2019-TIOL-3084-CESTAT-DEL
Mammen Engineering Works Vs CCE & C
ST - Appellant is a sub-contractor and had received payment of Rs.19.30 crores for fabrication, erection and commissioning work of the main contractors - it did not pay ST for the reason that the works order required ST to be paid by the main contractors - however, a SCN dated 19.10.2012 was issued to the appellant alleging non-payment of ST even though it was required to pay the ST in terms of the CBEC Circular dated 4.1.2008 - extended period of limitation invoked - demand confirmed along with interest, penalties imposed under sections 76 and 78 of the Finance Act, 1994 [Act] - appeal to CESTAT.
Held: It cannot be urged that there was any willful suppression of facts with an intention to evade payment of duty as is the requirement of section 73(1) of the Act - there were conflicting decisions of the Tribunal in this regard and it is for this reason that the matter had been referred to a Larger Bench of the Tribunal - in fact, under the terms of work order also, it was the main contractor who had to discharge the ST liability and the appellant had also not collected any ST from the main contractors - this apart, it is not in dispute that the main contractors had actually deposited the ST - the Commissioner failed to examine the reply filed by the appellant on this issue and has invoked the extended period of limitation in the impugned order only for the reason that facts came to the notice of the Department only when an audit was carried out and that the appellant had also not mentioned the amount in the ST-3 returns - the appellant could have been under a bona fide belief that neither ST was required to be collected from the main contractor nor was it required to be deposited with the Government - such being the position, the Commissioner fell in error in invoking the extended period of limitation - the matter, therefore, needs to be remitted to the Commissioner to calculate the ST liability for the period prescribed under section 73(1) of the Act without invoking the proviso that seeks to extend the period of limitation - the appeal is allowed only to the extent indicated above and the order passed by the Commissioner stands modified, accordingly : CESTAT [para 10, 11]
- Appeal partly allowed/matter remanded: DELHI CESTAT
2019-TIOL-3083-CESTAT-DEL
Leisure Hotels Ltd Vs CCGST, C & CE
ST - (i) Whether for the period August, 2008 to June, 2012, the buildings (at Corbett Ramnagar & Naukuchiyatal) which were rented, covered in the definition of immovable property, and appellants were, therefore, liable for payment of ST under the provisions of Finance Act, 1994 [Act] (ii) Whether w.e.f. 1.7.2012, the appellants are eligible for abatement of 40% in terms of notification no. 26/2012 (iii) Whether the appellants are liable for payment of ST on letting out plant/machinery and fixtures to M/s. Mahindra Holidays & Resorts India Ltd. [MHRIL] under Supply of Tangible Goods [SOTGS] (iv) Whether extended period of limitation is invokable (v) Whether penalty under sections 77 and 78 is imposable.
Held: The facts in the case of Ramkumar Giri - 2018-TIOL-3563-CESTAT-MAD relied upon by the Revenue are not applicable to the present case - rather the facts are akin to the ruling in the case of Jai Mahal Hotels Pvt. Ltd. - 2014-TIOL-992-CESTAT-DEL wherein it has been held that on true and fair construction of the provisions of Exclusionary Clause under Explanation I to Section 65(105) (zzzz) and in particular, sub-clause (d) thereof, it was held that renting of building used for the purpose of accommodation including hotels, meaning thereby renting of a building for a hotel is covered by the Exclusionary Clause and does not amount to an immovable property, falling within the ambit of taxable service - accordingly, it is held that for the part of the disputed period August, 2008 to 30.6.2012, the appellant is not liable to ST - for the period from 1.7.2012, the appellants have admittedly deposited the ST and has not disputed their liability, subject to abatement - under the facts and circumstances, the appellant, as provided in notification no. 26/2012-ST, is entitled to abatement of 40% and is liable for ST only on the balance receipt of 60% with respect to the lease rent of the hotel - so far as the liability to ST under SOTG is concerned, under the facts and circumstances, it appears that the amount received per annum is not wholly for supply of tangible goods, as the plant and machinery, which are embedded to the earth and the fixtures and fittings, which cannot be removed without cannibalising them, and their removal may destruct, is not classifiable as goods, as the same are immovable - further, as the appellant remains owner of the hotel premises, the goods or fittings therein which have been made available to the lessee, do not amount to delivery, as the goods in question are in the constructive possession of the appellant - accordingly, the appellant shall not be liable to ST under the category of SOTG on the goods which are present in the hotel premises, which are immovable in nature - accordingly, this issue is remanded to the Adjudicating Authority for a re-determination in view of the findings and observation of the Bench - the appellant is also directed to furnish the details to the Adjudicating Authority with respect to the value of the plant and machinery/fixtures which are not movable and the goods which are movable, so as to work out the proportionate amount towards movable goods for calculation of ST - so far the penalties are concerned, the issue is wholly interpretational in nature - further, the transaction is duly recorded in the books of accounts maintained in the ordinary course of business and thus, there is no contumacious conduct on the part of the appellant - accordingly, the penalty under sections 77 and 78 of the Act is set aside - thus, the appeal is allowed in part, as indicated above - the appeal filed by the Department is accordingly rejected: CESTAT [para 13, 14, 15, 16]
- Appeal of Assessee partly allowed/ Appeal of Revenue rejected: DELHI CESTAT
2019-TIOL-3081-CESTAT-DEL
Leo Coal Movers Pvt Ltd Vs CC, CE & ST
ST - The issue relates to the short payment of ST amounting to Rs.1.76 lakh for the year 2007-08 by the appellant.
