2019-TIOL-2972-CESTAT-AHM

Trije Engineers Vs CCE & ST

ST - There are two issues involved in the present appeal; one of which is Demand due to the denial of benefit of Notfn 15/2004 and Notfn 01/2006 on the ground that assessee has not included the value of pipe supplied by service recipient and other is demand of Rs. 6,77,862/- towards the coating work of pipe carried out on the pipe supplied by service recipient - As regard the issue that whether the assessee is entitled for Notfn 15/04 and Notfn 01/06, the Supreme Court has already decided that even if the material supplied free of cost by service recipient and value thereof is not included in gross value of service, the benefit of Notfn 15/04 and 01/06 cannot be denied, therefore, in principle the assessee is entitled for abatement provided under Notfn 15/04 and 01/06 - However, from the computation chart of demand, it is found that for the demand shown in Annexure A to SCN, the total value was taken from the balance sheet after excluding the value of coating, from this it is not revealed that whether the value of pipe was included in the gross taxable value or otherwise - It is obvious that once the pipe is supplied by the recipient of service, the value of said pipe will not reflect in the balance sheet, therefore, there appears to be some error in computation of duty, therefore, the same needs to be reexamined - As regard, the duty demand on the coating of pipe, assessee raised the issue of being sub-contractor, accordingly, the demand is hit by limitation - The authority below denied the benefit of sub-contractor only on the ground that during relevant time, the cenvat scheme was operated, accordingly, the assessee was entitled to avail cenvat credit and discharge service tax - However, whether the circular is applicable and consequently whether the demand is hit by limitation or otherwise has not been dealt with properly by lower authority, therefore, this issue also needs to be reconsidered in the light of Board Circular - The impugned order is set aside and the appeal is allowed by way of remand to the adjudicating authority: CESTAT

- Matter remanded: AHMEDABAD CESTAT

2019-TIOL-2971-CESTAT-ALL

Vibhor Vaibhav Infra Pvt Ltd Vs CCE

ST - The service provider was engaged in providing various services related to construction and laying of pipelines and laying of drainage and also 'Works Contract Service' and 'Erection Commission And Installation Service' - They provided services to GDA, U.P. Jal-Nigam and various other Government Authorities - Proceedings were initiated against service provider by way of issuance of SCN where a demand was raised against service provider for various project undertaken by them and services were provided to stated Government Authorities - The Original Adjudicating Authority has confirmed the demand on account of construction of 33 and 11 KVA electric substations at Indirapuram, Ghaziabad and imposed equal penalty - Further, he has confirmed service tax demand of around Rs.1.55 lakhs for construction of Boundary wall and imposed equal penalty - In so for as the demand and penalty in respect of electric Substations is concerned, assessee has relied on earlier decision of this Tribunal in case of M/s Shiv Shankar Electricals And Contractors wherein it was decided that taking into consideration the exemption provided through Notfn 45/2010-ST and Notfn 11/2010-ST, the service tax on construction of electric substation is not sustainable - All services related to transmission of electricity have been covered by negative list after 01.07.2012 - It is settled by now that construction of electric Substation is also related to transmission of electricity - Therefore, the demand of service tax of Rs.64,22,925/- along with equal penalty is set aside - In so for as demand of around Rs.1.55 lakhs is concerned, the service provider has submitted that the services were provided to a trust and the same was exempted - However, they are not in position to establish through record that the services were provided to trust and therefore, they are not contesting the service tax and interest but they are contesting penalty on the same - The penalty of Rs.1,55,869/- under Section 78 of FA, 1994 is set aside - In above terms except for the duty of Rs.1,55,869/- and interest thereon entire appeal of service provider is allowed: CESTAT

