2019-TIOL-NEWS-263 Part 2, Dated: Friday, November 08, 2019

ST - Condonationof Delay Application listed for hearing on21.8.2019 - since no one appeared, the matter was adjourned to 27.9.2019 - again, no one appeared for the hearing -perusal of the application does not indicate that any letter in writing was submitted by the appellant to the Department regarding change of address - only the change in the e-mail address had been intimated to the Department and this change of e-mail address would not necessarily lead to a conclusion that the postal address had also changed in the meantime - mere submission of the certificate of registration cannot also be made a ground that the Department should have changed the address of the appellant -in the absence of any specific communication from the appellant regarding change of address, the Department was justified in sending the order at the recorded address - the appellant has also not indicated the date on which the VasantVihar office forwarded the order to the appellant nor the appellant has indicated when this order was received by it at the new address -these facts were required to be stated by the appellant to make out a case for condoning the delay, but they have not been stated - the Bench is, therefore, not satisfied with the averments made in the application that the appellant was prevented by sufficient cause from preferring the appeal within the stipulated time -the delaycondonation Application is, accordingly, rejected - as the delay condonation Application has been rejected, the Appeal stands dismissed: CESTAT [para 4 to 8]

ST - Whether appellant as a banking institution is liable to pay ST on pre-closure charges of loan account and locker rent charges for the period 2005-06 to 2009-10.

Held: Since the ST demand on pre-closure charges of loan account is not being contested on merit, the demand for the normal period stands upheld - as regard the submission made on limitation, there is a force in the argument of the appellant that the issue is not free from doubt as regard the pre closure charges will attract ST or otherwise -since there are conflicting judgments of this Tribunal in the case of Small Industries Development Bank of India (SIDCO) and Housing and Urban Development Corporation Ltd. (HUDCO), the matter was referred to larger bench -in this position, there is no malafide intention on the part of the appellant -therefore, the demand for the extended period is not sustainable and the same is set aside -for the same reason, the penalty imposed under sections 76 & 78 of the Finance Act, 1994 [Act] is also set aside by invoking section 80 of the Act - as regard the ST demanded on the locker rent charges, though the locker rent charges was included in the service of Banking and Financial service and other services with effect from 10.9.2004, however, by virtue of notification 25/2004-ST, the value of locker rent charges received prior to 10.9.2004 is exempted -there is no dispute that the entire amount on which ST demand was raised was received prior to 10.9.2004 as can be seen in O-I-O -in this position, there is no doubt that amount being received prior to 10.9.2004 towards locker rent charges is covered by the exemption notification 25/2004-ST -accordingly, the demand on locker rent charges is set aside -appeal is partly allowed in above terms : CESTAT [para 4]

ST - During the course of verification of ST-3 returns, it was noticed that the appellant had availed ineligible cenvat credit of Rs.7.23 lakhs on Employee Medical Insurance Benefits, canteen expenses and pest control charges during the period January 2012 to September 2012 - SCN issued - cenvat credit allowed by the Assistant Commissioner - on appeal by Revenue, the Commissioner (Appeals) allowed Revenue appeal, therefore, assessee in appeal before CESTAT.

Held: Commissioner(Appeals) has reversed the decision of the original authority and has also held that the appellant has suppressed the material fact from the Department and has not disclosed the same in their ST3 return - the finding of the Commissioner(Appeals) that the appellants have not disclosed these facts and have not filed the ST3 returns is factually incorrect - the SCN itself was issued on the basis of the scrutiny of the ST3 returns filed by the appellant wherein the appellants have disclosed all the material fact relating to the availment of cenvat credit on the impugned services - once the appellant has disclosed all the facts in the ST3 returns and has not suppressed any facts from the Department, then the Department cannot invoke the extended period of limitation and confirm the demand - in the present case, the period of dispute is January 2012 to March 2012 whereas the SCN has been issued on 7.10.2014 which is beyond the period of limitation as prescribed under the law - further, the decisions relied upon by the appellantsare squarely applicable to the present case and in those decisions, the Tribunal has consistently held that if there is no suppression, extended period cannot be invoked - therefore, by following the ratio of the said decisions, the entire demand in the present case is barred by limitation and, accordingly, the same is set aside by allowing the appeal only on the ground of limitation without going into the merits: CESTAT [para 6]

