2019-TIOL-2997-CESTAT-MAD

Randstad India Pvt Ltd Vs CCGST & CE

ST - The assessee is engaged in providing Man-power Supply Agency Services - During audit, certain objections were raised mainly with regard to wrong availment of credit - SCN was issued proposing to demand penalty for the wrongly availed credit - It is not in dispute that the assessee has reversed entire wrongly availed credit along with interest before issuance of SCN - As per sub-section (3) of section 73, no SCN is to be issued when the credit is reversed on being pointed out by officers of department - The present SCN has been issued alleging for fraud and suppression of facts on the assessee - The suppression alleged by the department is that while reversing the wrongly availed credit, the assessee has not reversed the entire amount - This cannot be considered as positive act of suppression of facts with intention to evade payment of service tax - Moreover, when the audit party pointed out the error, they reversed the entire amount - From the impugned order, it can be seen that the entire figures were correctly reflected in the accounts of assessee - No ingredients found to attract sub-section (4) of section 73 of FA, 1994 - The assessee has paid-up the wrongly availed credit with interest - Therefore, the penalty is unwarranted and same is set aside: CESTAT

- Appeal allowed: CHENNAI CESTAT

2019-TIOL-2996-CESTAT-BANG

Ridhi Sidhi Transport Vs CC, CE & ST

ST - The assessee is a proprietorship concern engaged as a handling agent, wherein the assessee is required to provide local transportation of goods and also take care of loading and unloading - The assessee received Rake Handling charges, local transportation charges & service charges as per the agreement - During the relevant period, the officers of the Preventive Wing visited the assessee's premises and recorded statements of the proprietor, who claimed to be unaware of its liability to pay tax under Cargo Handling Service - Meanwhile the assessee availed the Extraordinary Taxpayer Friendly Scheme and filed declaration and paid service tax with interest on the value of service charges received - The assessee did not include the value of Rake Handlinmg Charges towards payment of tax in view of Board/TRU Circular No. B/11/1/2002-TRU dt. 01/08/2002 as it was under a bona fide belief that expenses reimbursed towards loading and unloading would not attract duty - The Revenue issued an SCN proposing duty demand on the total value of loading and unloading charges & service tax charges - On adjudication, duty demand was raised with interest & penalties u/s 76, 77 & 78 of the Act - On appeal, the Commr.(A) allowed partial relief - The Tribunal later upheld demand raised under Cargo Handling Service regarding loading & unloading charges - It quashed the penalties imposed & did not examine the plea of limitation - The assessee then filed ROM seeking modification of such order as such plea of limitation had not been discussed - The Tribunal allowed such application and recalled its order - The Revenue's appeal against such orders was dismissed by the High Court - However, for a subsequent period, the Revenue issued SCN by invoking extended limitation, raising demand for differential tax amount - The duty demand with penalty was partly sustained by the Commr.(A) - Hence the present appeal.

Held - In the first round of litigation, since the final order of the Tribunal was recalled, the assessee has liberty to raise all legal issues - Considering the principles u/s 65A of the Finance Act 1994, the demand should not have been confirmed under Cargo Handling Service because the essential character of the main activity is towards transportation charges - The charges received for transportation far exceeds the charges received for loading & unloading - Hence the demand raised under Cargo Handling Service is untenable and merits being set aside: CESTAT

Held - Regarding the other period in dispute, though the Revenue invoked extended period, it brought no material on record to show any intent to evade payment of tax during the relevant period - Also considering the decisions of the Tribunal in Vishal Traders Vs. CCE and Singh Brothers Vs. CCE it is seen that when there is doubt or confusion in the assessee's mind on account of Circulars issued by the Revenue, then invocation of extended limitation is unsustainable as there is no intent to evade payment of duty - Hence the extended limitation is wrongly invoked and demand is barred by limitation - Moreover, in the subsequent appeal, the demand is barred by limitation as extended period cannot be invoked subsequently in SCN when the Revenue had knowledge of all facts since they issued SCN for the previous period - Considering the decision of the Apex Court in Nizam Sugar Factory Vs. CCE wilful suppression cannot be alleged for the subsequent period - Hence the demands are quashed on merits and on limitation: CESTAT