Held: It is not in dispute that before the introduction of the Point of Taxation Rules, 2011, w.e.f. 1.7.2011, the appellant could have discharged ST liability on receipt basis even though the ledger was maintained on accrual basis - if that be so, then it is clear from the financial summary submitted by the appellant, that the short paid ST demanded in the SCN to the extent of Rs.1.76 lakh is towards receipts issued in 2007-2008 for an amount of Rs.14.27 lakhs, which amount the appellant received in the month of April, 2008 - the adjudicating authority has not accepted this contention of the appellant only for the reason that the figures in the two challans do not correspond to tax liability of Rs.1.76 lakh - the adjudicating authority committed an error in rejecting this contention of the appellant for the reason that the tax amount mentioned in the two challans would also include that tax amount for the other amount received by the appellant in the month April, 2008 - it would have been different if the amount mentioned in the Challans was lesser than Rs.1.76 lakh because in that case the appellant would not have discharged the entire tax liability - the Commissioner (Appeals) completely failed to advert to this issue in the order even though the said submission was noticed by the Commissioner (Appeals) in the impugned order - such being the position, there is no short payment of ST for the period in issue - the impugned Order, therefore, cannot be sustained - it is accordingly set aside - the appeal is accordingly, allowed: CESTAT [para 16, 17, 18, 19, 20]
- Appeal allowed: DELHI CESTAT
2019-TIOL-3079-CESTAT-DEL
MP Security Force Vs CCE & ST
ST - Appellant is a proprietary firm of Shri Lakhan Lal Soni and is registered with the CE Department for providing of 'security service' and 'manpower supply services' - acting on intelligence that the appellant has suppressed the value taxable service, the DGCEI, conducted a search on 25.8.2011 at the appellant's office - during the search, various incriminating documents were recovered, which indicated that the appellant was not paying ST on the entire value of services rendered by them to their clients - after completion of investigation, SCN issued - demand of ST of Rs.2.15 crore along with interest confirmed, penalties imposed under sections 76, 77 and 78 of the Finance Act, 1994 [Act] - appeal to CESTAT.
Held: As far as the demand is concerned, the Advocate of the appellant has conceded that the appellant collected ST from the service recipients, but did not deposit the same with the exchequer - he, however, made a plea regarding exclusion of payments made towards the salary, wages, EPF and ESI from the computation of 'gross value' for the purpose of payment of ST under the provisions of section 67 of the Act and also for the waiver of the penalty as proposed in the impugned order - it is evident from the provisions of the Employees Provident Fund [EPF] Act and Employees State Insurance [ESI] Act that the contributions made towards the two Acts are in the nature of statutory contribution and required to be deducted by the appellant as immediate employer on behalf of Principal Employer - thus, following the ratio laid down in the case of Intercontinental Consultants & Technocrats Pvt. Ltd. - 2012-TIOL-966-HC-DEL-ST ], these contributions cannot be treated as value of such service under section 67 of the Act - therefore, there is no authority provided in the law for subjecting these contributions to ST under section 67 of the Act - the provisions of the EPF and ESI Act makes it clear that it will be the primary responsibility of the principal employer to deduct amount towards the PF and deposit the same with the Central Government - the appellant in this case claimed that it has deducted the contributions on behalf of principal employer, that is recipient of the service, for remittance to the competent authority in terms of the provisions of EPF and ESI Act - the contributions made towards PF & ESI is, therefore, not required to be added for the purpose of calculation of the gross amount under section 67 of the Act, if the same has been deposited with the Government - the issue regarding valuation of taxable services has been the subject matter of decision of Delhi High Court in case of Intercontinental Consultants & Technocrats Pvt. Ltd. (supra), which has been affirmed by Supreme Court - 2018-TIOL-76-SC-ST wherein it is held that under provision of section 67 (1) of the Act only service element has to be included for gross amount of "such services" - in view of the above, the contributions made towards EPF and ESI are not liable to be included for the computation of gross amount under section 67(1) of the Act - as far as the abatement towards deduction of wages and salaries paid to the personal employees by the appellant is concerned, the same is covered by the decision of Mumbai Bench of this Tribunal in case of Security Guards for Greater Bom. & Thane Dist. - 2017-TIOL-69-CESTAT-MUM , wherein it is held that wages and allowance including salary and administrative charge collected from client is excludible from the gross value of taxable service in terms of section 67 of the Act - it is, accordingly, held that the appellant is entitled for the abatement towards the payment made on account of contribution towards ESI, EPF and PF and also towards wages and salaries while computing the assessable value in terms of section 67 of the Act for the payment of ST - accordingly, the impugned order is set aside and appeal allowed by way of remand to the original adjudicating authority to re-determine the ST required to be paid by the appellant in the light of the findings hereinabove - in addition to ST payable, the appellant will be liable to pay interest and penalty on the re-determined ST liability - it is also found that the appellant failed to deposit the ST even after collection so the case of waiver of penalty under section 80 of the Act is not made - in the result, appeal is allowed by way of remand in the above terms : CESTAT [para 6, 7, 8, 9, 10, 11, 12, 13]
- Appeal allowed by way of remand: DELHI CESTAT
2019-TIOL-3078-CESTAT-KOL
Mackintosh Burn Ltd Vs CST
ST - (i) Whether the Commissioner has traversed beyond the scope of the Show Cause Notice and (ii) Whether the Commissioner was right in denying Cum Duty benefit as requested by the appellants.