ST - On the basis of information gathered that the appellant is providing services in the nature of commercial training and coaching and have not paid ST under the said services, investigations were undertaken - during the course of investigation, entire amount of ST along with interest was remitted - thereafter, a SCN dated 21.1.2008 was issued demanding ST under the heading 'Commercial Training and Coaching Service' along with interest and penalty by invoking extended period of limitation - demand confirmed along with interest, penalties imposed - appeal to CESTAT.

Held: The appellant did not press on merits of the case and confined his submissions to dropping of various penalties imposed on them - during the relevant period, there were conflicting decisions regarding the classification of the impugned service - the Department has also not brought any evidence on record to show that there was suppression of material fact with intent to evade payment of tax - since the issue of penalty is squarely covered by the decision of the Karnataka High Court in the case of Addeco Flexione Workforce Solutions Ltd. - 2011-TIOL-635-HC-KAR-ST and by following the said decision, penalties imposed under sections 76, 77 and 78 of the Finance Act, 1994 are dropped - appeal is allowed : CESTAT [para6]

ST - The assessee had entered into separate agreements for construction with the builder for construction of flats - Service tax was collected from assessee under the category of 'Residential Complex Service' by the service provider and paid to the Government - Later, the levy of service tax on composite contracts in respect of the construction activities including construction of residential complex service was held to be unconstitutional as per the decision of Apex Court in case of Larsen & Toubro Ltd. - 2015-TIOL-187-SC-ST - Circular No. 108/02/2009 was issued by Board clarifying that the construction services undertaken by builders on behalf of the flat owners which are for personal use are excluded from the definition of residential complex - Subsequently, assessee filed refund claim for the refund of the service tax paid by them to the service provider - The first ground on which the authorities below have rejected the refund claim is that the Circular is not applicable to the assessee - Para 3 of Circular 108/02/2009 clarifies that if the purchaser enters into an agreement for construction of residential complex with the builder and the builder provides the services for construction and after such construction, the purchaser received such property for his personal use, then such activity would not be subjected to service tax because the exclusion provided in the definition of residential complex would apply to such a situation - Thus, it is very much clear that the exclusion clarified in the circular applies to the assessee - For this reason, service tax paid by them is under mistake of law - The second ground for rejection of refund claim is on the ground of limitation - Section11B prescribes a period of one year for filing the refund claim - However, the jurisdictional High Court in the case of 3E Infotech had occasion to analyse the issue of levy when service tax is paid under mistake of law - The assessee has also placed on record the decision of Apex Court in case of KVR Constructions - The said decision arises out of an appeal filed by the department against the judgment of High Court of Karnataka, wherein it was held that the provisions of limitation under section 11B of CEA, 1944 would not apply for refund of service tax paid by mistake - The rejection of refund claim is unjustified - The impugned orders are set aside: CESTAT

ST - The assessee provides service of Sale of Space or Time for Advertisement which is taxable u/s 65(105)(zzzm) - However, the assessee did not obtain registration for the relevant period and did not pay service tax - The Revenue sent several letters seeking details of the service rendered and amounts received against such services but the requisite details were not provided - Subsequently, SCN was issued proposing to raise duty demand - Upon adjudication, the same was confirmed albeit the penalties imposed u/s 76, 77 & 78 of the Finance Act were dropped - Hence the Revenue's appeal.

