2019-TIOL-3198-CESTAT-ALL

Gautam Mohan Manchanda Vs CCE & ST

ST - The assessee had paid service tax on the commission received by him under 'BAS' and sought the refund of the same claiming that the said service tax was paid on the salary received by them and it was not commission - On the basis of return filed by them with Income Tax Authorities, the Lower Authorities have held that the payment received by them was in the form of commission and it was not salary and therefore the refund was rejected - No infirmity found in the order passed by Commissioner (A), same is upheld: CESTAT

- Appeal rejected: ALLAHABAD CESTAT

2019-TIOL-3197-CESTAT-BANG

CC, CE & ST Vs Vibhutigudda Mines Pvt Ltd

ST - The assessee is registered under provisions of Section 68(2) of FA, 1994 under category of 'Transportation of Goods by road services' - They had exported iron ore fines and lumps and accordingly filed refund claim in terms of Rule 5 of CCR, 2004 availed on various input services used for manufacture and export of iron ore fines for the period April 2006 to March 2007 - The Commissioner (A) has rightly held that the assessee is entitled to cenvat credit and there is no provisions contained in Rule 6(1) of Cenvat Credit Rules when the final product is exempted from Central Excise duty by virtue of Notfn 4/2006 CE - The Commissioner (A) has relied upon various decisions which have consistently held that assessee is entitled to avail credit of service tax paid on input services when they are producing exempted excisable goods which are chargeable to 'nil' rate of duty - The Karnataka High Court in case of ANZ International 2009-TIOL-40-HC-KAR-CX , it has been held that the provisions of Rule 6 of Cenvat Credit Rules are not applicable when the goods are exported under bond - The High Court judgment has been maintained by Supreme Court and followed by CESTAT in case of Vibhuthigudda Mines Pvt. Ltd . - The ratio of Tribunal's decision rendered in case of Punjab Stainless Steel Industries 2008-TIOL-1004-CESTAT-DEL is squarely applicable to the present case - The said decision of CESTAT has been upheld by High Court of Delhi in 2009-TIOL-30-HC-DEL-CX - In the case of Jolly Board Ltd., it has been held that cenvat credit is admissible in terms of Rule 6(6) when goods are exported and there is no requirement to execute any bond if the exported goods are exempted - The said decision of CESTAT has been affirmed by High Court of judicature at Bombay - Therefore, by following the ratios of said decisions of Tribunal and the High Court, there is no infirmity in impugned order passed by the Commissioner (A): CESTAT

- Appeal dismissed: BANGALORE CESTAT  

CENTRAL EXCISE

2019-TIOL-2522-HC-P&H-CX

Pr. CCGST Vs Jindal Stainless Ltd

CX - The assessee-company manufactures various products using stainless steel - For purpose of manufacture, it procured furnace oil for use in its captive power plant installed in the factory premises - Some portion of the power generated is exported to the grid of the State Electricity Board - The assessee claimed that the cenvat credit to the assessee-company is admissible only on the fuel used in generation of power for its manufacture process and not for the exported electricity - Hence SCN was issued - On adjudication, the duty demand and penalty were confirmed for different periods - Such findings were later quashed by the Tribunal - Hence the present appeal by the Revenue.

Held - The appeal is pending disposal - Meanwhile, the Revenue's counsel sought permission to withdraw the appeal on grounds that the tax amount involved is lower than the limit specified in the Board Instruction dated 22.8.2019 - Hence the application is allowed and the Revenue's appeal is dismissed as withdrawn: HC

- Appeal dismissed: PUNJAB AND HARYANA HIGH COURT

2019-TIOL-3210-CESTAT-DEL

Mewar Hi Tech Engineering Ltd Vs CCGST

CX - Notification 8/2003-CE - Whether the clearances of the final product by the other manufacturer/the job workers have to be clubbed with the clearances of the appellant, job worker here being another manufacturer and relationship being on principal to principal basis.

