicable -however, the Bench is not in a position to agree with the said argument in view of the decision of the Apex Court in the case of Mahindra & Mahindra - 2005-TIOL-01-SC-CX-LB - also it needs to be noted that revenue neutrality and invocation of extended period of limitation are question of facts and need to be examined on facts of the case in hand -since the tax [on reverse charge basis] is paid by the service recipient by stepping into the shoes of service provider, even the persons paying the tax and taking the credit though have same identity differ and hence the principle of revenue neutrality should not apply to such cases -since the Commissioner has dropped the demand holding the same to be barred by limitation on ground of revenue neutrality, the matter is remitted back to Commissioner for examining the issue of limitation on the basis of other evidences adduced in the SCN for invoking extended period of limitation: CESTAT

(iii) Whether the benefit under Notification 17/2004-ST is admissible to the recipient of service. (respondent ) - Commissioner has allowed the benefit of notification and dropped the demand in this respect - Revenue has challenged the order of Commissioner on the ground that the order of CESTAT relied upon by the Commissioner while extending the benefit is under challenge before the High Court of Bombay -Revenue has contended that the benefit of this notification is admissible only to the service provider and not the deemed service provider under section 66A(1)(b) -this argument of revenue was rejected by the Tribunal in case of Rochem Separation Systems Pvt. Ltd. [Rochem] - 2015-TIOL-120-CESTAT-MUM - in the case of Cummins Technologies - 2017-TIOL-3470-CESTAT-DEL the Tribunal held that "………. upon fixing the responsibility for payment of service tax under reverse charge mechanism, no distinction can be placed between the service receiver and service provider for the purpose of Section 66 ibid. Therefore, we are of the view that the benefit of exemption Notification No.17/2004-S.T., dated 10.9.2004 should also be available to the respondent……….." - the Bench also takes note of the fact that the appeal filed by revenue against the order of Tribunal in case of Rochem has been dismissed by the Bombay High Court - 2018-TIOL-2015-HC-MUM-ST - Bombay High Court has upheld the order of Tribunal holding that the demand is barred by limitation -following the above decisions,no merits found in the appeal of the Revenue in this respect: CESTAT

(iv) Whether penalty under Section 78 can be imposed on the Appellants - Revenue has challenged the order of Commissioner whereby he has dropped the penal proceedings initiated against the appellants under section 78 -the Bench has already held that revenue neutrality cannot be valid ground for non-payment/short payment of taxes required to be paid under the reverse charge mechanism - hence, no merits found in the order of Commissioner holding that for the reason of admissibility of CENVAT credit in respect of the tax sought to be recovered the issue is revenue neutral -however, in para 4.02 (ii),Commissioner has himself rejected the arguments advanced by the respondents in respect of system inaccuracies and bonafide belief -once the Commissioner has rejected such arguments then in respect of the amount of tax paid by the appellants during the investigation he could not have dropped the penal proceedings -it is now settled by decision of Supreme Court in the case of Rajasthan Spinning and Weaving Mills - 2009-TIOL-63-SC-CX that the ingredients for invoking provisions of mandatory penalty under section 78 are identical to those invoking extended period under section 73, and if the ingredient for invoking extended period are found then the penalty under section 78 is a must-so Commissioner is necessarily mandated in the present case to record the findings in respect of para 9(d) of the SCN- if Commissioner finds that what has been stated in this para of SCN is correct, he has no option but to impose penalty equivalent to the duty demanded -since order of Commissioner has not considered this aspect, the matter needs to be remanded back to him for re-determination of the issue on limitation: CESTAT

In sum, in respect of issue (i), the matter is remanded for consideration of contract name UKEIRI - in respect of issue (ii), the matter is remanded for consideration of the issue on limitation - in respect of issue (iii), the order of the Commissioner is upheld - in respect of issue (iv), the matter is remanded - the appeal of the Revenue is partly allowed and the matter remanded to the adjudicating authority for consideration of issues (i), (ii) and (iv) : CESTAT [para 5.3, 5.4, 5.5, 5.6, 5.8, 6.1]

Venu Enterprises Vs CCT

ST – During the audit, it was observed from the appellant's ST-3 Returns that the appellant was also providing 'Cleaning Services' to Tumkur Dairy without disclosing the tax liability, etc. – on being pointed out, appellant paid the entire tax with interest – SCN issued on 26.6.2018 – demand confirmed with interest, equivalent penalty imposed - appellant having not met with success in its first appeal against the levy of penalty under section 78 of the Finance Act, 1994 [Act], is before CESTAT.

