| SERVICE TAX
2019-TIOL-3216-CESTAT-MUM
Pawan Hans Helicopters Ltd Vs Commissioner of CGST
ST - Demand of duty for the period between 2009 and September 2013 against assessee for not maintaining separate records for trading spare parts of helicopter and sale of scrap, being considered as exempted service, but availing entire CENVAT credits on inputs is assailed in this appeal - Commissioner (A) had stretched the explanation appended to Section 66 of Finance Act w.e.f. 1-4-2011 that clarified that exempted service would include trading and given it a retrospective effect to cover whole disputed period of assessee by invoking the principle laid down by Tribunal in case of R.M. Gupta Textiles (P) Ltd. and stated that clarificatory notes have retrospective effect attached with it - However, as discussed in I.G. Petrochemicals' case, trading is not a service for which explanation appended to section 66 could be conjointly read with the definition of service given in section 65 (44) of FA, 1994 that excludes delivery or supply of any goods which is deemed to be a sale within the meaning of clause 29(a) of article 366 of Constitution of India - Be that as it may, even the Commissioner (A) had accepted trading to be a service but exempted from Service Tax, in his order - He has clearly given his findings that assessee was either required to maintain separate account for receipt and use of input or pay the amount equivalent to 6% of value of exempted service as per the provision of Rule 6(3) of CCR or pay an amount determined under sub rule 3A of Rule 6 of CCR but in his order, in the operating portion, he rejected the appeal and confirmed O-I-O by which assessee was directed to pay 6% of value of exempted service - This order is erroneous for the reason that assessee was not provided with the opportunity to exercise either of these two options though it was willing to go for proportional reversal that would have substantially reduced the demand - However, having regard to the fact that trading, as held in I.G. Petrochemicals Ltd judgement, being not a service, reversal of proportionate credit is uncalled for - Hence, impugned order is set aside: CESTAT
- Appeal allowed; MUMBAI CESTAT
2019-TIOL-3215-CESTAT-ALL
U P State Food And Essential Commodities Corporation Ltd Vs CCE
ST - The assessee is primarily engaged in procurement/purchase of food grains and essential commodities and distribution of the same to the financially weaker section of the society - Apart from that they entered into an agreement with M/s Coal India Ltd. for supply of coal, on their behalf, to various brick fields - For the said purpose they were paid consideration by M/s Coal India Ltd. - Revenue by entertaining a view that the said services provided by assessee to M/s Coal India Ltd. falls under the category of 'BAS' and the assessee was liable to pay service tax on the same raised the demand by way of issuance of SCN by invoking longer period of limitation - Assessee has referred to the fact that in year 2008 w.e.f. 01 April, 2008 they were appointed as nodal agency by M/s Coal India Ltd. in which case it becomes their sovereign function to distribute the coal - The said plea of assessee stands considered by the Adjudicating Authority who has observed that inasmuch as the demand is prior to 01 April, 2008 when assessees were appointed as nodal agency by M/s Coal India Ltd, it has to be held that prior to the said date they were providing services covered by the definition of "BAS" - No merits found in the argument that they have to be treated as a nodal agency w.e.f. 2005 itself when they started providing such services in terms of the letter of Chief Secretary of Uttar Pradesh issued to the District Magistrate directing that the assessee should be appointed as an agent for distribution of the coal - Admittedly said letter cannot be considered as a letter appointing the assessee as a nodal agency which was specifically done in the year April, 2008 itself - Having held against the assessee on merits, now proceed to decide the limitation aspect of the demand being barred by limitation - The Adjudicating Authority having himself held that there was no suppression on the part of assessee, the longer period should not have been invoked - Apart from that, the Commissioner has extended the benefit of Section 80 of Finance Act to the assessee even though by extending such benefit she has imposed lesser penalty whereas such section requires no penalty - In any case having extended the benefit of Section 80 to the assessee, the Commissioner has himself agreed that there was no suppression or mala fide - Inasmuch as the demand in the present appeal stands raised beyond the period of one year, the entire demand is barred by limitation and is required to be set aside - For the same reason, penalty imposed on assessee is set aside: CESTAT
- Appeal allowed: ALLAHABAD CESTAT
CENTRAL EXCISE
CX - The assessee-company manufactures ERW pipes - During the relevant period, it was alleged that the assessee indulged in clandestine clearance of manufactured goods under cover of bills issued by another firm and in doing so, suppressed the value of clearance of taxable goods so as to remain below the exemption limit specified in the SSI exemption notification - Based on intelligence inputs, the premises of the assessee-company were searched - Subsequently, duty demand was raised and penalty was imposed by the adjudicating authority - On appeal, the Tribunal quashed such an order and remanded the matter back to the adjudicating authority, which re-iterated the demands - In the second round of litigation, the Tribunal again set aside the demand - Hence the present appeal by the Revenue.