- Assessee's appeals allowed: BANGALORE CESTAT

United Cement Agency Vs CCGST

ST - The assessee is registered with Service Tax Department falling under category of 'Clearing & Forwarding Agents Services' - It was found that the assessee was providing services of sales promotion to cement companies by way of arranging orders for them and facilitating payment to such companies - Proceedings were initiated against them by way of issuance of SCN raising demand of service tax - Assessee had not disputed the fact of providing of services and have simplicitor submitted that the SCN issued to them is vague inasmuch as the category of services provided by them has not been specified - However, it is seen that the demand stands confirmed by invoking longer period limitation - As the negative list era was introduced in 2012 itself, there could be a bona fide belief on the part of assessee that the services provided by them are not taxable - In the absence of any evidence to the contrary indicating any mala fide on the part of assessee, longer period of limitation is not available to the Revenue - Accordingly, the demand on the issue of time bar is set aside - As a part of demand may fall within the limitation period, the Original Adjudicating Authority is directed to re-quantify the same - The imposition of penalty upon them is not justified, same is accordingly set aside: CESTAT

- Appeal allowed: ALLAHABAD CESTAT

CENTRAL EXCISE

2019-TIOL-2994-CESTAT-DEL

Kesri Steels Ltd Vs CCGST, C & CE

CX - Appellant carries on the business of manufacture of stainless steel pattas and pattis - appellant is paying CE duty under the special procedure or compounded levy scheme vide notification no.17/2007-CE read with rule 15 of Central Excise Rules - it appeared to Revenue that since the appellant have six cold rolling machines in their factory during the month of August, 2012 to October, 2012 they were required to pay duty on the basis of six machines - accordingly, it appeared that appellant have short paid the duty of Rs.3.70 lakhs which appeared to be recoverable alongwith interest and further penalty was also proposed - the Assistant Commissioner dropped the SCN, relying on the ruling of Rajasthan High Court in the case of Jupiter Industries - 2006-TIOL-459-HC-RAJ-CX wherein it has been held that no duty is leviable for the period when machine is not installed/operated - on appeal by Revenue, the Commissioner (Appeals) confirmed the demand of duty on four machines - appellant before CESTAT.

Held: There is no evidence on record that the appellant have operated more than two machines in violation of the declaration - further, the finding of the Commissioner (Appeals) is erroneous wherein he has observed that the appellant have not led any evidence to support that they have only operated two machines and not four machines, in contrary to its submission/ written submission -this finding cannot stand in view of the monthly declaration filed by the appellant at the end of each preceding month wherein they have declared the number of cold rolling machine employed as two -further, Revenue has not brought any evidence on record that the appellant have operated more than two machines during the disputed period, in violation of their declaration -thus, the SCN is presumptive having no legs to stand -accordingly, appeal is allowed and the impugned order set aside - thus, the O-I-O stands restored : CESTAT [para 4]

- Appeal allowed: DELHI CESTAT

2019-TIOL-2993-CESTAT-DEL

Kareli Sugar Mills Pvt Ltd Vs CGST

CX - Whether the iron and steel items (angle, channel, joist, bar plate sheet and coil) can clearly fall under the definition of capital goods and the inputs.

Held: Sub clause (i) of rule 2(a) of Cenvat Credit Rules, 2004 [CCR] makes it very clear that any item other than those falling under Chapters 82, 84, 85 and 90 will not be a capital goods - apparently and admittedly the impugned iron and steel items are falling under chapter 72 - from the appellant's own submissions, it is clear that appellant has been using these iron and steel items for the purpose of constructing roof, platforms and columns - as is very much apparent from the terminology used, the items are used purely for the construction activity - nothing found on record as may show that these items have been used in such a structure which is used in or integrally connected with the process of actual manufacture of the final product - the reliance of the appellant on the Circular No.267/11/2010 dated 8.7.2010 is also not applicable to the given facts and circumstances, as the structures for which the impugned iron and steel items have been used, there is no evidence to show those structures to be the integral part of the manufacture process yielding sugar and molasses as the final product - in absence thereof, it is held that Commissioner (Appeals) has rightly confirmed the non eligibility of the appellant to avail the cenvat credit on the impugned items - the Adjudicating Authorities below have rightly relied upon rule 9(6) of CCR - in view thereof, the act of the appellant has rightly been held as suppression of relevant facts - resultantly, no infirmity found as far as the imposition of penalty under the impugned order is concerned - in view of the above, the iron and steel items do not fall either under the definition of capital goods or under definition of inputs under section 2(a) and 2(k) of the CCR - appellant, accordingly, was not entitled to avail the cenvat credit - the recovery thereof as claimed vide the impugned SCN has rightly been confirmed vide the Order under challenge - same is accordingly upheld - appeal is hereby rejected : CESTAT [para 6, 7, 9, 10]