Held: Admittedly, the tax as well as the interest has been paid much before the issuance of SCN; even the SCN does not point out to suppression of fact, fraud or misstatement etc. to fasten the liability of penalty under section 78 - the bonafides of the appellant could not be doubted and hence, it is a fit case to invoke section 80 of the Act - there is no case made out with regard to the suppression, fraud or misstatement etc. to fasten the penalty under section 78 - it is also settled law that tax and interest, if paid before the issuance of SCN, the SCN itself has been held to be not required - therefore, the impugned order is held to be unsustainable for which reason, the same is set aside and the appeal is allowed : CESTAT [para 3, 4]

- Appeal allowed: BANGALORE CESTAT

2019-TIOL-2814-CESTAT-MUM

Verdantis Technologies Pvt Ltd Vs PR Additional Director General

ST - Whether the appellants are entitled to CENVAT credit against the input invoices which are addressed to their unit, a premises which is not registered.

Held: Commissioner (Appeals) denied the refund only on the ground that the premises where the services have been used was not registered, but the registration was in the name of their head office – no merit found in the objection of the Revenue as the principle of law in this regard is well settled in the cases of J.P.Morgan Services India Pvt. Ltd. - 2015-TIOL-226-CESTAT-MUM and Allspheres Entertainment Pvt. Ltd. - 2015-TIOL-1629-CESTAT-DEL -merely because the premises is not registered from where the services are rendered and ST is paid, CENVAT credit cannot be denied on the input services used for providing output services from the said premises - in the result, the impugned order is set aside and the appeal is allowed: CESTAT [para 5, 6]

- Appeal allowed: MUMBAI CESTAT

2019-TIOL-2813-CESTAT-MAD

Vedanta Ltd Vs CCE

ST - SCN was issued to the appellants alleging that on scrutiny of the financial statement, it was observed that a sum of US$ 50 lakhs has been paid to M/s.Vedanta Resources Plc. Inc., London [Vedanta] as Professional Fees including Management Consultation Fee of US$ 30 lakhs and Representation Fees of US$ 20 lakhs per annum -the amount paid by appellants towards Representation Fee was also shown in the financial statement as Management Consultancy Fees -though, appellants had discharged ST on the Management Consultancy Fees of US$ 30 lakhs, they had not discharged service tax on US$ 20 lakhs, which is paid to Vedanta as Representation Fees - department was of the view that though the amount of US$ 20 lakhs is shown as Representation Fees, it is actually Management Consultancy Fees and, therefore, the appellants are liable to pay ST on this portion also under Management Consultancy Services - the original authority held that the appellants are liable to pay ST on US$ 20 lakhs under the category of Management Consultancy Services by reverse charge mechanism -the demand was confirmed with interest and penalties imposed – assessee is before CESTAT.

Held – Undisputedly, there are two agreements entered between the appellant and Vedanta - (i) Representative Office Agreement and the other (ii) Consultancy Agreement -from the Representative Office Agreement, it is very much clear that the intention of the parties is that appellants is to have Representative Office overseas -the department cannot pick and choose sentences from the agreement to interpret the meaning of the agreement to be a Consultancy Agreement – the issue would be more clear from the Consultancy Agreement - in clause (c) of the preamble of the Consultancy Agreement, it is stated that Vedanta is willing to provide Strategic Planning and Consultancy Services to appellant and each of its subsidiaries and for such Consultancy Agreement, the fees are fixed US$ 30 lakhs -the appellants have discharged ST on the amount paid under this agreement. thus, on analysis of both agreements, no hesitation to conclude that the agreement under question is nothing but a Representative Office Agreement and not a Consultancy Management Agreement -the demand of ST on the amount of US$ 20 lakhs, which was paid by the appellant to Vedanta as Representative Office cannot be subject to levy of ST under the category of Management Consultancy Services -the demand, therefore, cannot sustain on merits -when the situation is revenue neutral one, wherein, the appellants would be eligible for credit, it cannot be said that the appellants are guilty of suppression of facts with intention to evade payment of ST -furthermore, there has been several audits conducted in the appellant's factory -in all these audits, there was no objection raised in respect of the present issue –the department is aware of the entire facts -the invocation of extended period is then without basis -the appeal succeeds on limitation also -from the foregoing, the demand cannot sustain -the impugned order is set aside -the appeal is allowed : CESTAT [para 6, 7, 8, 9, 10]

