SERVICE TAX

2019-TIOL-2837-CESTAT-MAD

Sree Mahavishnu Agencies Vs CGST & CE

ST - Appellant had entered into an agreement dated 6.3.2006 with SRF Ltd. [SRF] for Inspection of Greige Fabric and Inspection and Trimming/Fringe cutting of dipped belting chafer fabrics -department took the view that the appellants had provided manpower to SRF, however, have not paid the ST liability thereon for the period 16.6.2005 to 31.3.2008 - SCN issued - demand confirmed along with interest, penalties imposed - on appeal, Commissioner (Appeals) upheld the order of the original authority - appeal to CESTAT.

Held: On going through the agreement between the appellant and SRF, it is evident that though they (appellant) may have well used their own manpower for carrying out the services, the fact remains that the agreement is only to do Inspection of Greige Fabric and Inspection and Trimming/Fringe cutting of dipped belting chafer fabrics - they were also paid only as per the quantum per meter based on the quantum of the work done by them and not on man hours or based on the number of laborers supplied - in the circumstances, the services will not come in the purview of manpower recruitment or supply service - the impugned order holding to the contrary cannot sustain and requires to be set aside - appeal is allowed : CESTAT [para 5, 7]

- Appeal allowed: CHENNAI CESTAT

2019-TIOL-2836-CESTAT-ALL

Micromatic Grinding Technologies Ltd Vs CCE & ST

ST - A SCN was issued to assessee - It mentions that the assessee was registered under category of "transport of goods by road" with department and during audit, it appeared that besides rendering "transport of goods by road" service, the assessee was also engaged in providing "BAS" as provided for under section 65(19) of FA, 1994 - The SCN further mentions despite being called upon to deposit the aforesaid amount of Service Tax, the assessee did not deposit the same - A detailed reply was filed by assessee to aforesaid SCN - Apart from making submissions on merit, assessee also contended that the SCN was liable to be set aside as it was vague and did not disclose reasons as to why the activities undertaken by assessee were covered under BAS - The relevant portion of SCN extracted above merely mentions that the assessee evaded payment of Service Tax on BAS rendered by it - It does not even indicate the nature of business actually carried out by assessee - In the appeal filed before Commissioner (A), the assessee specifically stated that the burden to establish that the activities undertaken by assessee were covered under BAS lays on the Revenue, but the SCN did not give any reason as to why the amount paid and received by assessee were covered under BAS - The O-I-O does not deal with this issue and only in a cryptic manner examined the amount received under various heads without recording any finding as to why the demand of Service Tax was justified - The appellate order does not deal with this objection of assessee - When the SCN, which is the foundation on which the department has to build up its case, is vague and lack details, it has to be held that the impugned order based on such a SCN is bad in law and cannot be sustained - Thus, the order passed by Commissioner(A) is set aside: CESTAT