- Appeal rejected: DELHI CESTAT

2019-TIOL-2992-CESTAT-MAD

Sri Kaliswari Fireworks Pvt Ltd Vs CCE

CX - When duty has been paid by the supplier at a particular rate availing a particular exemption notification and also invoices have been issued accordingly, whether the jurisdictional officers of the recipient assessees can dispute the assessment of duty and say that less duty was payable or no duty was payable and on that ground deny CENVAT credit to the recipient.

Held: Issue has been settled by Apex Court in the case of MDS - 2008-TIOL-245-SC-CX- the ratio of this judgment was followed in several cases by this Tribunal - at any rate, even with respect to jurisdiction, the officers at the recipient end have no jurisdiction of the assessment done by the supplier-manufacturer - in case they did have the jurisdiction over the supplier-manufacturer, a notice should have been issued to such supplier-manufacturer who is alleged to have wrongly assessed and paid excise duty - by no stretch of imagination can the recipient of CENVAT invoices along with the goods be expected to understand or anticipate how much duty was actually to be paid by the supplier and take credit accordingly - a plain reading of the CENVAT Credit Rules, 2004 also provides for credit of duty paid and not credit of duty that should have been paid -therefore, there is no scope for the credit to be altered from the amount of excise duty which has been paid as shown in the input invoices - in view of the above, that all the impugned orders need to be set aside - appeals are allowed by setting aside impugned orders: CESTAT [para 7, 8, 9, 10]

- Appeals allowed: CHENNAI CESTAT

CUSTOMS

Naushie Exports Vs CCE

Cus - The petitioner challenges an order of Customs and Central Excise Settlement Commission on the limited question of imposition of interest - The contention of revenue was that the payment of interest ought to be as per the terms of contract between the petitioner and the authorities, being 15%, whereas the Settlement Commission, taking note of the changes in FTP and the provisions of Section 127H of Customs Act, 1962 dealing with the power to grant immunity from interest, passed an order granted partial immunity from payment of interest in excess of 10% simple interest per annum - The judgment of Supreme Court in Rexnord Electronics - 2008-TIOL-35-SC-CUS has been applied by a Judgement in case of FAL Industries Limited - The Settlement Commission has taken note of provisions of Section 127H and has exercised discretion concluding that interest upto 90% would be liable to be waived - Upon perusal of relevant portion of impugned order, no reasoning found for conclusion by the Bench - Matter is remanded back to the file of Settlement Commission to be decided afresh in accordance with law: HC

- Writ petition disposed of: MADRAS HIGH COURT

2019-TIOL-2991-CESTAT-MUM

Amit Rajkumar Singhania Vs CC

Cus- Based on the specific information that certain unscrupulous persons using the bogus/forged documents to smuggle substantial quantity and undeclared items of mobile accessories/ readymade garments/fabrics from China, Hong Kong South Korea Istanbul and other countries to evade payment of duty, investigations were initiated and consignments imported against 12 Bill of Entries filed by M/s.Chitalia Logistics Pvt. Ltd (CHA) were intercepted-after completion of investigations,SCN was issued to the importers and all other concerned with import of the said goods asking them to show cause as to why the imported goods which have been (i) misdeclared in respect of value be not confiscated (ii) imported in contravention of provisions of IPR (Imported Goods) Enforcement Rules, 2007 be not confiscated absolutely (iii) differential duty on the imported goods be not demanded and recovered from them under section 28(4) of the Customs Act, 1962 [Act] along with appropriate interest under section 28AA ibid (iv) penalties should not be imposed on them under section 112 or 114A of the Act (v) amounts already deposited by them during the course of investigation be not appropriated against the liability of Customs duty, Interest or any another liability that may arise-vide impugned order, goods confiscated/confiscated absolutely, demands confirmed, amounts deposited appropriated, redemption of goods allowed on payment of redemption fine [RF], penalties imposed- appeal to CESTAT.

