SERVICE TAX

2019-TIOL-2863-CESTAT-BANG

Ocwen Financial Solutions Pvt Ltd Vs CCT

ST - The assessee is a wholly owned subsidiary of Ocwen Asia Holdings Ltd. which is ultimately held by Ocwen Financial Corporation, USA - The assessee provides general back office and operational support to their group companies situated outside India - Additionally, they have also obtained registration as a service provider under categories of Management Consultancy Services, Business Support Services, IT Software Services and Consulting Engineer Services - The assessee claimed refund under Rule 5 of CCR, 2004 r/w Notfn 5/2006-CE - The original authority rejected the refund claim - On appeal, Commissioner(A) has remanded the case to the lower adjudicating authority for de novo consideration - The Commissioner (A) also directed the adjudicating authority to examine the applicability of principles of unjust enrichment - The ratios of the decisions in Convergys India Services Pvt. Ltd - 2011-TIOL-1902-CESTAT-DEL, Vodafone (India) Pvt. Ltd. - 2014-TIOL-2479-CESTAT-MUM, Balakrishna Textiles Pvt. Ltd. - 2008-TIOL-2831-CESTAT-AHM and Indo-Nippon Chemicals Co. Ltd. - 2003-TIOL-161-HC-AHM-CX clearly brings out that the unjust enrichment is not applicable to cases involving export of services as per the proviso to Section 11B(2) and the finding of the Commissioner(A) to that extent is bad in law - Further, Commissioner(A) has also travelled beyond the SCN because in the SCN, the principle of unjust enrichment was not invoked - The impugned order invoking the principles of unjust enrichment is not applicable in these cases - Consequently, the impugned order is set aside to that extent: CESTAT

- Appeals allowed: BANGALORE CESTAT

2019-TIOL-2860-CESTAT-ALL

Parwati Construction Vs CGST, C & CE

ST - The assessee was engaged in providing taxable services falling under category of "Works Contract Services" - As a result of enquiry conducted against them, they were issued a SCN raising demand of service tax and penalty - As regards penalty imposition of Rs.6,72,643/- upon assessee while confirming the demand of Rs.13,45,285/- under the category of 'Construction of Residential Complex', admittedly the said construction was for U.P. Avas Evam Vikas Parishad - Service tax was deposited by assessee alongwith interest even before issuance of the SCN in which case no notice should have been issued to them in terms of the provision of Section 73(3) of Finance Act, 1994 - Otherwise also, said services having been provided for Government body, there could be a bona fide belief on the part of assessee not to pay any tax on the sale - Revenue has not adduced any evidence to show that such non-payment was with any mala fide intention - As such, the penalty imposition on the said ground is not justified, same is set aside: CESTAT

- Appeal disposed of: ALLAHABAD CESTAT

Frontline Business Solutions Pvt Ltd Vs CCGST & CE

ST - Assessee has challenged the legality of equivalent penalty imposed under section 78 of the Finance Act, 1994 [Act] after payment of penalties under section 76 as well as 77 of the Act in compliance to the adjudication order.

Held: It cannot be said that only because audit party had found some receipts are taxable, suppression of fact is made out - it cannot also be established that appellant had any malafide intention to suppress its duty liability from the department - there is nothing available in the show cause about the intention of the appellant to evade payment of tax except that error was pointed out in the EA-2000 audit which appellant accepted to be an error and made its best efforts to rectify the same as in both O-I-A and O-I-O, it has been noted by the authorities that they had checked the payment and found them accounted in the assessee's account on ACES that has established that the payment details are genuine - therefore, there is no cogent reason available to impose penalty under section 78 of Act when under section 76 penalty of 10% was imposed and appellant had abided the same by paying the penalty - further, transitory provision as contained under section 78(B)(1)(b), provision of section 76 or 78 shall be applicable to the cases where SCN was issued but no order has been passed under sub section of 2 of section 73 as section 76 deals with non-payment of tax other than the reason of fraud or collusion or willful misstatement or suppression of fact or contravention of any other provision of the act or rules while section 78 covers any of these grounds - hence, the appeal is allowed and the impugned order to the extent of confirming equivalent penalty under section 78 is hereby set aside: CESTAT [para 5, 6, 7]