- Appeal allowed: CHENNAI CESTAT

CX - The present disputepertains to the alleged mis-declaration of value of 'intermediate goods' manufactured by the appellant-assessee, and cleared by availing the benefit of notification no. 214/86-CE dated 25.3.1986, out of the raw materials supplied by customers - admittedly, some part of the production from the same 'input mix' were also cleared to these customers after payment of duty on different assessable value - the original authority dropped the proceedings but, in appeal, the Commissioner (Appeals), vide impugned order, reversed the finding – appeal to CESTAT.

Held: Nothing found on record to contradict the documented claim of the appellant that some 'downstream' manufacturers did supply them with grinding/scrap which is one of the sources for manufacture of ABS/PP sheets/HIPS sheets -admittedly, the appellant is also required to utilize some prime material of their own in the manufacture and, in proportion with the contribution so made, is entitled to claim ownership of some of the products while the rest are required to be returned to the principal-manufacturer as the job-work undertaken by them -it is this artificial segregation that has been characterized by the CE authorities as falsified production record leading to the detriment fastened on the appellant-assessee by the first appellate authority for having thus evaded duties of CE -it is apparent from the decisions of the Supreme Court in International Auto Ltd. - 2005-TIOL-81-SC-CX-LB and of the Tribunal in UmeshRai - 2009-TIOL-1399-CESTAT-AHM and in Suvikram Plastex (P) Ltd. - 2007-TIOL-2073-CESTAT-BANG that job-worker is not transformed as independent manufacturer merely because of their own material being deployed –therefore, it is well within the scheme of job-work for the appellant-assessee to be entitled to the benefit of exemption intended for job-workers subject to fulfill ment of the conditions prescribed therein -the provisions of exemption notifications, as interpreted in the cases of Ranjan Polyesters Ltd. [2016 (344) ELT 257 (Tri.-Del.)], Abhinav Chemicals [2012 (284) ELT 589 (Tri.Del.)] and ITEL Industries Ltd. [2012 (275) ELT 145 (Ker.)], accord the privileges of job-worker to a manufacturer if the supplier of inputs undertakes to discharge the duty liability on the finished goods so manufactured with the job-worker as the default manufacturer even for a contracted manufacturer -the facts of the present case would need to be tested against this meaning of job-worker – the Bench discerns a patent lack of such examination in the impugned order -the entire quantity of raw material received from the customer has not been utilized for job-work and not included in the resultant product cleared to the supplier -however, duty liability has been discharged in full on goods in which supplied raw material was appropriated by the appellant-assessee for production on own account -therefore, no differential duty arises therefrom -unutilised raw material, even if liable to duty, that are in compliance with the provisions relating to the utilization for job-work is also not stigmatized as having been cleared without payment of any duty -the sole issue for consideration is whether the appropriate duties have been discharged on the goods cleared by the appellant-assessee as job-worker -it is admitted in the records that the labour charges and the margin of profit have been subject to duties -the customers have utilized the job-work goods as inputs for manufacture of final products and there is no allegation of non-inclusion of the costs in the assessable value on which duty liability has been discharged -in these circumstances, the presumption of the goods remaining unutilized merely because of artificial segregation based on the input contribution of the supplier and the appellant-assessee may not be sustainable -this is an aspect that has not been examined in the order of the first appellate authority who has preferred to be convinced by the circumstances of entries in the production register, first to conclude non-utilisation of goods supplied as job-worker -in the process, there has been no ascertainment of discharge of duty liability on input received as job-worker that was not returned along with finished products -in the absence of such examination at the appellate stage, the impugned order is set aside and matter remanded back to the first appellate authority to consider the dispute in the light of the findings of the Bench that the appellant-assessee is a job-worker, that the portion of inputs received from the principal-manufacturer which was not put to use for production as job-worker has discharged duty liability and that, as producer of goods, duty on job-work has also been discharged -the appealsare disposed of in the above terms : CESTAT [para 5, 6, 9, 11, 12, 13]