Held - The counsel for the Revenue sought permission to withdraw the present appeal as the tax value involved is lower than the limit of Rs 1 crore as specified in the Board Instruction dated 22.8.2019 - Hence the Revenue's application to such effect is allowed and the appeal is dismissed as withdrawn: HC
- Appeal dismissed: PUNJAB AND HARYANA HIGH COURT
2019-TIOL-2526-HC-P&H-CX
CCE Vs RK Gupta
CX - The respondent is the GM of a company which manufactures items such as slabs, blooms, ingots, HR strips/Coils of Stainless Steel - The company availed Modvat/cenvat credit on duty of inputs, raw materials and capital goods - It had installed a captive power plant for generation of electricity, wherein fuel is used after availing credit on the same - Some part of the electricity was cleared to M/s DHBVN - On assessment, the Revenue proposed to deny credit on grounds that the electricity generated was cleared without payment of duty - Hence SCN was issued raising duty demand for recovery of credit - On adjudication, the demands were confirmed and penalty was imposed - On appeal, the Tribunal quashed the demands raised - Hence the present appeal.
Held - Notice of motion was issued and the matter is pending hearing - The Revenue's counsel claimed that the tax value involved was lower than the limit prescribed in the Board's Instructions dated 22.8.2019 - Hence such application is allowed and the Revenue's appeal is dismissed as withdrawn: HC
- Appeal dismissed: PUNJAB AND HARYANA HIGH COURT
2019-TIOL-3225-CESTAT-MUM
Mohan Textiles Vs CCE
CX - Woven fabrics of synthetic filament yarn - Appellant was found to have cleared the goods without payment of excise duty by the Departmental Authorities and accordingly SCN was issued to it demanding differential duty amounting to Rs.8.75 lakhs by denying benefits of SSI exemption vide notification no.08/2003-CE dated 1.3.2003 on the alleged ground that the goods dealt by the appellant fell under Heading 54.06 of CETA and not under Heading 59.11 – demand confirmed along with interest, equivalent penalty imposed – the same was upheld by the Commissioner (Appeals), hence appeal to CESTAT.
Held: The crux of the issue lies in the fact of invocation of extended period for raising duty demand for the period from April, 2003 to July, 2004 – admittedly, SCN was issued on 17.4.2006 which was not within the normal period prescribed at the relevant time and the Commissioner (Appeals) had confirmed the justification of invocation of extended period by observing that proprietor had admitted that they had misclassified the product and, therefore, a clear case of suppression was established against the appellant, contrary to his own observation and acknowledgement in the order itself that vide its letter dated 29.4.2004, appellant had informed to the department that it was claiming benefit of exemption notification no.08/2003-CE dated 1.3.2003 and was engaged in the manufacture of woven fabrics of synthetic filament yarn falling under Chapter 5911 – further, as found from the impugned order, in para 5A(ii), the proprietor had stated in his statement dated 17.1.2006 that they "mistakenly" classified the product under Chapter 59 instead of Chapter 54 - Tribunal had held that claim of wrong classification or claiming benefit of notification by itself is no suppression, no case of suppression of facts to evade duty is made out to justify imposition of duty liability against the appellant to invoke extended period though no error is noticed in the impugned order in respect of classification of the product cleared by the appellant – hence, the appeal is allowed and the impugned order is hereby set aside : CESTAT [para5.3, 6]
- Appeal allowed: MUMBAI CESTAT
2019-TIOL-3224-CESTAT-CHD
Panacea Biotec Ltd Vs CCE & ST
CX - Appellant manufactured and cleared certain dutiable P or P Medicines - in the same premises, another independent unit in the name of Panera Biotec Pvt. Ltd. [Panera] manufactured vaccine, namely Haemophilus Influenzae Vaccine - Panera has taken some portion of premises of the appellant on lease for manufacture of vaccine -during the period April 2008 to April 2009 vaccine attracted nil rate of duty -the vaccine manufactured by Panera was entirely supplied to the appellant -during the scrutiny of the statutory records of the appellant, Department noticed that quantities of vaccine manufactured and cleared supposedly by Panera have been entered into RG-1 register of the appellant and clearances have been shown in the appellant's records -the Department, therefore, entertained a view that it is only the appellant who is manufacturing the vaccines which is nil rated for CE duty and the appellant is not maintaining separate statutory record for cenvat credit which have been availed on manufactured and exempted goods – accordingly, a demand for reversal of the cenvat credit amounting to Rs.1.65 crore has been made, invoking the provisions of rule 6(3) of Cenvat Credit Rules, 2004 – vide impugned order, Commissioner has again confirmed the demand of cenvat credit, equivalent penalty imposed – appeal to CESTAT.
