SERVICE TAX

2019-TIOL-2847-CESTAT-HYD

ST - The issue involved is regarding demand of differential service tax from assessee under category of Maintenance and Repair services - Assessee undertakes repairs of various ships as per the contract entered into with shipping lines, they raise invoices as per agreement and discharge service tax liability under Maintenance and Repairs on 30% of amount charged to shipping lines balance 70% being supplies, abated as towards material cost - The Adjudicating Authority has come to a conclusion that value of material shown as 70% for abatement is incorrect, on the ground that it has not been evidenced and in the absence of any evidence the claim of 70% as abatement is incorrect - It is the case before the lower authorities as well as before the Tribunal that the 70% abatement claimed towards the material cost is evidenced by discharge of VAT to the State Government which in itself enough as these are towards supply of material and assessee will rely upon the judgment of Apex Court in case of Larsen & Toubro 2015-TIOL-187-SC-ST to submit that the entire repair activity undertaken by assessee being a works contract, service tax liability either pre or post 01.06.2007 does not arise - It is his further submission that identical issue was agitated in Tribunal in case of Marine Corporation of India - 2019-TIOL-1589-CESTAT-HYD wherein, this bench held that the service tax liability does not arise on the services rendered by assessee under works contract - The documents reproduced before the lower authorities and before Tribunal, it is noticed that invoices raised by assessee indicate that service tax liability is discharged on 30% of value of invoice as services rendered by them - The repairs undertaken by assessee would get classified under works contract for both the reasons i.e. that the assessee has paid State Government VAT on the materials on 70% of value and service tax is paid on balance amount evaluated @ 30% of value charged - In any case, the judgment of Apex Court in case of L&T is applicable in the case in hand - Further the services rendered by assessee i.e. issue to exigible to tax of Maintenance and Repair services was considered by this bench in case of Marine Corporation of India for identical period - Accordingly, the impugned order is unsustainable and is set aside: CESTAT

- Appeal allowed: HYDERABAD CESTAT

2019-TIOL-2846-CESTAT-AHM

ST - The issue involved is whether the assessee has to pay service tax on the NSE/BSE transaction charges and SEBI turnover fee recovered from their clients in addition to the brokerage charges - The issue is no longer res-integra and the issue has been decided consistently by this Tribunal in various judgments wherein it was held that the actual charges paid to NSE/BSE and SEBI fee and taking reimbursement from the clients is not liable for service tax - Accordingly, impugned order is set-aside: CESTAT

- Appeal allowed: AHMEDABAD CESTAT

CENTRAL EXCISE

2019-TIOL-2850-CESTAT-DEL

CX - The assessee is engaged in manufacture of MS/SS ingots - Mr. Anshul Agarwal is Director of company and Mr. Nitish Ranjan is the Authorised Signatory - The officers conducted the physical verification of the stock of assessee, wherein they concluded that there is a shortage of 128.435 MT of MS Ingots - It further appeared that the assessee had clandestinely removed the MS Ingots on the basis of three invoices issued to M/s Rathi Special Steel Ltd, Khushkheda, Bhiwadi and M/S Rathi Steels Ltd. (Dakshin), Khushkheda, Bhiwadi - On the scrutiny of statutory records of assessee, it was noticed that said three invoices were not mentioned therein - It was concluded that the same were parallel invoices used for clandestine removal of MS Ingots without entering the same into statutory records - These parallel invoices were not recovered from assessee's premises - So far the alleged shortage of finished goods of 128.435 MT is concerned, there may be a possibility of variation of 10% to 15%, but the shortage cannot be stated to be illusory, as worked out during physical stock taking - The panchnama / mahazar was drawn in front of two independent witnesses who witnessed the physical stock taking - In case of disagreement of the method of stock taking the assessee should have raised objection during the time of stock taking or soon thereafter or within a period of few days, which is not the case - Further, assessee has not examined the panchnama witness before the adjudicating authority in this regard - Thus, the alleged shortage of finished goods if held to be correct, but there needs to be some allowances say 15%, is given for error or variation, as the stock taking was done in a hurried manner - Coming to the second issue of three parallel invoices, nowhere from the record it emerges from where such documents were recovered from or received - In the course of verification of the alleged buyers/receiver of the goods before the Commissioner (A), Shri A. K. Malhotra, Director of M/s Rathi Steel Dakshin Limited stated that his statement was taken under pressure - Further, he had already retracted his statement - The other alleged buyers, were not examined by the Revenue in adjudication proceedings - With regard to the third issue, namely the demand based on weighment slips, recovered during the course of search, the Director of assessee has given a plausible explanation, that they also weighed the goods of outsiders on their weighbridge and such weighment slips pertain to outsiders' material - Such plausible explanations have not been found to be untrue - There is also no proof to establish clearance of goods under the weighment slips whatsoever - Hence, it is held that the demand based on weighment slips is only presumptive or fictional and not based on any material evidence, and hence the same is set aside - So far the valuation of the alleged shortage of stock is concerned, it would be appropriate to consider the value mentioned in alleged parallel invoices - Thus, demand shall be reworked adopting the value mentioned in such invoices - The adjudicating authority is directed to calculate the duty payable on this quantity on the basis of the rates of ingots found mentioned in alleged parallel invoices - Accordingly, the assessee shall also be entitled to reduced penalty under Section 11AC of the Act - At the same time, assessee be entitled to pay 25% of the duty, recalculated - So far the personal penalty on Shri Anshul Agarwal and Shri Nitish Ranjan is concerned, no case of active concealment and/ or case of clandestine removal is made out against them, accordingly, penalty under Rule 26 against both these assessees are set aside: CESTAT