Held: It is found that by applying the ratio of the Apex Court judgments in the cases of Ballarpur Indust. Ltd. - 2007-TIOL-153-SC-CX , Shital International [ (2011) 1 SCC 109] and Prince Khadi Woollen Handloom Prod. Co-op. Indl. Society [1996(88) ELT 637 (SC)], the Counsel of the appellant submitted that the Commissioner has gone beyond the scope of the SCN while passing the impugned order whereas the Authorised Representative of the Revenue vehemently opposed the contentions and said that only when the appellants have submitted that a part of the demand has been paid through cenvat credit, the Commissioner had to go into the issue to find that - the Commissioner held that the condition for allowance of cenvat credit in respect of input service is as per rule 4 (7) of the Cenvat Credit Rules, 2004 - in case, the Commissioner felt/found that any of the claim of the appellants about the payment were incorrect, he has given a finding on the same without going into the liability of the cenvat credit - it is found that for this issue, it is required to go through the claim of the appellants about the arithmetical correctness of the duty paid by them through cenvat credit, verification needs to be undertaken by the Adjudicating Authority - for this reason, the issue needs to travel back to such Authority - coming to the issue of admissibility of Cum Duty value while computing the duty liability, the appellants are a Public Sector Undertaking and as such, as held by the Tribunal as well as various Courts mens rea cannot be assumed in respect of PSUs - it was consistently held that no particular person or officer could be benefited by such suppression/mis-declaration by the Organization - therefore, the appellants are entitled to the benefit of Cum Duty price - the amounts received by the appellants from their Customers should be treated to be inclusive of ST and accordingly, the liability of ST re-calculated - for this purpose also, the impugned order needs to go back to the Adjudicating Authority - in view of the findings of the Bench, suppression etc., cannot be imputed to the appellant - penalty imposed is not sustainable, however, they shall be liable to pay interest on the duty arrived at in terms of the above - in view of the above, the appeal is allowed by way of remand to the Adjudicating Authority : CESTAT [para 7, 8, 9]
- Matter remanded: KOLKATA CESTAT
2019-TIOL-3077-CESTAT-MUM
Maersk Global Service Center India Pvt Ltd Vs CCGST
ST - Refund of CENVAT - Rule 5 of CCR, 2004 - Appellant is engaged in the activities of providing 'Business Support Service" to its clients, situated outside India - during the period from April' 2013 to June' 2015, the appellant had filed refund applications, claiming refund of ST paid on input services - in the impugned order, the Commissioner (Appeals) had denied the refund benefit in respect of the ST paid on the input services namely, Manpower Recruitment or Supply Agency Services, Tele-communication Service, Legal Consultancy Service, Works Contract Service, Renting of Immovable Property Service, Courier agency service - appeal to CESTAT.