Held: In the present case, the raw material has been supplied by the appellant but the subsequent manufacturing activity is admittedly done by the job worker in his own premises without any supervision and control of the appellant -admittedly, the clearances were also made from the premises of job worker itself - Circular No. 56/94–CX dated 14.9.1994 is a precise clarification with respect to the impugned issue of entitlement to SSI exemption to the manufacturer who is supplying raw material to the another person/the job worker for the manufacture of same final product as is manufactured by him – in paragraph 4, it is observed that " … If it is found that the job worker is an independent entity and carries out the manufacturing activities independently and is not an agent, of the raw material supplier or a dummy, then the job worker will be treated to be a manufacturer…" - it is not disputed that job worker is independently clearing the goods manufactured by him -except receiving raw material from appellant, there is nothing on record to show that job worker herein was an agent of raw material supplier or a dummy –the adjudicating authority below has committed an error while denying the relationship of appellant and job worker as the one on principal to principal basis - therefore, the job worker in the present case, has independent liability towards excise duty -his clearances have wrongly been clubbed with the clearances of the appellant -the adjudicating authority below has failed to follow the directions–irrespective of the above, there is no contract between the appellant and its job worker but the facts and circumstances as discussed above are sufficient to hold that the job work was performing an activity of manufacture and the raw material was provided by the appellant on principal to principal basis - the findings of the original adjudicating authority about no material to establish a relationship are, therefore, apparently wrong -the findings that, "the ownership of raw material since remain throughout with the appellant, the liability of duty there upon was that of appellant…" are, therefore, legally as well as factually incorrect -in the given circumstances, since there was no duty liability of the appellant with respect to the goods independently got manufactured by his job worker and got cleared by the job workers, clubbing of those clearances to the clearances of appellant so as to deny the benefit of SSI exemption to him, is an absolutely unjustified and apparently a wrong finding -finally coming to the issue of limitation, the clearances for the period w.e.f. April, 2007 to August, 2009 has been objected vide SCN of 25.4.2011 -the SCN is definitely beyond the period of one year -from the above, it stands clear that in fact there was no liability of the appellant to pay duty with respect to the goods got manufactured by the job worker, as such clubbing thereof with the clearances of the appellant is absolutely wrong -hence, there was no reason for the appellant to not to avail the SSI exemption -hence, there is no act of having any intent to evade duty with the appellant nor any act of suppression -accordingly, the Department was not entitled to invoke the extended period of limitation -the law is settled that duty recoverable for a period not exceeding one year in the absence of any element of deception or malpractice is not sustainable -the SCN in the given circumstances is held to be barred by time -for the similar reason, there is nothing on record which entitles imposition of penalty -as a result of entire above discussion, the Order under challenge is hereby set aside -appeal is, accordingly, allowed : CESTAT [para6, 6.1, 9, 10, 11, 12]

- Appeal allowed: DELHI CESTAT

2019-TIOL-3209-CESTAT-AHM

Mili Detergent Industries Vs CCE

CX - In a case of clandestine clearances of detergent powder, the adjudicating authority, vide impugned order, again confirmed the demand in remand proceedings.

Held: Officers seized 11 loose papers containing details of clearances of detergent powder from the office of M/s.Sonal Cosmetics (Exports) Ltd. [SCEL] who were consignee of these goods cleared from M/s.Mili Detergent Industries, M/s.Superchem and M/s.JalaramChemical Industries - the clearances mentioned in the said papers stand accepted by ShriMashrubhaiBharwad, tempo driver, who had transported these goods to SCEL - when the partner of the consignor unit and Managing Director of consignee unit has accepted removal of receipt of goods from M/s.Mili Detergent to SECL, it leaves no doubt that the details found in loose papers pertain to clandestine clearance by three units to SECL –further, even the authorized signatory of M/s.Jalaram accepted the details found in papers to be clearances made by them without payment of duty to - the directors of M/s.Jalaram and M/s.Superchem also agreed with the statement of authorized signatory - the cross examination of Shri Mashrubhai Bharwad was already allowed earlier and, therefore, there was no reason for the adjudicating authority to grant cross examination again and again and cannot be considered to be violative of principles of natural justice – no reason found to grant cross examination of the officers as there is no doubt about the investigation proceedings –since, on merits, it is found that the clandestine removal by the consignors as well as consignee and also by the transporter stands accepted, therefore, no reason found to interfere with the impugned order and the same is upheld – consequently, all the appeals are dismissed : CESTAT [para 5]

- Appeals dismissed: AHMEDABAD CESTAT

2019-TIOL-3208-CESTAT-AHM

Pacific Harish Industries Ltd Vs CCE & ST

CX - The issue involved is as to whether the appellant is correct in taking cenvat credit on the input service on which ST was paid by the appellant under reverse charge mechanism -the appellant have paid ST after being pointed out by audit -the case of the department is whether the appellant who admittedly paid the ST, interest and 15% of penalty, is a case of suppression of facts and as per rule 9(1)(bb) of Cenvat Credit Rules, 2004, the appellant are not entitled for the credit – demand confirmed hence appeal to CESTAT.