- Appeal allowed: MUMBAI CESTAT

CENTRAL EXCISE

2019-TIOL-2862-CESTAT-BANG

Mukund Ltd Vs CCT & CE

CX - The assessee is engaged in manufacture of Alloy steel and non-Alloy steel - During audit, it was noticed that the assessee had availed CENVAT credit of Service Tax paid on "Civil Works" on input services inasmuch as the said services do not fall within the ambit of Rule 2(l) of CCR, 2004 - The original authority has analyzed each and every input service and has passed a reasoned order by holding that all the services availed by assessee fall in the definition of 'input service' and none of them are in nature of 'civil construction' only - Without giving any reasons, the Commissioner (A) has wrongly come to the conclusion that all the services availed by assessee are in nature of 'civil construction' only - All the services fall in the definition of 'input service' as contained in Rule 2(l) of CCR, 2004 and do not fall in the services which have been specifically excluded - The invoices for impugned services referred to maintenance and repair of the plant and do not refer to construction of a building or a civil structure or laying of foundation which are specifically excluded from the definition of 'input service' - The impugned order is not sustainable in law whereas the O-I-O is well-reasoned and therefore, the order passed by original authority is restored: CESTAT

- Appeal allowed: BANGALORE CESTAT

2019-TIOL-2861-CESTAT-BANG

Kris Flexipacks Pvt Ltd Vs CCE

CX - The assessee was formerly known as Nikita Plast - The adjudicating authority has held that the Fancy Bag Industries had manufactured and cleared the impugned goods in the name of assessee without depositing the duty amount to the Government but instead deposited to the bank account of assessee - Adjudicating authority confirmed the demand towards excise duty on poly bag for the period from 2000-01 to 2005-06 and appropriated Rs. 5,00,000/- already paid by the Fancy Bag Industries towards duty liability, imposed equivalent penalty under Section 11AC of the CEA, 1944 read with Rule 25 of CER, 2002, imposed penalty of Rs. 10,000/- under Rule 26 of CER, 2002 on Manoj Mehta of Fancy Bag Industries and also imposed penalty of Rs. 10,000/- under Rule 26 on assessee and also demanded appropriate interest under Section 11DD - Manoj Mehta is the mastermind in committing the illegal activities - The goods have been manufactured by Fancy Bag Industries and have been supplied to various customers in Bangalore under the invoice of assessee without their authority as argued by assessee - Further Manoj Mehta has admitted that he has produced the goods in the name of assessee and supplied the same to their customers and collected the duty and deposited the same in the account of assessee whereas the assessee has rebutted this allegation and submitted that he has not permitted Fancy Bag Industries as well as Manoj Mehta to manufacture the goods on their behalf - The employees of Fancy Bag Industries have admitted that they were clearing the goods by generating the invoice of assessee which is clearly not tenable in law - The statement of Manoj Mehta that subsequent to the clearance of goods by him to the customers he used to get the goods from assessee which was taken and stored by them, this statement has not been proved on record - Further, the perusal of invoices produced on record shows that the goods were supplied on same day showing it to be produced by assessee - The entire illegal activity has been done by Manoj Mehta without the knowledge of assessee - Therefore, the Commissioner has rightly confirmed the demand against the Fancy Bag Industries and rightly imposed the penalty on Manoj Mehta - As far as appeal of assessee is concerned, the activities carried on by Manoj Mehta is without the concurrence of assessee and they had no knowledge about the activity of Fancy Bag Industries, Bangalore and they have never asked them to print invoices in their name and clear the goods in their name - Further the imposition of penalty of Rs. 10,000/- on assessee is not sustainable in view of the ratio decision of Tribunal in the case of Homag India Pvt. Ltd. - 2017-TIOL-1557-CESTAT-BANG - The freezing of the bank account solely on the statement of Manoj Mehta is also not tenable in law - The Department has not caused any verification and investigation nor recorded any statement with regard to the transaction in the frozen account - The entire seizure of account and freezing the same is based on mere presumptions and at the back of assessee who was not even put on notice before seizing the accounts - Further, no verification whatsoever is done including to find out whether credits and the balances related to sale proceeds of alleged clandestinely cleared goods - Further there is not even corroborative evidence and the entire case is merely based on co-noticee's statement without any evidence - In the absence of any evidence to prove the role of assessee, freezing of the account and adjusting the amount therein towards the duty liability is wholly unjust, illegal and improper - The order of demand against the Fancy Bag Industries is upheld and also upheld the imposition of penalty on Manoj Mehta but dropped the penalty imposed on assessee under Rule 26 of CER, 2002 and also order for defreezing of the account of assessee with immediate effect - Consequently, appeals by Fancy Bag Industries and Manoj Mehta are dismissed and appeal filed by assessee is allowed: CESTAT