- Appeal partly allowed: ALLAHABAD CESTAT

2019-TIOL-2970-CESTAT-AHM

Universal Medicare Pvt Ltd Vs CCE & ST

ST - The assessee is engaged in manufacture of PP medicaments and entered into a BPA with M/s Aventis Pharma for sale of marketing divisions for consideration - Pursuant to EA-2000 audit, the department issued SCN to the assessee demanding service tax alongwith interest and penalty on the ground that the purchaser has placed several restrictions on assessee under the agreement and therefore the transaction was in nature of providing "Franchise services" - That the assessee has merely provided representational rights to the franchisee to sell or manufacture goods or provide service - It is an undisputed fact that the goods are being sold under the brand name purchased on outright basis - In such circumstances even if the know how is retained by assessee which forms part of another business i.e the manufacturing business it would not effect on slump sale of marketing business - No nature of any service is appearing in BPA and in such case reliance placed upon some of the clauses in isolation cannot be interpreted as the agreement to be of franchise agreement - It is pertinent that the brandname/ tradename of the product in question stands transferred to M/s Aventis under the deed of assignment and once the highest Authority i.e the Trademark Registry has transferred the brand name/ trade name to the ownership of M/s Aventis, the assessee has no right over such brand name and trade name and there is no question of any representational rights of assessee to be given to M/s Aventis - It is also a fact that except interpreting the clause of agreement, the revenue has not brought any evidence to show that the BPA was not followed or the transaction were executed otherwise - The impugned order is not sustainable on merits - Coming to the issue of raising of demands by invoking extended period of limitation, there is no instance which can show that there has been suppression or mis-statement of facts by assessee with intention to evade service tax, if otherwise would have been payable - Such transaction first of all is not liable for service tax and was publicized in media - The transactions were reported to various regulatory authorities viz. FDA, Ministry of Corporate Affairs and SEBI and also disclosed in books of accounts and balance sheet - In such case when there is no evidence of suppression or intention to evade service tax, the demand cannot be made by invoking extended period of limitation - These views are also supported by judgments in case of Simplex Infrastructures - 2016-TIOL-779-HC-KOL-ST and Padmini Products - 2002-TIOL-289-SC-CX - Further, since the demand is not sustainable, penalty being consequential to demand would also not exist: CESTAT

- Appeal allowed: AHMEDABAD CESTAT

CENTRAL EXCISE

2019-TIOL-2969-CESTAT-MUM

Pepsico India Holding Pvt Ltd Vs CCE & ST

CX - The assessee is engaged in manufacture of 'Aerated Water' and availing Cenvat Credit on inputs, capital goods and input services under provisions of CCR, 2004 - During audit, it was noticed that the assessee had irregularly availed and utilized excess Cenvat Credit on capital goods and inputs - The assesse reversed the entire excess credit alongwith interest, much before the issuance of SCN - There is no willful suppression on the part of assessee with intention to evade payment of duty - The omission, if any, is bonafide - The Commissioner imposed the penalty on assessee mainly on the ground that there was short reversal of Rs.50/- on the part of assessee and therefore the they were held liable for 100% penalty on the total amount of Rs.4,38,439/- - The department in its audit report itself alleged the availment of excess credit amount to Rs. 4,38,389/- only and not the amount of Rs. 4,38,439/- - No reason has been mentioned by Revenue for mentioning the lesser amount in its audit report - It is the mistake on account of incorrect calculation on the part of the department and assessee cannot be penalised for it - The assessee acted fairly and immediately upon being pointed out by the audit party, reversed the excess excess credit availed by them alongwith applicable interest - Since the assessee have already reversed the entire excess credit availed by them alongwith interest, much before the issuance of SCN, in view of Section 11AC, no penalty is payable by them - Accordingly the impugned order is set aside: CESTAT

- Appeal allowed: MUMBAI CESTAT

2019-TIOL-2968-CESTAT-MAD

Wheels India Ltd Vs CGST & CT

CX - The assessee is engaged in manufacture of automobile wheels and their parts and accessories - During audit, the department found that the assessee had availed credit of service tax paid on premium for product liability insurance - Department was of the view that said credit is not eligible as the same is post-sales/post-manufacturing service - It is explained by assessee that they are extending the warranty benefit to the automobile manufacturers with regard to wheels and other parts supplied by them - The product liability insurance is availed by assessee for covering the risk of any manufacturing defect arising out of finished products cleared by them - When the defects are found and put forward only after use of vehicle by the purchaser of vehicle, in such cases, the automobile manufacturer has to compensate/satisfy the claim of customer which is thereafter reimbursed by assessee - In such cases to cover the risk of such payment, assessee has to avail product liability insurance - Indeed, this insurance is directly connected with manufacturing activity of assessee and is also an input service used in relation to the manufacture of finished products - After appreciating the facts, evidence as well as following the decisions in Rane Brake Lining Ltd. - 2018-TIOL-3648-CESTAT-MAD and Sundaram Dynacast Pvt. Ltd., denial of credit is unjustified - The impugned order is set aside: CESTAT