Held: There is no dispute that appellant has paid ST even though on pointing out by the auditors, subsequently, but under reverse charge mechanism on receipt of services namely, security agency service and manpower recruitment service -they have availed cenvat credit on the basis of bank challans as proof of payment of ST - credit was not taken on supplementary invoices, bills challans and, therefore, the provisions of rule 9(1)(bb) is not applicable – the very same dispute has been dealt with by the Tribunal in the cases of Nissan Motor India Pvt. Limited - 2019-TIOL-1569-CESTAT-MAD and Columbia Machine Engineering India Pvt. Limited [2018 (12) TMI 1098 – CESTAT AHMEDABAD] - accordingly, it is held that in case of payment of ST under reverse charge mechanism, rule 9(1)(bb) will not apply -therefore, the impugned order is not sustainable -the same is setaside and appeal is allowed : CESTAT [para 4, 5]

- Appeal allowed: AHMEDABAD CESTAT

2019-TIOL-3207-CESTAT-BANG

Mysore Polymers and Rubber Products Pvt Ltd Vs CC, CE & ST

CX - Appellants are engaged in manufacturing automotive tubes on job work conversion basis for M/s.CEAT and M/s.Good Year -the appellants were providing periodical costing details of the inputs supplied for manufacture of tubes, for a particular period, subsequent to the completion of the period, and were adopting this costing value for future clearances -the appellants submitted to the authorities that the assessments of M/s.CEAT were provisional; they were not in a position to indicate value at the time of clearances and that appellant's clearances to M/s.CEAT also be provisionally assessed -the department alleged that in one of the costing received on 27.09.2005 the effective date is 01.09.2005, therefore the assessee should have retrospectively applied said rates with effect from 01.09.2005and thus continuously undervalued their clearances from 2003 – SCN issued, demand confirmed – on appeal, vide impugned order, demand along with interest confirmed for the normal period – appeal to CESTAT.

Held: CBEC Circular No. 619/10/2002  dated 19.2.2002, relied upon by the appellant, though provides for finalization of values at a later date, essentially suggests provisional assessment in such cases - whatever be the Department's reason for not accepting provisional assessment, the ratio of the Circular would not be applicable to the appellants - it can be seen that Commissioner (Appeals) has gone into the aspect of limitation and has given suitable relief to the appellants on the count that they have kept the Department informed and requested for provisional assessment from time to time - Commissioner (A) has confirmed the demand only for the normal period - as the assessments were not provisional, the Department was not barred from issuing a demand for normal period - on the issue of adjustment of duty excess paid and short paid, as there is no such provision in law, the Bench cannot extend any such relief - in view of the above, no reasons found to interfere with the impugned order - accordingly, the appeal filed by the appellants is rejected - the Department has a case on merits and the appellants are liable to pay duty for the normal period – the case is remanded to the Original Authority to compute the demand for normal period which shall be paid by the appellants : CESTAT [para6, 7, 8]

- Appeal rejected: BANGALORE CESTAT

2019-TIOL-3206-CESTAT-BANG

Motherson Sumi Electric Wires Vs CCT

CX- Whether the Department can demand interest under section 11AB of the Central Excise Act, 1944 [Act] on the differential duty paid through supplementary invoices due to subsequent increase in price of the goods by virtue of price escalation clause.