CX- M/s.Venkateswary Industrial Products Pvt. Ltd. [ VIPPL] is a limited company engaged in manufacture of two products called "Cable Filling Compound" (CFC) and "Cable Cleaning Compound" (CCC) - they avail the benefit of SSI exemption - SCN was issued alleging that the turnover of VIPPL should be clubbed together with the turnover of M/s.Venkateswara Industrial Paint Industry (VIPI), Newton and Apollo Engineering Industries (AEI) alleging that these three are not separate manufacturing units but are fictitious entities operating from the same premises -accordingly, differential duty has to be paid after reckoning the total turnover of all these companies as clearances by VIPPL -the second SCN is issued primarily to VIPI with VIPPL as a co-noticee -the issue of classification was not a point of issue during the initial stages or in both the SCNs -however, when this issue was contested before the Tribunal, it has directed the Commissioner to examine this claim as well -relying on the expert opinion of a Chartered Engineer which they obtained, the appellants' claim that the product CFC is classifiable under CH 3403 and, therefore, it is fully exempted from payment of duty vide notification 287/1986 dated 5.5.1986 -once the classification is decided in their favour, the demand does not survive at all.

Held - The Bench does not agree with the appellant that the classification has to be decided by a Chartered Engineer -a Chartered Engineer can give his expert opinion regarding the nature of the material but the classification is to be done by the officers or the adjudicating authority or the appellate authorities - the adjudicating authority has not in any way disputed the Chartered Engineer's certificate -drawing from the Chartered Engineer's certificate, he concluded that the product in question is not classifiable as lubricating preparation but as a miscellaneous chemical under CH 3823 -a plain reading of Chartered Engineer's certificate also does not convince the Bench that CFC is in the nature of a lubricant -therefore, no force found in the argument of the appellant - the adjudicating authority was correct in classifying the product under CH 3823 -therefore, the question of exemption under notification 287/1986-CE does not apply in this case: CESTAT

SCN No.150/92 dated 8.4.1993 - The entire demand arises on the presumption that VIPPL is the only true manufacturer and VIPI as well as Newton and AEI are dummy entities create solely for the purpose of splitting the total turnover so as to remain under SSI limit - the evidences on record are the statements and results of investigation that there are no separate manufacturing facilities or records of stock of raw materials or finished products -therefore, all other three are dummy units-it is found that the department themselves contradict this position in their subsequent notice partly by admitting that VIPI is a separate entity - the turnover of VIPI of Rs.48.25 lakhs, therefore, needs to be deducted from the total turnover in this SCN and demand needs to be reduced to that extent - the Bench also does not find sufficient justification for imposition of fine and penalties in this background: CESTAT

SCN No.184/94 - (1) Clearances without payment of duty amounting to Rs.1.21 lakh : The relevant period for this is 1.4.1991 to 31.3.1992 -appellant submits that this demand will not be sustainable if the department holds that VIPI is a dummy unit and VIPPL is the only correct unit as alleged in the first SCN -it is found that as far as the allegation regarding VIPI being dummy unit is concerned, the Bench has not accepted it and, therefore, set aside partly the demand with respect to the first SCN -therefore, the demand to this extent under this SCN sustains -it is based on the clearances made in the name of VIPI and clearances in the name of AEI operating from the same premises with no separate manufacturing facilities and no separate stocks of raw materials or finished products: CESTAT