- Appeal allowed: ALLAHABAD CESTAT

CENTRAL EXCISE

2019-TIOL-2840-CESTAT-MUM

Raymond Uco Denim Pvt Ltd Vs CCE

CX - This is an appeal against O-I-O denying CENVAT credit, having been availed on taxes paid for procurement of 'courier service' between April 2005 and September 2009 and on utilising services of 'job workers' for the same period - The denial of CENVAT credit on the former was consequent on the finding that the definition of 'input service' in rule 2(l) of CCR, 2004 specifies various activities that are directly or indirectly connected with the manufacture of goods or rendering of services which does not extend to any activity beyond the place of removal - In so far as tax levied on conversion fee charged by job worker, as provider of 'business auxiliary service', the activity for which service tax has been levied pertains to rendering capital goods workable at regular intervals of usage - The input services pertain to tax discharged on goods used in manufacture or services utilised for such activity - The repair of machinery is undoubtedly entitled to be considered as a service that has a connection with the manufacturing process - However, it is the tax paid as recipient of 'business auxiliary service' that is claimed to be eligible - No evidence found on record that the service on which tax was incurred pertained to relayering of machinery used in production - Such evidence is required as, prima facie, relayering does not readily lend itself to conformity with definition in Section 65(19) of FA, 1994 - No reason found to consider the tax paid on 'business auxiliary service' to be one that conforms the definition of 'input service' in rule 2(l) of CCR, 2004 - The denial of CENVAT credit on availment of services of courier is not in accordance with law and must be set aside - However, in relation to the activity on which tax was discharged by the supplier of business auxiliary service, the coverage of business auxiliary service cannot be held to extend to such activity for the purpose of availment of CENVAT credit - Assessee has raised the plea of bar of limitation as the SCN has invoked the extended period - The fact that there had been regular audits does not anywhere hide the suppression of relevant information which could have been laid to crystallisation of tax liability - Audit can only unearth which is declared and which is on record - The activity of business auxiliary service not being entitled to CENVAT credit in the given circumstances, would not be on record - Hence the plea of limitation does not merit acceptance: CESTAT

- Appeal allowed: MUMBAI CESTAT

2019-TIOL-2839-CESTAT-DEL

Pyrotech Workspace Solutions Pvt Ltd Vs CCGST, CE & C

CX - The assessee was engaged in manufacture of other Furniture and Parts - As they were clearing their final product to Mega Power Project under claim of exemption in terms of Notfn 6/2006-CE, there was no requirement of payment of 6% of duty in respect of said goods in terms of provisions of Rule 6(3) as Rule 6(6)(vii) provided an exception to the said rule - The said Notfn 6/2006-CE was rescinded on 17/03/2012 and was replaced with Notfn 12/2012 - The new Notfn 12/2012 also exempted the goods supplied to Mega Power Project - The assessee continued to avail the benefit of said notfn - Revenue entertained a view that they are required to pay 6% of value of said goods in terms of Rule 6(3) of CCR, 2004, as they were availing Cenvat Credit on common inputs - Admittedly, the Notfn 6/2006 continued to cause appearance in Sub-Rule 6(6)(vii) even though the same was not in force during the relevant period and it seems that the said mistake was realized by legislature only on 08/05/2012 and vide Notfn 25/2012, the subsequent exemption Notfn 12/2012 was introduced in said rule - It is not even a case of re-introduction of exemption notification - Exemption continued in as much as with the rescinding of Notfn 6/2005, the subsequent Notfn 12/2012 was immediately introduced - It is only in the provisions of Rule 6(6)(vii) of Cenvat Credit Rules, which are to the effect that there would be no requirement of reversal of any amount in case of goods cleared under exemption to Mega Power Project, Notfn 6/2006 was not replaced with Notfn 12/2012 - This inadvertent mistake stands clarified by Board vide their clarification - Admittedly, the goods continued to be cleared under exemption to Mega Power Project - Otherwise also continues of Notfn 6/2006 in the said Rules does not make any sense in as much as the said Notification was not even in existence during the relevant period - As such, it is Notfn 12/2012, which was to be read in the provisions Rule 6(6)(vii) of Cenvat Credit Rules - In such a scenario, there would not be any requirement of reversal of any amount in terms of provisions of Rule 6(3) - The impugned order is set aside: CESTAT