Held: Issue has now been settled by the Larger Bench of the Supreme Court in the case of Steel Authority of India Ltd. - 2019-TIOL-204-SC-CX-LB therefore, by following the ratio of the above said decision of the Apex Court, the appellant is liable to pay the interest on the differential duty paid through supplementary invoices –further, as far as limitation is concerned, in view of the settled position, time limit prescribed under section 11A of the Act is also applicable for recovery of interest –the decision of the Apex Court in the case of TVS Whirlpool Ltd. has been followed by Punjab & Haryana High Court in the case of Jai Bharat Maruti Ltd. and the Delhi High Court in the case of Kwality Ice Cream Company - 2012-TIOL-252-HC-DEL-CX and the Tribunal, Bangalore in the case of Canara Bank - 2016-TIOL-2432-CESTAT-BANG further, it is found that longer period of limitation is not invokable in the present case because the short payment is not due to fraud, collusion, suppression etc. with intent to evade duty and in view of the decision in the case of VAE VKN Industries Pvt. Ltd. and Hindustan Insecticides Ltd. - 2013-TIOL-631-HC-DEL-CX , it is held that extended period of limitation is not invokable in the present case - the Division Bench of this Tribunal in the case of  Sharavathy Conductors Pvt. Ltd. considered the issue of limitation with regard to demand of interest on supplementary invoices, wherein, it was held that when the normal time limit prescribed is one year from the relevant date for recovery of the principal amount, it is reasonable to adopt the same period for recovery of interest as well - in view of the above, the issue is squarely covered in favour of the appellant in view of the various decisions relied upon cited supra and by following the ratio of the said decisions, in the present case, the entire demand of interest on supplementary invoice is barred by limitation -consequently, both the appeals of the appellant are allowed only on limitation and not on merit: CESTAT [para5, 6]

- Appeals allowed: BANGALORE CESTAT

2019-TIOL-3205-CESTAT-BANG

Molex India Pvt Ltd Vs CCT

CX- Appellant had not exercised their option under sub-rule (3)(iii) of Rule 6 of CCR, 2004, but the input services were utilized, both for manufacturing and sale of dutiable goods and Trading which is an exempted service - The issue involved in the present case is short reversal of cenvat credit in terms of rule 6(3)(iii) of Cenvat Credit Rules, 2004 - internal Audit had pointed out that the appellant while availing the provisions of Rule 6(3A)(b)(iii) of CCR, 2004, has to take the total input service credit into account while calculating the credit to be reversed and not the common input service credits alone.

Held: Issue has been settled by the Division Bench of this Tribunal in the case of Reliance Industries Ltd. - 2019-TIOL-1754-CESTAT-AHM wherein it has been categorically held that total CENVAT credit for the purpose of formula given under Rule 6(3A) is only total CENVAT credit of common input services–therefore, by following the ratio of the said decision, the impugned order is not sustainable in law – a s far as extended period of limitation is concerned, it is found that there is no suppression of material fact on the part of the appellant with intention to evade payment of duty and non-filing of intimation is only a procedural lapse and does not amount to suppression of fact for which benefit under rule 6(3)(ii) read with rule 6(3A) cannot be denied - in view of the above,both the appeals are allowed by following the ratio of the Division Bench of this Tribunal in the case of Reliance Industries Ltd. and the impugned order is set aside – since the appeals are being allowed on merits, there is no need to go into the question of limitation -consequently, both the appeals are allowed : CESTAT [para6.1, 6.2, 7]

- Appeals allowed: BANGALORE CESTAT

2019-TIOL-3196-CESTAT-BANG

IPC Packaging Pvt Ltd Vs CCT

CX - The assessee-company manufactures PP Woven Fabrics and Sacks, PP Liner falling under Chapter Heading 39 of CETA 1985 - Upon audit, certain irregularities in credit availment and short payment of duty were pointed out - The assessee paid the duty with interest as pointed out - Later, an SCN was issued alleging that the assessee availed ineligible credit and penalties were proposed - On adjudication, duty demand and penalties were confirmed - These were sustained by the Commr.(A) - Upon remand by the Tribunal, the adjudicating authority partly sustained the penalties - Later, the Commr.(A) again remanded the matter to reconsider imposition of penalties, without considering the matter on merits - Hence the present appeal.

Held: The Commr.(A) misconstrued the appeal amd only observed that the issue involved in the appeal is with regard to the imposition of penalty - Though the Commr.(A) observed there to be no mala fide intent in payment of duty with interest at time of audit and also observed that the assessee should not be burdened with penalty, yet the Commr.(A) remanded the matter back to the original authority on issue of imposition of penalty - The original authority too neglected the Tribunal's directions and examined the case on merits and rejected the assessee's claims on grounds that the assessee accepted its fault during audit - It was then concluded that the assessee is precluded from challenging such findings on merits - Such findings of the adjudicating authority run contrary to the directions issued by the Tribunal - Moreover, the Commr.(A) returned no findings on merits - Hence the O-i-A is unsustainable and merits being quashed - The matter is remanded to the adjudicating authority to comply with the Tribunal's directions and settle the case on merits: CESTAT