(2) Clearances after obtaining Central Excise registration between November, 1992 to March, 1993 : appellant submits that this demand has been made by adding turnover of AEI to their turnover for which there is no corroborative evidence -since there was no separate manufacturing facility and AEI was operating from the same premises with no separate stock of raw materials or finished products, it can only be called a dummy unit and the department was justified in clubbing these clearances with that of VIPI: CESTAT

(3) Difference between Private Register No. 106 and RT-12 returns value : the Bench finds that there was a difference between the two but there is no sufficient corroborative evidence to show that the difference represents the clandestine removal -the demand on this account, therefore, needs to be dropped: CESTAT

(4) Allegation of undervaluation : this demand was arrived at for clearances made to 33 parties on the ground that clearances were shown to have been made @ Rs.42/- per Kg while in case of others, the price adopted was Rs.126/- per Kg -the statement of one of the recipients was recorded which he retracted during cross examination -therefore, no sufficient found to substantiate the demand on this ground: CESTAT

In conclusion, there is ground to confirm the demand to the extent of clubbing the clearances by AEI with VIPI but there is insufficient evidence to substantiate the demands on other grounds -consequently, there is no sufficient ground to substantiate the confiscation, fine and imposition of penalties on VIPI: CESTAT

As far as VIPPL is concerned, the demand in this SCN was only on account of the fact that there was a difference between the value of sales shown in CE and the sales income shown in the IT Returns -such a difference can be a cause for suspicion and investigation but by itself cannot be conclusive evidence that goods were clandestinely removed and sold -accordingly, the demand on this count and consequential penalties need to be set aside and is set aside: CESTAT

In view of the above, (a) the demand against VIPPL under SCN No.150/92 dated 8.4.1993 is upheld after deducting the value of clearances in the name of VIPI which, the department, itself has agreed in the subsequent SCN, to be a different entity and treating any non-duty paid clearances as cum-duty clearances (b) the demand against VIPI under SCN notice No.184/94 to the extent of demand by clubbing the value of clearances of AEI as indicated in Annexure XII A and Annexure XII B to the SCN are upheld after giving the benefit of SSI exemption, if any and treating any non-duty paid clearances as cum-duty clearances (c) all other demands against VIPI are dropped due to lack of sufficient evidence (d) the demand of duty against VIPPL is dropped due to lack of sufficient evidence (e) all confiscation, redemption fine, penalties (including personal penalties) under both SCNs are set aside (f) the matter is remitted to the original authority for the limited purpose of calculation of differential duty as per (a) and (b) above - the appeals are disposed of as herein above [para 5, 13, 19, 20, 21, 22, 23]

CX - The assessee filed the refund claim towards Excise Duty paid on petroleum products cleared to customers at the rate fixed between the parties - The authorities below have rejected the refund claim holding that as per the doctrine of unjust enrichment, the duty has been passed on to the buyer - Mere issuance of credit notes will not establish that the duty has not been passed on to another - The Apex Court in the decision of M/s. Addison & Co. Ltd. - 2016-TIOL-146-SC-CX-LB has well analysed the issue and held that mere issuance of credit notes cannot be the sole basis for holding that the duty has been borne by the assessee and that it has not been passed on to another - The credit of the sanctioned refund to the Consumer Welfare Fund is legal and proper - The impugned orders do not require any interference: CESTAT