Held: Manpower Recruitment or Supply Agency Service and Telecommunication Service - The refund benefit has been denied on the ground that the invoices issued by the service provider had mentioned the address of the appellants' Head Office instead of the address appearing in the registration certificate - the fact is not in dispute that the input services were consumed by the appellant in its Airoli Unit, for use/utilization in the output services exported by it - thus, mere mentioning of address of the Head Office instead of such unit in the invoices will bear the character of a technical lapse and the original authority is competent to condone such lapses in terms of sub-rule (2) of Rule 9 of the Cenvat Credit Rules, 2004 [Rules] - accordingly, the mater should be remanded to the original authority for verification of the invoices and other particulars and thereafter to extend the refund benefit, if the services were used in the Airoli Unit for providing output service: CESTAT
Works Contract Service - There is no specific finding by either of the authorities that the works contract service was availed by the appellant for the interior works or for other activities in respect of construction of buildings - for ascertaining the eligibility of input service, since the fact has to be verified, the matter is also remanded to the original authority to find out the activities undertaken by the appellant with regard to such service - if the service is other than the construction of building or civil structure, refund benefit should be extended to the appellant: CESTAT
Renting of Immovable Property - Department has accepted the refund claim by the appellant but denied the claim on maintenance charges claimed by these service providers - since the maintenance charges collected by the service providers were in context with the property which was rented out by him, such maintenance charges should also be considered as part and parcel of renting of immovable property for the purpose of levy of service tax and also claim of the refund benefit - thus, denial of benefit on such service is not proper and justified: CESTAT
Legal Consultancy Services, Courier Agency services, Manpower Recruitment and Supply Agency Services etc. - The original authority had denied the refund benefit on the ground that invoices were not submitted by the appellant - the appellant submits that all the relevant invoices are available with the appellant and the same are also placed in the appeal records - in view of the fact that the documentary verification has to be done at the original level, the matter is remanded to the original authority for verification of the documentary evidences to be produced by the appellant: CESTAT
With regards to denial of refund on the ground that the same is barred by limitation of time, it is an admitted fact on record that the refund applications were initially filed through on-line and subsequently filed in manual form along with requisite enclosures - since the claims were lodged on-line, which was accepted in the departmental web-site, the claim applications cannot be considered as barred by limitation of time - further, for consideration of limitation aspect, the Trade Facilitation Notice issued by the Raigadh Commissioner cannot be considered as legal and valid inasmuch as such notice cannot alter the time limit prescribed in the statute - thus, refund application filed by the appellant for the period October 2012 to December, 2012 is not barred by limitation of time: CESTAT
To sum up, these appeals are disposed of in the following terms : (a) Manpower Recruitment and Supply Agency Service/Telecommunication Service - t he matter is remanded to the original authority to verify whether the ST has been paid on the taxable service and whether the services were received in the Airoli Unit of the appellant (b) Works Contract Service, Legal Consultancy Service, Courier Service - remanded to the original authority for fresh adjudication in line with the above observations (c) Works Contract Service, Legal Consultancy Service, Courier Service - appeal allowed (d) Maintenance charges paid in respect of Renting of immovable property should be considered as input service for the purpose of claim of benefit of refund - appeal allowed [para 5, 5.1, 5.2, 5.3, 5.4, 5.5]
- Appeals disposed of: MUMBAI CESTAT
2019-TIOL-3073-CESTAT-DEL
Mahima Real Estate Pvt Ltd Vs CC & CE
ST - SCN was issued to the appellant demanding ST of Rs.1.06 crore - this amount was for the following three services provided by the appellant: (i) appellant had not paid ST amounting to Rs.88.24 lakhs during the period 1.4.2007 to 31.8.2012 in respect of Corpus Fund, Escrow Fund and Maintenance Security Deposit obtained from buyers of immovable property, under the category of 'Management, Maintenance or Repair' service under section 65 (105) (zzg) read with section 65(64) of the Finance Act, 1994 [Act] (ii) appellant had not paid ST of Rs.4.03 lakhs during the period 1.7.2010 to 31.8.2012 in respect of late payment charges recovered from prospective buyers of immovable property, and (iii) appellant had short paid ST to the tune of Rs.14.46 lakhs during the period 1.07.2011 to 30.9.2012 as the appellant had paid ST on receipt basis instead of accrual basis - demand confirmed along with interest, penalties imposed under sections 76, 77 and 78 of the Act, hence appeal to the CESTAT.