Held: The jurisdictional Assistant Commissioner, vide his report dated 10.2.2017, has very categorically mentioned that there is no mention about the existence of Panera in the original ground plant -Panera was issued a drug license on 18.1.2008 to manufacture vaccine whereas as per the CE record Panera has applied for CE registration only on 7.3.2011which was provided to them on 16.5.2011 - the financial statements of Panera for the relevant period i.e. 2008-2009 did not show any supply of vaccine to the appellant - the appellant has not been able to advance any potent evidence to controvert the findings of the Department that vaccine was being manufactured by the appellant on the strength of vaccine manufacturing license issued by the competent authority to Panera –appellant has not been able to produce any evidence to prove that Panera existed on their premises independently –no iota of evidence found to indicate that Panera had independently utilized power for manufacture of vaccine –these facts clearly bring out that Panera only existed on paper and actually goods are manufactured by the appellant in the name of Panera –it is beyond comprehension that the goods manufactured by some other plant which is a separate legal entity will find a place in the records of the appellant's statutory books or stock records - these evidences cannot be rejected lightly and the Department has rightly raised the issue of mis-utilization of the cenvat credit -in view of the above, the appellant has failed to adduce any evidence to prove that Panera had any independent manufacturing facility within the appellant's own premises and no fault found in the Department's conclusion that it is the appellant who had manufactured the vaccine in the name of Panera – no legal infirmity found in the impugned order – the same is upheld and the appeal is dismissed : CESTAT [para 12, 13, 15, 16, 17, 18]
- Appeal dismissed: CHANDIGARH CESTAT
2019-TIOL-3223-CESTAT-AHM
Modern Petrofils Vs CCE & ST
CX - Proceedings were initiated against M/s.Resham Exports, an EOU, for diversion of goods procured from the appellant vide SCN dated 9.12.2004 -in the said proceedings, a penalty was imposed on the appellant for the involvement in supplying goods to a non-functional EOU– appeal to CESTAT.
Held: From the facts of the case, it is apparent that the appellants were not careful enough and were willing party to the diversion of goods by the consignee -in this regard, the affidavit filed by the transporter regarding delivery of goods at the premise of M/s.Resham Exports also appears to have been obtained without knowledge of the transporter –from the impugned order, it is seen that Shri Abhinandan Kataria, Manager of M/s.Vardhaman and Shri Harish Natwarlal Bhatt, Proprietor of M/s.Nirav in their statements have admitted that goods cleared by the appellant have been illicitly diverted -it is also seen that these submissions are supported by the statements of Shri Bodu Gulam Shaikh who was the representative of the consignee involving in the diversion of the goods -in the light of the facts that the statement of Shri Kataria & H.N.Bhatt and Shri Bodu Gulam Shaikh are in consonance, later retraction of Shri Kataria loses its significance -it is seen from the statements of Shri Anil Kataria dated 2.4.2004 that he was aware of the diversion of goods after clearance from the factory -it is also admitted position of the appellant that Shri Anil Kataria was their regular transporter -in the statements of Shri H.N.Bhatt dated 7.7.2004, he had reaffirmed that he has informed the representatives of appellant namely Shri Manmohan Agarwal about the diversion of goods en route -he also confirmed that Shri VK Sharma [ Sr. Manager (Commercial) of the appellant] was also aware of the facts -another factor which is relevant is that during the short period of about 10 days they had cleared almost 100 consignments weighing 884 tonnes to one party -this fact itself should have raised alarm bells and doubts in appellant's organization -in any case, it was responsibility of appellant to ensure delivery of goods -from the above set of facts, it is apparent that the appellants were aware of the diversion of goods en-route -in view of above facts, significant merit found in imposing penalty on the appellants -consequently, the penalty imposed in the order is upheld -the appeal on this count is dismissed: CESTAT [para 4.6]
- Appeal dismissed: AHMEDABAD CESTAT
2019-TIOL-3222-CESTAT-AHM
KD Bhatia Dyeing And Printing Mills Pvt Ltd Vs CCE & ST
CX - Appellant unit is engaged in manufacture of Man Made Fabrics (Processed) - based upon investigation, the appellants were issued SCN dated 13.4.2007 wherein duty demand was made as under : (i) demand of Rs.27.09 lakhs was made on the ground that during physical verification on comparison with the lot register, the grey fabrics was found short which was used in manufacture of 836120 L. Mtrs of MMF (Processed) and the said finished goods were allegedly cleared without payment of duty (ii) demand of Rs.2.43 lakh was made on the ground that a quantity of 75114 L. Mtrs of Finished MMF valued at Rs.20.28 lakhs mentioned in job cards was not found in lot register and same has been cleared illicitly in open market (iii) demand of Rs.55.09 lakhs was made on the basis of private register wherein the fabrics was found to have been entered without lot number – (iv) demand of Rs.1.91 lakh was made on the ground that the Appellant received 65733 L. Mtrs of grey fabrics as found from private register as substitution against respective lot nos found in Private Register and cleared processed fabric 59159.75 L. Mtrs. – demands confirmed, equivalent penalty imposed, personal penalty on Shri Gulshan Bhatia, Director also imposed – appeal to CESTAT.