CX - These appeals are against the demand of duty towards alleged clandestine manufacture & removal, alongwith penalty - Both the prop-concerns are owned by husband & wife - They are engaged in business of importing mix scrap (zinc scrap) and reselling the same after sorting for the last 10-12 years - They maintain proper records of scrap purchased, bill of entry wise, and after reselling the same, seek refund of SAD paid at the time of import, in accordance with Notfn 102/97-Cus - S.K.J. Metals is located at Vill. Ruheri, Aligarh Road, Hathras and Rishabh International is located at Circular Rd., Hathras, about 5 Km away from S.K.J. Metals - Based on the documents resumed and relied upon, and the statements recorded, it appeared to revenue that both the concerns Rishabh and SKJ are defacto owned and managed by Mr. Santosh Kr. Jhawar, accordingly, the affairs were clubbed for duty determination and that both the firms are importing scrap, segregating the same, manufacturing zinc ingots and/or aluminium ingots and removing or clearing the manufactured ingots clandestinely in the garb of scrap - The Tribunal gone through the relied upon private records i.e. Note pads, Writing Pads and Registers and notice that contrary to the claim of Revenue the relied upon documents do not bear the names of either of assessee and there is no other indication in these records to connect the documents to the assessee - The relied upon Writing pads are found to contain daily receipt and expenses and not the manufacture and sales of any item much less the Zinc Ingots as claimed by the Revenue - The Register only contained daily receipt and expenses and not the sales of Zinc Ingots as claimed by the department - The Consignment sales made under the Consignment Challans, represented authorized sales of Zinc Scrap and such sales are exempted from sales tax under section 6(A) CST Act - We further find that under the said Consigment Challans, the consignment sales are made through two different traders namely M/s Shri Ram Overseas Delhi and M/s Jay Shree Metal Corporation, Jamnagar (Guj.) for further sales - These Consignment Challans do not in any case reveal either manufacture of Zinc Ingots or clandestine removal thereof by the assessee - The Tribunal have no option other than to reject the evidence value of said private records, resumed from the premises of SKJ and linkage of the said private records to the assessee - Photographs of search operation show manufacturing of Ingots on 07.01.2016, but do not subscribe to the view that the assessee was engaged in manufacturing ingots in the past, for which direct and positive documentary evidences of manufacture are needed - The Adjudicator's findings that both the assessees were undertaking manufacture from the same premises relying on the photographs is totally delusive in the absence of any indication/clue what so ever about the conduct of operation by both the units in the photographs - Consequently the seizure and confiscation of these goods is not justified under the Central Excise Law, by any stretch of imagination - It is beyond human credence to judge the age of the machines from their still photographs and CDs, particularly the age of the furnaces which are installed under ground with only mouth exposed for charging and discharging - Tribunal therefore disagree with the findings in impugned order that Furnaces were appearing old from still photographs and CDs (video), particularly when the Panchanama do not subscribe these facts - The Revenue had failed to disprove the claim of acquiring the manufacturing for machinery by assessee-SKJ at the end of Dec.2015 - Therefore, the Revenue's claim of engagement of the assessee in manufacturing prior to Jan 2016, is unacceptable and set aside.

The Adjudicator despite upholding the charges of manufacturing by assessee, did not give findings on the issue of availability of Credit of Additional duty of Customs paid on the imported Scrap - Confirmation of liability to duty, on clearances of Scrap consignments by treating them as consignments of Zinc Ingots, automatically make the assessee eligible to the credit of Additional duty of Customs paid on the imported Scrap - The nature of commodity viz Zinc Scrap and the corresponding data of the statutory Balance Sheets had been arbitrarily transformed into Zinc Ingots, for imaginary quantification and confirmation of demand in the impugned Order - Even the demand is solely based on the actual Balance Sheet, is not sustainable, unless the same is supported by sufficient and corroborative evidence - The impugned Order confirming artificially quantified demand is therefore inconsistent with the law and not tenable - The impugned order confiscating seized goods and confirming demand of duties and imposition of penalties is set aside: CESTAT

CX - The assessee is engaged in manufacture of Programmable Logic Control as also some other automation hardware devices - Same are primarily cleared by assessee to various other big factories on payment of duty on the value of hardware - However, assessee is also importing various types of software which are also being supplied by them to the customers of hardware for the purpose of using the same in the hardware - Such supply of software, according to the assessee is under a cover of separate invoices - Revenue by entertaining a view that the cost of software is required to be added in the cost of hardware and as such the duty liable to be paid would be on the assessable value inclusive of the software, had raised the demand against the assessee invoking longer period of limitation - Assessee fairly agrees that the said decisions were not placed by assessee before Adjudicating Authority and as such his appreciation of same is not available on record - The attention of Adjudicating Authority was brought to the fact that in some cases they have sold only the hardware without the corresponding supply of software, which fact is indicative of situation that software cannot be considered to be a part and parcel of the hardware - It is the option of customers to buy the software or not buy the same - Similarly, he submits that in some cases initially only one type of software was supplied with the sold hardware and it is only subsequently at the requisition of customer, that the other types of software were sold separately - He clarifies that the demand confirmed against them includes even those instances where they have sold the software only - He submits that though all the issues were raised before Original Adjudicating Authority, he has sidelined the same by observing simplicitor that no evidence to that effect has been produced by the assessee, whereas the fact is that all these documentary evidence were placed on record - The impugned order is set aside and matter is remanded to Commissioner: CESTAT