Held- The goods imported by the appellants have been confiscated in the impugned order under following categories: (a) Counterfeit goods imported in contravention of IPR (Imported Goods) Enforcement Rules, 2007- these goods have been confiscated absolutely in terms of section 111(d), (l) & (m) of the Act- appellants do not seriously dispute the order of confiscation of these goods (b) Imported goods mis-declared in terms of value-these goods have been confiscated but have been allowed to be redeemed on the payment of RF imposed- despite the appellants' submissions that value has been sought to be enhanced on the basis of dubious and flimsy material the Bench is not in a position to accept the said submissions-from paras 19.3 and 21 of the impugned though, the Bench is convinced that the importers had misdeclared the value, but it is also found that the value determined by the revenue is also determined in arbitrary manner and on the basis of various assumptions and presumptions-hence the quantum of undervaluation determined by the revenue can always be debated-further, it is a fact that appellants have before the Commissioner asked for cross examination of various persons associated with market enquiry-Commissioner has denied the cross examination-in the case of the type before the Bench where the value has been determined on the basis of the market inquiry, Commissioner should have normally allowed cross examination and supplied all the documents, which formed the basis of valuation to the appellants- however, in view of specific concession made by the appellants' counsel during the course of hearing that with the passage of time (nearly two years from date of importation), the goods have become junk and they do not intend to clear the same for DTA market, the issue in respect of the re-determination of the assessable value under section 14 has become a mere technical and administrative formality and dispute-suffice to say that appellant importer had mis-declared the goods in terms of value, quantity and description- for the mis-declaration of the goods in terms of value, quantity and description, it is held that goods are liable for confiscation under section 111 (m) and (o) of the Act: CESTAT [para4.1, 4.3, 4.5, 4.6]

Since the goods have been intercepted and seized prior to the clearance of the goods, the proceedings against the said goods could have been initiated only under section 124 of the Act and the goods confiscated under section 125 (1)- in case the goods are not confiscated absolutely, the officer adjudging the case is required to give the option to redeem the goods against the RF which needs to be determined by him-in the present case in respect of the :(i) four Bills of Entry filed in the name of Appellant 2, Commissioner has imposed RF of Rs.17 lakhs without pointing out any reason for determining the RF-even if the extent of undervaluation is taken into account, the total difference in the value as declared and the value as determined by the revenue in these proceedings is Rs.39.00 lakhs- taking into account the value re-determined, the RF imposed is much on higher side and the same is reduced to Rs.3.50 lakhs (ii) six Bills of Entry filed in the name of Appellant 3, Commissioner has imposed redemption fine of Rs.35 lakhs without pointing out any reason for determining the RF-even if the extent of undervaluation is taken into account, the total difference in the value as declared and the value as determined by the revenue in these proceedings is Rs.1.08crore- taking into account the value re-determined, the RF imposed is much on higher side and the same is reduced to Rs.7 lakhs: CESTAT[para4.8]

The demand of duty made by invoking the provisions of section 28, prior to redemption of the goods is totally premature: CESTAT [para 4.9]

From the plain reading of section 114A, it is evident that penalty under the said section can be imposed only if there is demand confirmed under section 28(8) of the Act-since the Bench is not in a position to uphold the demand of duty made under section 28, the Bench is not in a position to uphold the penalties imposed under section 114A-further, as per the proviso to section 114A, the penalties could not have been imposed simultaneously under that section and section 112-to overcome the said proviso, Commissioner has imposed penalty under section 114A on the firm and penalty under section 112 on the proprietor of firm-the Bench cannot agree with the said approach as it is settled law that the proprietor and proprietorship firm are single identity for all the purpose-thus the Bench sets aside the penalties imposed by the Commissioner under section 114A of the Act: CESTAT[para4.13]

Penalties under section 114AA could have been imposed if the revenue was able to prove that forged/fake documents were caused to be filed for clearance of the goods- in the entire order,the Commissioner has not recorded a finding to that effect-accordingly the penalties imposed under section 114AA are set aside: CESTAT[para4.14]