- Appeal partly allowed: DELHI CESTAT

2019-TIOL-2849-CESTAT-MAD

CX - The assessee is engaged in manufacture of IC Engine Pump Filter and Injectors - They de-bonded their 100% EOU as per final exit order after paying appropriate duty and converted the unit into DTA from 100% EOU status - During scrutiny of ER-1 returns, it was noticed that the assessee had taken CENVAT Credit on duty paid on capital goods received under Notfn 22/2003-CE and Notfn 52/2003-Cus. at the time of de-bonding - The Department was of the view that the proviso to Rule 3(1) of CCR, 2004 was only for allowing credit in respect of amount equal to Central Excise Duty paid on the capital goods at the time of de-bonding of the unit in terms of Notfn 22/2003-CE - The very same issue of eligibility of 50% of the credit of capital goods availed by assessee at the time of de-bonding was disputed by Department for which a SCN had been issued - The said matter reached the Tribunal and vide Final Order dated 14.02.2017 , the Tribunal held the issue in favour of assessee - Thus, the 50% credit availed by assessee on the very same capital goods has been allowed by the Tribunal - The Department has not been able to apprise the Bench that any appeal has been filed by the Department against such order - Thus, the decision of Division Bench of Tribunal with regard to issue of eligibility of credit on imported capital goods is decided in favour of assessee - As the issue as to whether the assessee is eligible for the credit availed on CVD paid on imported capital goods having been decided by Division Bench of Tribunal in assessee's own case for the 50% availed by them, by judicial discipline, following the same, it is held that the credit availed for balance 50% in the subsequent period is in order - The demand cannot sustain: CESTAT

- Appeal allowed: CHENNAI CESTAT

2019-TIOL-2848-CESTAT-BANG

CX - The assessee is a proprietorship concern engaged in manufacturing Borewell Button Bits - The principle raw materials used were steel and carbide tips - During the relevant period, the jurisdictional DGCEI officers conducted simultaneous searches as various places and seized many documents, files and invoices - Statements were recorded of employees in the searched places, dealers, job workers and a transporter - Upon investigation, SCN was issued proposing to raise duty demand with interest for alleged manufacture & clandestine clearance of borewell button bits and parts of hammers - Penalty was also imposed on several persons - On appeal, the Tribunal remanded the matters, observing that even though pocket diaries seized contained details of alleged supplied made to dealers, the investigating officers had not contacted the dealers & had not recorded their statements - Thereafter, the adjudicating authority raised duty demands against the assessee and imposed personal penalty on its proprietor, who was deceased - Hence the present appeal.