Cus - The assessee is a unit established in operating in the Cochin SEZ under control & supervision of the jurisdictional Development Commissioner - During the relevant period, the assessee exported 123 consignments of goods manufactured under MEIS against all 123 shipping bills and the RA of the DGFT issued MEIS scrips in all 123 shipping bills after satisfying that the goods were exported and the proceeds were repatriated - Later, the Customs authorities in the Cochin SEZ found that the declaration of the assesee's intention to claim MEIS benefit was not declared in the shipping bills and as such, the same could not be registered - The assessee requested the Development Commissioner to permit amendment of the shipping bills u/s 149 of the Act, however, such request was rejected by the Dy Commr. of Customs at Cochin SEZ - Subsequently, the Commissioner sustained the findings of the Development Commissioner - Hence the present appeal by the assessee.

Held - The assessee's request for amendment of shipping bills was rejected on grounds of delay in applying the amendment and that as per Circular No. 36/2010, examination were not conducted whereas for Export Promotion Scheme, stringent examination norms are prescribed - Concerning the examination of the consignment during the relevant period, there was no provision for physical examination of the cargo exported from the SEZ unit under MEIS scheme and that the requirement was incorporated only on 19.09.2018 - Further, the entire export was made prior to the incorporation of the physical examination requirement - In case of SEZ, the entire operations are under control of the Development Commissioner and the Customs officers posted therein, who can easily verify the entire records - However, such exercise was not carried out - Hence the amendment of shipping bills for the declaration of MEIS is clearly covered in favor of the assessee, which also produced one NOC, wherein amendment of shipping bills was allowed in identical facts - Hence the order denying the amendment of the shipping bills is unsustainable and must be set aside: CESTAT

Cus - The assessee-company manufactures electric fans - It imported goods such as rotors, stator, down case, top case and down rod of motor and have classified the same under tariff heading 8503 00 90 as parts of electric motor - On assessment, the Commissioner changed the classification of the goods as under Heading 8141 90 30 as parts of electric fan - Such findings were based on the examination report, which showed that the packing material as well as individual packs containing these items, clearly mentioned the description as being parts of electric fan - The Revenue further relied on the examination report showing that the packing material and the individual packs containing these items described the same as parts of electric fans - Statements were taken from the assessee's AR to the effect that such goods were meant for use in the ceiling fan and were parts of the ceiling fan motor classification under Heading 8503 was adopted by them - The AR also agreed to the duty liability to the pay the duty - Hence, duty demand was raised, the goods were proposed to be confiscated with option of redemption fine being given and penalties being imposed - Hence the present appeals.

Held - Rule 2(a) of the Section XVI applies to parts included or taken to include under Heading 84 or 85 - It is seen that no heading under either Chapter specifically covers the items like down case, upper case, down rod, stators and rotors in the heading - The Chapter Note 2(b) covers parts suitable solely and principally with the machines of Heading 8501 and 8502 and the said parts are to be classified under the same heading as that of the machine - It is also seen that Customs tariff headings include within purview the incomplete, unfinished where presented unassembled or disassembled if said to have the essential character of finished goods - In the present case, the packing also describes the goods as an electric fan - The rotors and stators, down case, top case and down rod of the motor are specifically designed to be a part of the fan - In such circumstances, following the mandate of Rule 2(a), the goods must be classified under Heading 84.14 as unassessmbled & incomplete fan - Regarding the penalty, redemption fine and confiscation, it is seen that the assessee earlier sought classification under Heading 85.03 and as the issue is subject matter of opinion, the penalty & confiscation are unjustified - The confiscation and redemption fine too are quashed: CESTAT