Held - The adjudicating authority recorded the defence taken by the assessee claiming to have intimated to the Revenue about a letter issued by the Railway Board informing that the Railway Ministry had written to the Finance Ministry, seeking exemption for railways from levy of service tax, enclosing both their core and auxiliary services - It was also informed that a cabinet note is being moved seeking specific exemption for several auxiliary activities of the Railways from the purview of service tax including the present service in question - There is no mala fide intent on part of the Railways to not pay service tax on the activity undertaken by providing service of Sale of Space or Time for Advertisement - Hence there is no infirmity in the O-i-O dropping the penalties - The present appeal lacks merit: CESTAT

2019-TIOL-3239-CESTAT-ALL

Swadeshi Polytex Ltd Vs CCE & CGST

CX - Appellant, engaged in the manufacture of 'Polyester Staple Fiber', claimed benefit of notification no.16/82 dated 4.2.1982 providing concessional rate of duty - with the denial of benefit, the appellant started paying duty on their final product under protest in 1983 and 1984 - Tribunal, vide order dated 10.8.1988 allowed the appellant's claim - appellant claimed the refund of duty paid during 1983-84 - proceedings were initiated against them proposing denial of the said refund claim on the ground of unjust enrichment - refund claim rejected, hence appeal.

Held: It is well established that the onus to prove that the duty element does not stand collected by assessee from his customers is on the assessee and is required to be discharged by production of evidences - appellant submitting that they have in their possession the relevant invoices showing non-collection of duty element from the customers thus establishing it beyond doubt that they have not collected duty and as such refund would not be hit by bar of unjust enrichment - inasmuch as the Lower Authority have not verified and examined the said invoices, the Bench deems it fit to set aside the impugned order and remand the matter to the Original Adjudicating Authority - the Tribunal's Final Order - 2018-TIOL-1985-CESTAT-ALL in appellant's own case would also be considered by the Original Adjudicating Authority -with these observations, the impugned order is set aside and matter remanded to the Original Adjudicating Authority : CESTAT [para6]

- Matter remanded: ALLAHABAD CESTAT

2019-TIOL-3238-CESTAT-DEL

UB Ventures Pvt Ltd Vs Commissioner of CGST, C & CE

CX - Since from the date of filing of appeal till date, there is no single appearance of the appellant except their repeated written requests for adjournment - today's absence, coupled with the above observation, for the conduct of the appellant is sufficient to opine that appellant is not interested in pursuing the impugned appeal - in these circumstances, the appeal is dismissed for non-prosecution: CESTAT [para 2, 3]