- Appeal allowed: CHENNAI CESTAT

2019-TIOL-2967-CESTAT-DEL

Nova Iron And Steel Ltd Vs CGST, CE & C

CX - The assessee is the manufacturer of sponge iron and also availing credit of duty paid on inputs/raw materials/capital goods and input services and are also utilising such credit towards payment of duty on their final products - The Department noticed that the assessee had availed cenvat credit on the strength of supplementary invoices issued by subsidiary companies of Coal India Limited i.e. M/s. SECL against the coal receipts despite that the assessee units has been closed since June, 2013 - The interest at the appropriate rate and the proportionate penalty was also proposed to be imposed upon the assessee - Admittedly the supplementary invoices on which credit has been availed were issued in March and May 2013 and the credit there upon has been availed in March 2014, December, 2014 and January, 2015 - Thus, the credit has neither been availed immediately on the receipt of inputs nor has been availed within the six months of the issue of the receipts - It becomes clear that while availing the said cenvat credit, assessee has contravened the time limit of both the provisions relevant for the availment of the cenvat credit even on supplementary invoices - The argument of assessee of not receiving the invoices in time and the emphasis upon RTI application is not sufficient to extend any benefit in favour of assessee because as per the Rules of Interpretation of Law, the language of the statute has to be read strictly in terms of the language therein - Both the Rules have no ambiguity as far as the time for availment of cenvat credit is concerned - There is nothing nor even the RTI applications which can give any reason to have an extended interpretation to both these provisions - Otherwise also, it becomes the case of suppression which again is a condition prescribed for availment of cenvat credit as per Rule 9(1) (b) of CCR, 2004 within the time limit as statutorily fixed - Hence, irrespective of entitlement of assessee for availing cenvat credit on supplementary invoices as has been held by Tribunal in Ultra Tech Cement Ltd. Unit Aditya Cement Works - 2018-TIOL-2976-CESTAT-DEL, the assessee has rightly been denied the availment thereof being barred by time - No infirmity found in Order under challenge, same is hereby upheld: CESTAT

- Appeal dismissed: DELHI CESTAT

CUSTOMS

2019-TIOL-2966-CESTAT-ALL

TD Forex Vs CC, GST & CE

Cus - The appellant-company, engaged in dealing in forex, had obtained a license from another entity - This entity had a license from the RBI to function as a full fledged money changer - The assessee was engaged as a restricted money changer - During the relevant period, the owner of the appellant-company was intercepted by Customs officers with considerable amount of Nepali currency being found in his possession - The currency and the vehicle were seized - The Revenue carried out investigation and noted that the appellant had withdrawn some amount of Indian currency prior to the interception of the appellant's proprietor - It was also observed that the persons from whom the appellant's proprietor claimed to have obtained the foreign currency, were in fact not available at the given address - The appellants were served SCN proposing to confiscate the currency u/s 121 of the Act as well as the vehicle - Penalties u/s 112, 114 and 117 were imposed - Such proposals in the SCNs were sustained on adjudication - On appeal, the Commr.(A) sustained such findings - Hence the present appeals.

Held - The confiscation ordered by the adjudicating authority and sustained by the Commr.(A) is u/s 121 of the Customs Act - This Section enables confiscation of only those proceeds which arise from sale of smuggled goods - It stands settled by the Tribunal in Ram Chandra VS Commissioner of Customs that confiscation of goods is to be resorted to only after establishing there to have been any sale of smuggled goods, which is not the case in the present circumstances - Moreover, when the smuggled goods are sold in India, they were sold against exchange of Indian currency - How the smuggled goods are sold in exchange of Nepalese currency within the territory of India has not be explained anywhere by Revenue - Hence the O-i-A cannot be sustained: CESTAT

- Assessee's appeals allowed: ALLAHABAD CESTAT

2019-TIOL-2965-CESTAT-DEL

Shubhra Logistics Vs CC

Cus - The appellant is a Customs broker holding a valid license issued by a Customs commissionerate at New Delhi under Regulation 9(1) of the Customs House Agent Licensing Regulation (CHALR), 2004 - The appellant is also permitted to carry on its business at a Customs commissionerate at Mumbai - In the course of business, the appellant cleared a consignment of Cold rolled and Hot rolled stainless Steel coils/sheets - The import was alleged to have involved mis-declaration of description, weight and value of the goods and involved complicity of the indentor of overseas supplier for Steel products - BoE filed for clearance of the goods was found to have been undervalued - On investigation, the appellant was found to have connived with the importer for obtaining forged invoice - Statements of various persons were taken - Thereafter, the Commissioner issued an O-i-O suspending the appellant's license on account of violation of CHALR provisions - Hence the present appeal.

Held - The appellant as CHA took the business after due diligence and after considering all the documents required for Customs clearance in good faith from the importer - The same were verified as well - Hence the appellant cannot be said to have contravened the provisions of Rules 10 and 11 of CBLR 2013 - Manipulation of test report of a consignment imported by the importer through one of its ow representatives was not within the knowledge of the assessee - Hence the assessee cannot be made liable for the same or be penalised for it - Besides, the mis-declaration was detected in 2014 but the license was suspended 2018, much after the occurrence of the event - The provisions of immediate suspension of license must be resorted to in deserving cases so as to prohibit the functioning of CHA at particular station, so that no documents are tampered with during the investigation and no activities are committed to the detriment of the Revenue - Hence, suspension is to be done immediately after the detection of case against the CHA for misdeed or any manipulation by the CHA, which is not the case in the present proceedings - Hence the O-i-O is unsustainable: CESTAT

- Assessee's appeal allowed: DELHI CESTAT