Held: Corpus Fund, Escrow Fund obtained from buyers of immovable property - in the instant case, the Commissioner, without any evidence to substantiate that the aforesaid amount before it is transferred to the society was actually utilized by the appellant for providing any service, the amount so collected from the buyers would not result in provision of any service - there is also no allegation in the SCN that the aforesaid amount before it is transferred to the society was actually utilized by the appellant for replacement of lifts/generators or the transformers - in the absence of any specific finding that the amount before it is transferred to the society had actually been utilized, no ST could have been levied as the appellant in such a case would not be providing any service - in the case of Vijay Shanthi Builders Ltd. - 2017-TIOL-3845-CESTAT-MAD , the Tribunal examined the demand made under Management, Maintenance or repair service on the Corpus Fund collected by the appellant therein and observed that the demand of ST on such deposit under the category of management, maintenance or repair service is unsustainable - it was, only to ascertain whether these funds had been used, that the matter was remanded - in the present case also, the Bench considers it appropriate to remand the matter for a consideration as to whether the Corpus Fund/Escrow Fund before transfer of the said fund to the society was utilized by the appellant for replacement of any of the items for it is only in such a situation that it could be levied to ST: CESTAT [para 13, 14, 15]
Maintenance Security Deposit obtained from buyers of immovable property - the contention of the appellant is that it is distinct from "maintenance charges" and since the refundable maintenance security deposit is ultimately transferred by the appellant to the resident co-operative society, it cannot be said that the maintenance security deposit is towards any service - the maintenance security deposit is to cover an exigency when the owner of the house does not pay the maintenance charges after the society is formed - it has, therefore, to be ascertained whether this amount before it is transferred to the society has been utilized - this aspect of the matter, therefore, also needs to be examined on remand: CESTAT [para 16]
Late payment charges recovered from prospective buyers of immovable property - any additional amount collected towards delay in making the payment of the installments cannot be subjected to levy of ST - this position stands clarified by the CBEC Circular dated 3.8.2011 - the Commissioner was, therefore, not justified in confirming the demand: CESTAT [para 21, 22]
Short payment of ST on account of payment made on receipt basis instead of accrual basis - appellant submitted that there was no deliberate attempt on part of the appellant not to make payments of ST since the appellant had been making the payments on receipt basis instead of accrual basis - the contention of the appellant appears to be justified as it was only with effect from 1.7.2011 that the system of payment of ST was changed from receipt basis to accrual basis - this amount was also deposited by the appellant before the issuance of the SCN - in such circumstances, no penalty should have been imposed in view of the provision of section 80 of the Act: CESTAT [para 25, 26]
Limitation: It would, therefore, not be necessary to examine the contention of the appellant relating to invocation of extended period of limitation since the entire demand made in the impugned order is not justified - thus, for all the reasons stated above, the impugned order cannot be sustained and is set aside - the matter is remanded to the Commissioner only to examine whether the appellant had actually utilized any of the amount deposited by the buyers/occupants of the constructed property towards Corpus Funds/Escrow Fund/Maintenance Security deposit before transferring the amount to the Society, because it is only in such a situation that ST would be levied on the amount so spent - the appeal is allowed to the extent indicated above: CESTAT [para 27, 28]
- Appeal partly allowed/partly remanded: DELHI CESTAT
2019-TIOL-3066-CESTAT-AHM
Sai Utsav Services Vs CCE & ST
ST - This appeal has been filed against confirmation of demand of service tax, interest and imposition of penalties under Sections 76 and 78 of FA, 1994 - The assessee argued that they are not contesting the demand on merits except for the demand on contract in respect of Reliance Fresh Limited - It has been argued that service provided to Reliance Fresh Limited is not Manpower Recruitment or Supply services as the Manpower deployed for the purpose of handling agricultural produce is not working under the directions and control of the service recipient but under the directions and control of assessee - It is seen that this specific assertion was made before the lower authorities but the same is not contested or refuted by the impugned order - The agreement with Reliance Fresh Limited also indicates that the contract is a Work Order though the payment has been made on the strength of man-days provided - The contract is for handling the agricultural produce and not for supplying the manpower - Moreover, in the case of M/s. Shaily Traders as well as in the case of M/s. Shri Ramdhar Singh , in similar circumstances, it has been held that such services are not liable to tax under Manpower Recruitment or Supply Agency Service - Accordingly, the demand on the said service provided to M/s. Reliance Fresh Limited is set-aside along with penalty and interest - It is also noticed that penalty has been imposed under Section 76 and 78 of FA, 1994 - It is a settled law that penalties under both the sections simultaneously cannot be imposed, the penalty imposed under Section 76 is set-aside - Since the demand relates to supply of Manpower to Reliance Fresh Agency is set-aside, the penalty imposed under Section 78 to that extent is also set-aside: CESTAT
- Appeal partly allowed: AHMEDABAD CESTAT
2019-TIOL-3065-CESTAT-MAD
Simfra Frozen Foods Pvt Ltd Vs CGST & CE