- Appeals partly allowed: BANGALORE CESTAT

CUSTOMS

2019-TIOL-2858-CESTAT-MUM

Harvinder Singh Vs CC

Cus - The appeal lies against impugned order in which duty liability has been ordered to be recovered on two consignments of 'button cells' of Hong Kong origin - The goods, which were to be levied to additional duty of customs on 'retail selling price' as mandated in proviso to section 3(5) of CTA, 1975, were issued with 'out of charge' endorsement but were detained and subsequently seized on the basis of enquiry eliciting that the 'retail selling price' of the impugned goods had been undervalued - The issue herein pertains to the legality of revision of value declared for the purpose of assessment of additional duties of customs while the goods were yet under control of customs and it is seen that the Tribunal has, in ABB Ltd - 2011-TIOL-792-CESTAT-BANG and Suzuki Ceramics - 2014-TIOL-2494-CESTAT-AHM, clearly held that the statute was wanting in machinery provisions for re-determination of retail selling price - Furthermore, it is seen that 'market value' was ascertained while the goods were yet in custody before clearance while revision of the declared 'retail selling price' may well have occurred between clearance and sale in market, that eventuality cannot be concurred while the goods were pending for assessment - Even so, the role of assessee in any part of the transaction, except in the matter of representing himself as power of attorney, has not been ascertained - The said 'power of attorney' is dated 1st December 2007 whereas the goods had been imported in October 2007 - It is, therefore, not discernible as to the specific activity of assessee that contributed to the goods having been rendered liable to confiscation - Accordingly, the impugned order has erred in invoking the provisions of section 112 of Customs Act, 1962 against the assessee: CESTAT

- Appeal allowed: MUMBAI CESTAT

Pertech Export Pvt Ltd Vs CC & CE

Cus - Vide Stay Order dated 23 January, 2017 all the appellants were directed to deposit 7.5% of Customs duty and/or 7.5% of penalty for satisfying the provisions of Section 129 E of Customs Act - Revenue submits that as the appellant has not deposited the said amount, their appeals are liable to be dismissed on this ground itself - The Tribunal, by appreciating the merits as also the financial condition of appellant, directed them to deposit only 7.5% of the amount involved - As thereafter the appellants did not deposited the amount and sought adjournment on various dates fixed for ascertaining compliance with the said order, the Stay Order was ultimately withdrawn vide interim order dated 04/09/2018 - The effect of withdrawing of said stay order is that the appellants were required to deposit full amount in terms of erstwhile provisions of Section 129 E of Customs Act - It is seen that no deposit stands made by appellant in spite of matter being pending in Tribunal for last five years - The condition for pre-deposit is being one of the essential conditions for disposal of the appeals, the appeals cannot be heard on merits and are required to be dismissed for non-compliance with the provisions of Section 129-E of the Customs Act read with the said order as also Interim order passed by the Tribunal: CESTAT

- Appeals dismissed: ALLAHABAD CESTAT