Since it is held that goods imported are liable to confiscation under section 111, the persons who have by their act of omission or commission rendered the goods liable to confiscation are liable to penalty under section 112-hence the penalties imposed under section 112 are upheld-in terms of section 112(ii), the penalty imposed could have been upto 10% of the duty sought to be evaded-in respect of Appellant 2, the total duty sought to be evaded is Rs.8.08 lakhs and in respect of Appellant 3, it is Rs.22.89 lakhs- accordingly, the maximum penalty that could have been imposed in terms of the said section could have been Rs.80,838/- on Appellant 2 and Rs.2.28 lakhson Appellant 3- the ends of justice will be met if the penalty imposed on Appellant 1 to 5 under section 112 of the Customs Act is reduced to 10% of that has been imposed by the Commissioner-accordingly the penalties imposed on each of appellant under section 112 are reworked and upheld as follows : (1) AmitSinghania- Rs.60,000/- (2) JituSharadShirsat, Proprietor, J.S.Enterprises- Rs.23,000/- (3) Nilesh Ramesh Jadhav, Proprietor, Amit Enterprises- Rs.45,000/- (4) M/s.Chitalia Logistics Pvt. Ltd.- Rs.50,000/- (5) Shri Manish Barot- Rs.75,000/-: CESTAT[para 4.15 ]

It has been submitted that since the initiation of proceedings, ShriNilesh Ramesh Jadhav, Proprietor of Amit Enterprises has expired and hence the proceedings against him and his proprietorship concern should abate-in view of the law laid down by the Apex Court in the case of Shabina Abraham- 2015-TIOL-159-SC-CX , the proceedings initiated against the deceased appellant should abate- however, only those proceedings which are in personam can abate under the Act-proceedings qua the clearance of imported goods cannot abate because in that case the ownership of the goods will be lost and any person who claims to legal heir of said person cannot get the goods cleared-thus, the order in respect of the goods imported against the six bill of entries filed by M/s.Amit Enterprises will have to be modified to permit the redemption of the goods to legal heirs of the importer: CESTAT[para4.16]

Commissioner has by the impugned order imposed penalty under section 117 of the Act on the Appellant 6, who is Director of the Custom Broker firm-from the reading of the section 117 of the Act, it is quite evident that penalty under this section could be imposed only for contravention of the provisions of the Act, either directly or indirectly by abetting in such contravention or for failure to comply with the provisions of the of the Act- Commissioner has while discussing the role of Appellant 6, not identified the provision of the Act which has been contravened by him directly or indirectly by him-the Bench is not in a position to uphold the penalty imposed by the Commissioner under the said section-supervisory failure by the employer over his employee cannot be the ground for imposition of penalty under this section, even if the employee has been found abetting or involved in the act of smuggling of goods by mis-declaration, suppression or fraud-penalty which is punitive in personam cannot be imposed for the offences committed by someone else (employee) for the reason of employment contract-hence the penalties imposed by the Commissioner on Appellant No 6, under section 117 are set aside: CESTAT[para4.17]

In view of the above, the appeals filed by the six appellants are disposed of as follows: (i) the goods imported against the Bill of Entries filed in the name of proprietorship concerns of appellant 2 and 3 are confiscated as per the impugned order (ii) the goods which are not in contravention of IPR (Imported Goods) Enforcement Rules, 2007 are allowed to be redeemed on payment of RF of Rs.3.5 lakhs by Appellant 2 and Rs.7 lakhs by Appellant 3 (iii) penalties imposed under sections114A, 114AA and 117 of the Act on Appellant 1, Appellant 2, Appellant 3, Appellant 4, Appellant 5 &Appellant 6 are set aside (iv) penalties imposed under section 112 on Appellant 1, Appellant 2, Appellant 3, Appellant 4 and Appellant 5 are upheld but are reduced as indicated above- upon death of proprietor of M/s.Amit Enterprise (Appellant 3) the penalty proceedings against him abate (v) with the above modification, the impugned order in respect of six appellants is upheld (vi) it is made clear that nothing in this order should be construed as a finding or decision in respect of any other person referred to in the impugned order but not in appeal before the Bench (vii) all the appeals are disposed of accordingly: CESTAT[para5.1]

- Appeals disposed of: MUMBAI CESTAT