ST - The assessee has never supplied any Manpower whereas by virtue of respective agreements, they only carried on assigned work on job work basis for which, the materials were supplied by assessee - This, according to the assessee, is not amenable to Service Tax - One of the sample Bills reproduced by First Appellate Authority is not the only activity performed by workers engaged by said contractor and nor does the relevant agreement say that the agreement/contract entered into with the particular contractor, or any other contractor for that matter, was only for processing and cleaning because all the agreements are similarly worded - The First Appellate Authority holds in respect of two contractors that the agreements/contracts in question were for job work and deletes the tax demand which was raised by holding that the agreements were not for supply of Manpower Services, but retains the tag of "Manpower" as against job work in respect of the agreement with M/s. Sri Kavery Agency - Undisputedly, Revenue is not in appeal in respect of other part of Order of First Appellate Authority and therefore, on the very principles of consistency, when there is no change of facts, the impugned order of First Appellate Authority cannot be sustained, since different yardsticks cannot be adopted for identically situated assessees especially when neither SCN nor O-I-O even whispers about any such dissimilarities - There is also no reasoning to accept the contentions of Revenue that agreements/contracts entered with the three contractors are different because, the SCN does not allege any such differences and nor is there any finding to this effect by Adjudicating Authority in O-I-O - Further, from perusal of agreement entered with M/s. Sri Kavery Agency, it is found that the same is specific, for undertaking or carrying out the assigned jobs, for which purpose alone the contractor, i.e., the service provider, shall deploy his Manpower - This is in terms with the Circular No. 190/9/2015-Service Tax - The demand as also the impugned order cannot sustain and hence, the same are set aside: CESTAT
- Appeal allowed: CHENNAI CESTAT
2019-TIOL-3064-CESTAT-BANG
Paypal India Pvt Ltd Vs CCT
ST - The assessee, a SEZ unit is engaged in providing Information Technology Software Services, Business Auxiliary Services and Business Support Services - Under Notfn 12/2013-ST, assessee filed the 11 refund claims - Thereafter, 11 SCNs were issued to assessee as to why the refund claims should not be rejected on the ground of non-submission of documents like original invoice, FIRC copy and Letter of Approval - After following the due process, the original authority rejected the refund claims filed by assessee on entirely new grounds which were not alleged in the SCNs - All the SCNs have been issued only on the ground of non-submission of documents mentioned therein and in SCNs, there is no allegation that the impugned services do not incorporate in the approved list of services by Deputy Commissioner - Further in the O-I-O, the adjudicating authority has admitted that assessee has filed all the documents but still the original authority has rejected the refund claims on entirely new grounds which were not in the SCN - In view of the settled law that the Revenue cannot travel beyond the SCN as held by Supreme Court in case of Ballarpur Industries Ltd. - 2007-TIOL-153-SC-CX and also in Brindavan Bevarages Ltd. - 2007-TIOL-118-SC-CX - In the impugned order services though have been classified under BAS and Management Consultancy Services but in fact some of them are specifically mentioned in the approval list of services and are in the nature of BSS which have been availed in order to provide output services - Further, as per Section 26 of SEZ Act, a unit in SEZ is exempt from payment of service tax under Chapter V of the Act on any taxable service provided to such unit - Similarly, there is exemption from payment of customs duties and excise duties levied on goods brought into the SEZ - The impugned orders are not sustainable in law and accordingly same are set aside: CESTAT
- Appeals allowed: BANGALORE CESTAT
CCE Vs Mali Pipe Industries
CX - Whether M/s. Mali Pipe Industries and M/s. Kumar Polyextrusion are entitled for SSI exemption benefit under notification no.8/2003-CE dated 1.3.2003 separately or the clearance value of M/s. Kumar Polyextrusion be clubbed with that of M/s. Mali Pipe Industries, in considering the said SSI benefit of exemption notification for the latter Unit :
Held: Commissioner (Appeals) has erred in appreciating the evidence as a whole and in particular the control and management of the unit M/s. Kumar Polyextrusion by Shri Kumar Shankar Mali of M/s. Mali Pipe Industries even though on paper both the units were shown and claimed to have separate existence and functions separately carrying out its business of manufacture and sale of goods independent to each other - on the contrary, the entire operation and business of both the units was undoubtedly controlled and managed by one person that is Shri Kumar Shankar Mali, hence, the clearance of both units be clubbed - the facts of the present case are more or less similar to the facts of the case in Libra Engineering Works - 2016-TIOL-2111-CESTAT-AHM and Himgiri Plastics - 2016-TIOL-3195-CESTAT-DEL - in these circumstances, no merit found in the impugned order setting aside the demand arrived at by clubbing the clearance value of M/s. Kumar Polyextrusion with that of M/s. Mali Pipe Industries while considering the benefit of SSI exemption under notification no.8/2003-CE dated 1.3.2003 as amended from time to time - in the result, the impugned order is modified by setting aside the same to the extent of dropping the demand of Rs.27.66 lakhs, interest and penalty on the issue of clubbing of clearance of M/s. Mali Pipe Industries & M/s. Kumar Polyextrusion and the O-I-O to that extent is restored - Revenue appeal disposed of accordingly: CESTAT [para 14, 16]
- Appeal disposed of: MUMBAI CESTAT
2019-TIOL-3080-CESTAT-MUM
Lupin Ltd Vs CCE & ST
CX - Whether duty equal to credit is payable on clearance of cenvat availed Capital Goods by the appellants or duty is payable at the rate and value prevalent on the date of clearance, deeming that the capital goods are manufactured by the appellants and as to whether the demand is barred by limitation.