Held - The issues involved are as to whether the adjudicating authority exceeded its brief by continuing proceedings in remand & as to whether the assessee is liable to pay duty on the alleged clandestine removal and whether personal penalty could have been imposed on a deceased individual - Though the seized pocket diary contains details of supplies made to dealers, the investigating officers have not contacted the dealers & did not record their statements - There is no proof of the purchase of raw materials needed for the alleged clandestine manufacture & clearance - Considering that the details in the pocket diary remain uncorroborated, the matter warrants remand - Moreover, there is force in the assessee's arguments that the O-i-O in challenge travelled beyond the scope of the remand order - The O-i-O simply reiterated the findings of the earlier O-i-O - It overlooked the key issues raised by the Tribunal, such as corroborative evidence of the nature of transport documents, purchase of raw materials, invoices, raw material consumption, to prove the clearances - Hence no corroborative evidences exist to prove the clandestine removal - The duty demand merits being quashed - Appeal allowed by way of remand: CESTAT

- Case remanded: BANGALORE CESTAT

CUSTOMS

2019-TIOL-2845-CESTAT-KOL

CC Vs Sai Kripa Enterprises

Cus - The assessee has imported used and worn unmutilated and fumigated mix cloth and three Bills of entry were filed covering the consignments of import - At the time of original assessment, the declared value of imported goods was enhanced - The adjudicating authority ordered confiscation of imported goods for violation of Import Trade Control restrictions and the goods were confiscated under Section 111(d) of Customs Act, 1962 - He also imposed redemption fine under Section 125 of the Act @30% and personal penalty under Section 112(a) of the Act @ 11-12% - The Commissioner (A) has ordered reduction of redemption fine and personal penalty on the basis of ratio laid down by Three Member Bench of Tribunal in case of Omex International - 2015-TIOL-582-CESTAT-DEL - The Three Member Bench has taken the view that redemption fine of 10% and penalty of 5% of the value of the imported goods, would be appropriate in case of import violating Exim Policy Provisions - No reason found to interfere with the findings of Commissioner (A) on the basis of such decision - In the result, the impugned order is upheld: CESTAT

- Appeal rejected: KOLKATA CESTAT

2019-TIOL-2844-CESTAT-DEL

Cus - The assessee is involved in import of electronic items - The Department on the basis of indication by SIIB for a 100% examination after they observed a substantial difference between the IGM and the said Bill of Entry filed by the noticee, examined the goods - On examination of goods, it was observed that the goods imported were five sets of standard transition as against one set declared in Bill of Entry - The Department alleged under valuation as well as mis-declaration of consignment under Bill of Entry - The Department after obtaining the documents from respective banks of importer and various airlines/carriers had observed that the importer has systematically and with malafide intentions procured duplicate invoices or under-valued the consignment with express purpose of defrauding the Government Exchequer not only for the impugned Bill of Entry but also for the imports made during the period w.e.f. June 2010 to June, 2015 - Thrice the statements of Proprietor of assessee were recorded as on 11.06.2015, 25.06.2015 and 22.07.2015 under Section 108 of Customs Act, 1962 - The original invoices of value USD 6890 have been admitted to be intentionally replaced with the invoice having lesser value of USD890 to save the custom duty payable thereon which was done by assessee by making a scanned copy thereof and by making the amendment therein - This admission is sufficient admission for alleged forgery on the part of assessee to under-value the imported consignment with a clear intent to evade the customs duty - The under valuation of goods has rightly been held by the adjudicating authority below - The demand of differential customs duty is, therefore, upheld - As regard to the issue of mis-declaration, admittedly, five sets of impugned mechanical instruments were found in impugned consignment at the time of examination, i.e. with respect to Bill of Entry whereas the Bill of Entry was mentioning only one set - Apparently, there is the difference in description of imported goods as mentioned in invoices issued by exporter to the one annexed with the Bill of Entry - Even the Bill of Entry mentions the import of one set only - There is no evidence to support that five sets is actually equal to one set - Therefore, the adjudicating authority has committed no error while confirming the proposed mis-declaration of goods imported by assessee - No doubt, in case of use of false and incorrect material there would also be the short paid duty or interest but all cases of short paid duty or interest may not be the cases of use of false and incorrect material - Hence, the scope of both the Sections is out rightly distinct - No infirmity found in the Order where penalty under both the Sections 114A and 114AA have been imposed - The non calculation of interest, if any, on the part of adjudicating authority is also not relevant for extending any benefit to the assessee, in view of the fact that assessee out of his own volition has deposited the entire differential customs duty and even the part interest thereof that too beyond the period of 30 days from the date of SCN - The impugned order is hereby upheld: CESTAT

- Appeal dismissed: DELHI CESTAT