- Appeal allowed: DELHI CESTAT

2019-TIOL-2838-CESTAT-MAD

Jeevan Diesels And Electricals Ltd Vs CGST & CE

CX - The assessee is engaged in manufacture of Diesel Generating sets - They cleared Diesel Generating sets such as, base frame fitted with engine with fuel tank, battery and control panel manufactured by them through other Units situated at Silvassa, Aroor, Bommanahalli for consumption in their Units in manufacture of final products - During verification of records, it was noticed that in respect of such clearances made by them to their sister Units, assessee have not determined the value in terms of Rule 8 of CEVR, 2000, inasmuch as, these goods were not sold but only transferred to their other Units - Since the valuation was not done in terms of CAS-4, SCN was issued proposing to demand differential duty - The demand of duty is calculated on the basis of cost of production arrived after taking 16.96% of value of goods cleared as the material cost - There is no provision in the Valuation Rules to arrive at such valuation of materials on such basis - Assessee has not produced CAS-4 certificate - It is the bounden duty of department to appoint a Cost Accountant and obtain a CAS-4 certificate - The valuation has then to be done on the basis of CAS-4 certificate - The Tribunal in assessee's own case had occasion to analyse the very same issue - Though the demand was also set aside on the ground of limitation, entire issue is revenue neutral - The assessee would be eligible for credit for the duty paid on goods i.e., cleared to their sister Units - The facts reveal that the demand of duty is not based on any provisions of law - From the letter dated 28.04.2007 issued by Superintendent, Cuddalore-I to the Assistant Commissioner (Central Excise) of the very same division, it is seen that in the absence of CAS-4 certificate, the department has taken the value declared by assessee in the invoice for the goods cleared to their sister Units - Taking into consideration that the duty demand is not based on provisions of law, the demand cannot sustain - Further, the decision in assessee’s own case has held that such method of valuation for demanding duty is against the provisions of law - The impugned order is, therefore, set aside: CESTAT

- Appeal allowed: CHENNAI CESTAT

CUSTOMS

2019-TIOL-2835-CESTAT-BANG

D And M Building Product Pvt Ltd Vs CC

Cus - The assessee is engaged in design, supply and installation of various types of office interior including office partition - For this purpose, they import aluminium profiles and locally procure/import glass, hardware, hinges - Based on customers' acceptance of design and quality/cost of materials, the goods are moved to site - After the process of drilling and bending undertaken at the site, the partitions are fixed or installed at site - The assessee was importing Aluminium Profiles from various foreign vendors and were clearing the same under the heading CTSH 7604 (subjected to duty @ 5%) - Department sought to classify the said goods under CTSH 7610 (liable to duty @ 10%) - The suppliers of assessee do not describe the impugned goods to be profiles; the importers do not place an order describing the goods to be profiles and the customers of the importers also do not describe them to be profiles in general - Going by the product catalogues, technical write-up, it is seen that each profile is made specifically for certain purpose and designed to it with specific size of glasses or doors - It could be that they are required to cut, drilled or punched on site to give them a finished touch or to adjust to the condition - Nowhere the goods are described as Aluminium profiles per se - Impugned goods are identifiable as items prepared for use in structure as supplier himself identifies the same with code numbers corresponding to a particular partition system and supplies them as such - Therefore, the only conclusion that can be drawn is that the impugned goods are prepared for use in structures which are known to the foreign supplier, importer and their customers - The end-use i.e., the articles "prepared for use" being specially finding a mention in the Tariff are required to be classified accordingly - In the result, the goods are classifiable under CTH 7610 9030 as contended by the Revenue - The assessee have also relied upon the Board Circular 11/1998 regarding the classification of goods under Chapter Heading 7610 - The Commissioner has made a distinction that CBEC Circular clarifies about the classification of rolled particles of Aluminium and not about Aluminium profiles prepared for use - The classification of a product depends on the Section/Chapter Notes and references to the Heading - One need not depend on clarification issued by Board, which could at best be clarificatory in nature - The impugned goods are classifiable under CTH 7610 3090 - The present SCN is issued on 10.10.2013 invoking an extended period - The extended period cannot be invoked and consequentially, equal penalty under Section 114A cannot be imposed on assessee - Penalty imposed on Shri Prabprit Singh Kochar does not stand scrutiny - Further, the assessee have submitted that there was a mistake in quantification of duty and certain bills of entries where the goods have been classified under 7610 and wherein appropriate duties have been paid have also got included - In order to re-quantify the amount of duty applicable for the normal period giving allowance to the Bills of Entry wherein duty was paid correctly, the matter requires going back to the original authority: CESTAT

- Appeals partly allowed: BANGALORE CESTAT