Held: Department relies on sub-rule (4) of rule 3 of the Cenvat Credit Rules, 2001 and Commissioner (Appeals) has also upheld the same - however, CBEC vide Circular No. 643/34/2002-CX dated 1.7.2002 holds that in that case, it would be reasonable to adopt the value shown in the invoice on the basis of which cenvat credit was taken by the assessee in the first place - in respect of Capital Goods adequate depreciation may be given as per the rates fixed in Letter F.No.495/16/93-Cus IV dated 26.5.1993, issued on the customs side - further CBEC Circular No. 813/10/2005-CX dated 25.4.2005 confirms that in respect of removal of Capital Goods on which credit has been taken under erstwhile sub- rule 1C of 57(AB) of Central Excise Rules, 1944 or under rule 3(4) of Cenvat Credit Rules, 2001 or 2002, the provisions of rule 3(5) of Cenvat Credit Rules would apply - however, Commissioner finds that the above circulars will be applicable only for the period prior to 1.7.2002 and at the time of clearance rule 3(4) was operational - however, this issue has been gone into by the Tribunal in a number of cases - the appellant's case is squarely covered by the decisions in the cases of Asia Brown Boveri [ 2002-TIOL-72-CESTAT-DEL-LB and upheld by the Supreme Court - 2001(131)ELT-T 149(SC)] and Siddharth Tubes Ltd. [2008 (228) ELT 193 (Tribunal-Delhi) and upheld by the Supreme Court - 2016 (342) ELT A21 (SC)] and, therefore, the issue is no longer res judicata - moreover, the demand pertains to February and March 2002 - the SCN is issued on 8.3.2006 - the appellants have been regularly submitting the ER-1 and regular audit of the appellants was also being undertaken - no case of deliberate suppression of facts etc. has been made out by the department - arguably, there were frequent changes of the law and different circulars were issued by CBEC during the relevant time - therefore, there is scope for a different interpretation by the appellants - therefore, extended period can't be invoked under the instant case - therefore, the issue is clearly barred by limitation - the appeal survives both on merits and on limitation - accordingly, the appeal is allowed: CESTAT [para 4.1, 4.2, 4.3, 5]
- Appeal allowed: MUMBAI CESTAT
2019-TIOL-3075-CESTAT-KOL
Mahanadi Coalfield Ltd Vs CCGST & CE
CX - Issue is whether the appellant is eligible to avail cenvat credit of CE duty paid on MS Plates used in repair and maintenance of capital goods.
Held: There is no dispute that the subject goods 'MS plates' has been used for repair or maintenance of Heavy Earth Moving Machinery [HEMMs] used in the coal mines of the appellant - the definition of term 'input' as defined in the Cenvat Credit Rules, 2004 [CCR] includes all goods used in the factory of production unless specifically excluded therefrom - neither of the exclusion clauses provided in the definition of term 'input' under rule 2(k) of CCR is attracted in the instant case - in view of the CBEC clarification vide Circular No. 943/04/2011-CX dated 29.4.2011 [serial no.(3)] after the amendment made in the definition of ‘input' w.e.f. 1.4.2011, no reason found to hold that the goods in question have no relationship with the coal production process - moreover, the Andhra Pradesh High Court has affirmed the decision of this Tribunal in the case of Hindustan Petroleum Corporation Ltd. [2017 (356) ELT A137 (AP) ] wherein the availment of credit on HR Sheets and Plates used for repair and maintenance of storage tanks, considering them to be an integral part of manufacturing, have been upheld - similar view have been taken by the Madras High Court in the case of CCE Trichy vs. CESTAT, Chennai [2014 (309) ELT 71 (Mad)] and in the case of Tamil Nadu Newsprints & Paper Ltd [2017 (357) E.L.T. 60 (Mad.)] - by respectfully following the aforesaid judgments of the High Courts and the decision of this Tribunal in the sister company's case [Final Order No.52767/2018 dated 7.6.2018, as modified vide Misc. Order No.50910/2018 dated 27.12.2018, in the case of South Eastern Coalfields Limited], the appellant is legally entitled to avail the benefit of credit on goods used in the repair and maintenance of plant & machinery which is used in the coal production process - the demand of duty, interest and penalty is, therefore, set aside and the appeal filed by the appellant is allowed: CESTAT [para 6, 7, 8]
- Appeal allowed: KOLKATA CESTAT
2019-TIOL-3074-CESTAT-MUM
CCE Vs Mahanagar Gas Ltd
CE - Whether the discount passed by the respondent @0.70 per kg to BEST during the relevant period June 2009 to April 2010 is admissible or be added to the value as an additional consideration for the CNG sold.