- Case remanded: BANGALORE CESTAT  

2019-TIOL-3195-CESTAT-AHM

Vishesh Dhatu Industries Vs CCE & ST

CX - The assessee pointed out that they are a division of Balbeer Metal and Power Plant Ltd. (BMPPL) - They are clearing the finished products manufactured by them to M/s Balbir Rolling Mills Pvt. Ltd. (BRML) and to Quartz Metal Industries (QMI) is just another division of BMPPL - He pointed that while VDI and QMI are both divisions of BMPPL - He pointed out that during period 2007-2008 to 2009-2010, assessee was supplying 100% of their product to M/s QMI and BRML - The assessee was supplying to other independent buyers apart from BRML and QMI - Revenue has sought to revalue the goods cleared by them to VDI and BRML under Rule 8 of Central Excise Valuations Rules, treating them as related entities - A perusal of SCN shows the entire foundation of allegation is based on relationship of directors among each other and not about the assessee and BRML being related persons - The allegations are essentially that the directors and investors in these two entities are related to each other that the relatives of directors own up to 85% of equity shares in the said group of companies - It is seen that the allegations of relationship between the two is based on admission of directors that they are relatives and that 100% of product of unit are being transferred to 'Balbeer group of companies', namely QMI and BRML - It has also been asserted that the directors are members of Hindu Undivided Family - These factors are immaterial in so far as relationship between two companies is concerned - The relationship of directors has no relevance whatsoever - Another allegation made in SCN is that they are using common basic infrastructure and staff - No specific instances have been pointed out - Even otherwise use of certain common basic infrastructure and staff is not relevant in so far as establishing the relationship between two companies is concerned - No evidence found in support of allegation that M/s VDI and M/s BRML are related in terms of Section 4(3)(b) of Central Excise Act - Consequently, the demand of duty made against VDI for clearance made to BRML cannot be sustained - Moreover the Apex Court has in case of Ispat Industries 2007-TIOL-245-CESTAT-MUM-LB prescribed that rule 8 can be invoked only when entire sales are made to related persons - It is not in dispute that part of the sales during 2010-11 and 2012-13 were to independent buyers - Moreover in view of above discussion even BRML is not a related entity - In respect of clearances made by VDI to QMI also Rule 8 of Central Excise Valuation Rules cannot be invoked as during this entire period part of the clearances were being made to BRML which has been held to be not a related person - Invocation of Rule 8 requires that no clearance should have been made to any independent entity - Consequently, demand of duty made in respect of clearances to QMI also cannot be sustained - Consequently, the appeals of the M/s VDI and Sh. Sharma are allowed: CESTAT

- Appeals allowed: AHMEDABAD CESTAT  

CUSTOMS

2019-TIOL-3194-CESTAT-MUM

Essar Steel India Ltd Vs CC

Cus - The appellant filed BoE for import of old, second-hand & reconditioned engine - The Revenue opined that the engine was re-manufactured and hence prohibited for import - On adjudication, the goods were held to be prohibited goods and were ordered to be confiscated with option of redemption fine being given and penalty being imposed - The appellant paid both the redemption amount and penalty - Later, the Commr.(A) reversed such findings on grounds of there being no contravention of Foreign Trade Policy - On the strength of such favorable O-i-A, the appellant claimed refund of the duty paid earlier - While such refund was allowed, it was sanctioned to the Consumer Welfare Fund on account of unjust enrichment - Such findings were sustained by the Commr.(A) on grounds that no evidence was put forth to show that the incidence of duty was not passed on - Hence the present appeal.

Held: The issue at hand is no longer res integra in view of the Apex Court's decision in CC, Raigad vs. M/s. Finacord Chemicals (P) Ltd. & Ors. and in United Spirits Ltd Vs CC which had been rendered in respect of three appeals and affirmed the view taken by the Bombay High Court that the principle of unjust enrichment would not be attracted in case of fine or penalty - The Court also held that the doctrine of unjust enrichment is inapplicable in case of refund of pre-deposits - Hence the Commr.(A) should have considered the applicability of these decisions in order to determine whether or not the principle of unjust enrichment could be applied for rejecting claims for refund of redemption fine and penalty - The Customs Act provides restrictions only in case of duty, cess, tax free but not on fine, penalty or pre-deposit - In light of such precedent judgments of the Apex Court, the principle of unjust enrichment is not applicable so far as the redemption fine or penalty is concerned: CESTAT

- Appeal allowed: MUMBAI CESTAT