Held: Demand of Rs.27.09 lakhs - the goods in lot register were not identified with parties -there is no co-relation of the said names with the lot register -the SCN has relied upon statement of Shri Gulshan Bhatia which was retracted as having been obtained under pressure, the same cannot be relied upon - the appellant had also sought cross examination of panch witnesses and others which was not granted - in absence of cross examination of witnesses, their statements could not have been relied upon - in absence of cross examination of witnesses, no demand can be made against on the basis of statements –none of the merchant manufacturers' record was summoned to show that they have received such goods without payment of duty and disposed off as such -in such case, merely on the basis of statements, demand cannot be fastened upon the appellant unit –pertinently, the statements were recorded in 2005 i.e. after three years of the visit of the officers by which time some of the buyers could not be found or could not produce records -the officers should have conducted investigation of merchant manufacturers who had sent goods immediately after the visit to the appellant unit when the alleged shortages came to their notice -there is no evidence as to how the goods were cleared from the appellant's factory -where were the sale proceeds, how it was paid and how the merchant manufacturers disposed the goods –there is no instance in panchnama that whole factory was searched -thus on the basis of such incomplete panchnama, the subject demand is not sustainable: CESTAT
Demand of Rs.2.43 lakh - only on the basis of entries mentioned in job cards which do not match with the lot register, it cannot be said that the said goods shown in the job cards were removed without payment of duty -there is no evidence on record to show that such goods were removed in open market -reliance has been placed upon the statement of ShriGulshan Bhatia, which stands retracted -except recording some statements, no evidence is appearing that the goods were disposed of in the market or if the goods belonging to the merchant manufacturers, when the goods were transported to them and what were the evidences for disposal of such goods -thus, merely on the basis of statements, a demand cannot be made -if some lot numbers are not found in lot register, the same cannot be inferred to have been removed clandestinely -thus, no reason found to demand said duty of Rs.2.43 lakh: CESTAT
Demand of Rs.55.09 lakhs - as per statement of Shri Bhatia which is undisputed, the register was allegedly maintained by the Printing Department and contained the production programme in batches -even if the lot number has not been found to be entered in such register, it cannot lead to inference that the unaccounted fabrics were removed clandestinely - no statement of the Printing master was recorded to ascertain the facts regarding the entries made in the private register -it is coupled with the fact that no corresponding clearances of such register were found –in such case, the private register cannot be made basis for demanding duty from the appellant unit on the ground that it contained details of goods removed without payment of duty: CESTAT
Demand of Rs.1.91 lakh - when the person maintaining such private register has not been interrogated nor his statement recorded, in such case, no allegation can be made on the basis of Private Register and no duty can be demanded: CESTAT
Conclusion: in view of the above, the impugned order demanding duty and penalty is not sustainable and is, accordingly, set aside -for the same reason, the penalty imposed upon the director, Shri Gulshan Bhatia is also set aside – both the appeals are allowed : CESTAT [para4, 5, 6, 7, 8, 9]
- Appeals allowed: AHMEDABAD CESTAT
CUSTOMS
2019-TIOL-3214-CESTAT-AHM CGG Veritas Services Pvt Ltd Vs CC
Cus - The issue involved is that whether the assessee is required to pay Additional Duty of Customs under Section 116 of Finance Act, 1999 - The identical issue has been considered by this Tribunal in Case of M/s. Atlantic Shipping Pvt. Ltd - 2018-TIOL-3326-CESTAT-AHM - In view of the said decision of this Tribunal, the Additional Duty of Customs in assessee's case is exempted in terms of Sub Section (1) of Section 116 of Finance Act, 1999 - Accordingly, the impugned orders are set aside: CESTAT
- Appeals allowed: AHMEDABAD CESTAT
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