Held: It is not in dispute that by an agreement dated 21.12.2006 with BEST, the respondent agreed to sell/supply CNG at various bus depots of BEST and it is also agreed that necessary infrastructure was to be provided by BEST - also, there was a clause in the said agreement which enabled the respondent to sell CNG to outside vehicles on the terms and conditions to be mutually agreed between the parties - pursuant to the said clause, the respondent entered into a separate agreement with BEST on 12.5.2008 - under the latter agreement, the respondent was allowed to sell CNG to outside vehicles from the premises of BEST, however, on payment of a fixed fee of Rs.35,000/- and variable fees of Rs.0.60 per kg of CNG sold - the revenue's contention is that the revised discount @0.70/- per kg of CNG passed during the period June 2009 to April 2010 to BEST is not admissible being an additional consideration received from BEST in lieu of facilities to dispense the CNG extended by BEST to the respondent - no merit found in the allegation of the Department in as much by the previous agreement dated 21.12.2006, both sides agreed that the respondent would pass a discount @0.60/-to BEST, which the Department never disputed even though under the said agreement, necessary infrastructure for dispensing CNG at the premises of BEST had been provided to the respondent by BEST - the revenue disputed the correctness of the said discount only after the agreement dated 12.5.2008 was executed allowing the respondent to sell CNG to outside vehicles - the second agreement dated 12.5.2008 is a separate transaction between the respondent and BEST for allowing outside vehicles to fill CNG at various filling stations installed by the respondent in the premises of BEST on payment of certain fees by the respondent to BEST - no investigation has been conducted by the revenue to establish the allegation that the discount offered by the respondent to BEST was in lieu of all infrastructural facilities extended by BEST to the respondent - no reason found to interfere with the findings of the Commissioner (Appeals), in para 16 of the impugned order, as in their appeal before this forum also, no contrary evidence has been placed by revenue - consequently, the impugned order is upheld and the revenue's appeal being devoid of merit, accordingly, dismissed: CESTAT [para 7]
- Appeal of Revenue dismissed: MUMBAI CESTAT
2019-TIOL-3063-CESTAT-ALL
CCE & ST Vs Tycon Cables India Pvt Ltd
CX - M/s Tycon Cables India Pvt. Ltd. and M/s Singhal Cable Industries were engaged in manufacture of PVC cables and wires - During search, the revenue recovered certain loose slips and notepads and by entertaining a view that the entries made therein represent the clandestine activities of assessee, initiated proceedings against them - The entire case of the revenue is based on the entries made in said loose papers and notepads which do not stand further investigated by the revenue - It is well settled law that allegations of clandestine removal cannot be upheld on the said basis, unless there is corroborative evidence on record - The revenue has not even been able to find out any such evidence - As such, no infirmity found in impugned order of Commissioner (A): CESTAT
- Appeals rejected: ALLAHABAD CESTAT
2019-TIOL-3062-CESTAT-DEL
Unipack Vs CCE & CGST
CX - The assessee is engaged in manufacture of corrugated boxes - On the basis of an information, premises of assessee was searched and it was noticed that clearances of assessee include that of M/s Unipack Solutions being carried out from the said assessee's premises only - The said premises of M/s Unipack Solutions were also got searched and no manufacturing activity was found there - The department observed that the value of clearances of all the three units was more than 1.5 crore - As such the assessee was observed to have wrongly availed the SSI benefit - The impugned SCN has clubbed value of clearances of assessee and of M/s Unipack Solutions both at Bhiwadi and that a separate SCN was issued to Delhi unit - It is observed that a verification has got done during the original proceeding and the report negated about the value of stock transfer made by Delhi unit to have been added in value of clearances of assessee relying where upon the proposed demand was confirmed - Even Commissioner (A) also sought another report from investigating authorities and provided an opportunity to assessee to represent qua those investigations' reports - Details of total sales and duty liability for the respective years was provided by assessee - However, Commissioner (A) was still of the opinion that no documents enabling necessary verifications were enclosed by the assessee - Assessee instead of providing the noticed shortcoming/lack of documents so as to verify his grievance of double calculation of duty as for as Delhi stock transfer is concerned, the assessee has taken a fresh ground that the turnover of both the Bhiwadi units include the traded goods also - The submission about assessee being manufacturer as well as trader of the similar goods as his final goods, is a pure question of facts - The value of traded goods cannot be included in the assessable value of manufactured goods, no doubt is a legal principle, an issue of law but whether or not the assessee has any trading activity is purely a question of fact - Hence, the same cannot be taken before the Tribunal for a first time rather would have been raised at the first available opportunity - Thus, the fresh document cannot be looked into by the Tribunal - It has to undergo scrutiny/verification at the lower adjudication levels - Matter needs reconsideration by the original adjudicating authority: CESTAT
- Matter remanded: DELHI CESTAT
2019-TIOL-3061-CESTAT-MUM
Mclube Asia Pvt Ltd Vs CCE & ST
CX - The assessee-company manufactures Organic Surface Active Agents and Washing Preparations and availed Cenvat credit of excess duty paid on inputs including service tax paid on commission given for sales promotion - Upon audit, it was pointed out the assessee wrongly availed Cenvat credit of service tax paid on commission on sales, paid to commission agents for sale of goods cleared to customers, which was ineligible for credit u/r 2(l) of CCR 2004 - SCN was issued for recovery of an amount of credit along with interest and penalty - On adjudication, such demands were confirmed and later sustained by the Commr.(A) - Hence the present appeal. Held - Considering a copy of the agreement, it is seen from the relevant paragraphs that free samples for demonstration purposes were to be provided by the manufacturer and the rest of the expenses including advertising and offering of additional discounts, gift or expenses on exhibitions have to be borne and carried out by the sales promotion agency - The sample invoice copy indicates that the payment was made as commission charges for order procurement, sales promotion activities and sales servicing and the assessee has documents to substantiate the same - In light of such facts as well as CBEC Circular 943/4/2011-CX though was ignored by the Commissioner as contrary to the Rule, clearly states that such credits are admissible, the assessee is eligible to avail credit of service tax paid to sales promotion agency - It is also settled in various precedent cases that audit report cannot form basis for invoking extended limitation - Hence the O-i-A in question merits being quashed: CESTAT
- Assessee's appeal allowed: MUMBAI CESTAT