- Appeal dismissed: DELHI CESTAT

2019-TIOL-3233-CESTAT-AHM

Vandevi Texturisers Pvt Ltd Vs CCE & ST

CX - The assessee is engaged in manufacture of Polyester Knitted Fabrics from Polyester Yarn - They are clearing their finished goods to other 100% EOUs against CT-3 certificates - During relevant period they had cleared goods to M/s Sunshine Overseas, Navsari which is also an 100% EOU - Based upon investigation, assessee was issued SCN demanding duty on Polyester Yarn alleging the same was not used in manufacture of fabrics but were diverted in open market - It was also proposed to confiscate the same and to impose penalty u/s 11AC of Central Excise Act and Rule 26 of CER, 2002 - The allegation of clearance of Polyester Yarn by assessee in the market has been made on the ground that the partners of M/s Sunshine Overseas in their statements stated that they did not receive any Polyester Fabrics - Further the statement of Shri Sanjay Ratan Aggarwal, Chief Executive Officer of the assessee has also been relied upon that they did not consign Polyester Fabrics to M/s Sunshine Overseas but diverted Polyester Yarn in local market - During investigation, the assessee's factory was also searched and no incriminating documents or evidences were found, which shows that they did not clear Polyester fabric to M/s Sunshine Overseas and instead cleared Polyster yarn in local market - Stock of raw material and finished goods were found to be in order - Even, the statutory records were found to have been correctly maintained by assessee and the same has nowhere disputed - It is observed that except placing reliance on the statement of the partners of M/s Sunshine and Chief Executive Officer of assessee and two tempo owners, no other evidence on record has been brought to show that the assessee has not cleared Polyester Fabrics to M/s Sunshine Overseas - It is also a fact on record that though 46 consignments of finished goods were transported through different vehicles, but only one statement of Shri Vijay Purohit has been relied upon to allege removal of Polyester Yarn in clandestine manner - Shri Sanjay Aggarwal vide affidavit dt 1.7.2003 and 4.3.2005 had retracted the statements made by him before the investigating officers - Once the statements has been made basis for alleging clandestine clearance, the adjudicating should have granted cross examination, which is not done - In absence of same the statements cannot form basis for alleging contravention of law by the assessee - Assessee has cleared the goods against CT-3 Certificates and the goods were certified to be warehoused by jurisdictional Excise authority of M/s Sunshine Overseas - The documentary evidences in form of CT-3, AR-3, D-3 Declarations, maintenance of statutory registers, filing periodical returns, which are undisputed clearly shows that the manufacture and supply of finished goods to M/s Sunshine Overseas has not been negated by Revenue with the assistance of any corroborative evidences - Even during the investigation, no buyer of Polyester Yarn has been brought on record to show that the assessee had cleared said raw material clandestinely to any person - Once the goods were certified to be warehoused by the consignee, the consigner, i.e. the assessee, cannot be held responsible for contravention of law - Such views are also based upon the judgments in case of M/s Sunshine Overseas - 2011-TIOL-770-CESTAT-AHM and NaynaTextiles - The demand against the assessee and penalty against all the assessees are not sustainable - The impugned order is set aside: CESTAT

- Appeals allowed: AHMEDABAD CESTAT

2019-TIOL-3232-CESTAT-MAD

Consumer Associates Vs CCE & GST

CX - The assessee was issued SCN proposing to demand duty - However, there was no demand of interest - After several rounds of litigation, the Commissioner (A) confirmed the demand and also allowed the benefit of modvat credit to the assessee - The penalty was reduced - The Commissioner (A) ordered to pay interest on the duty confirmed - The issue is with respect to the date from which the assessee has to pay liability of interest - The date chart supplied by assessee would give the dates and events - Thus, it is seen from the date chart that though the original authority confirmed demand, there was no demand of interest - Further, after several rounds of litigation, the demand of interest has been confirmed by Commissioner (A) who has finally determined/ascertained the duty payable by assessee - This has happened only on 24.2.2012 - The Tribunal in case of Lucas TVS - 2016-TIOL-75-HC-MAD-CX had occasion to consider a similar issue and held that the assessee has to pay the interest only from the date when the fresh order is passed - The Tribunal relied upon the decision of High Court of Bombay in case of Blue Star - 2009-TIOL-650-HC-MUM-CX - The Revenue's C.M.A filed against said Tribunal's decision has been dismissed by jurisdictional Madras High Court in - 2016-TIOL-75-HC-MAD-CX - After appreciating the facts of the case, evidence and the position of law, assessee succeeds in his argument - Assessee is liable to pay interest from 24.02.2012 on the demand that has been confirmed - The prayer of the assessee is allowed: CESTAT

- Appeal allowed: CHENNAI CESTAT

Cus - The assessee is aggrieved by late fee of Rs.14,95,000/- levied under section 46(3) of Customs Act, 1962 - The initial purchaser of high seas sales, M/s. Vazhavilla Cashews, Kollam could not take delivery of the goods even though they had filed Bill of Entry - Therefore, the shipper identified another purchaser namely the assessee for clearing the goods - After filing an application for amendment of IGM and also after filing the request for cancellation of Bill of Entry which was ordered on 9.1.2018, the Customs Broker has filed the new Bill of Entry on behalf of the new consignee on 12.1.2018 - Thus, after obtaining the order of cancellation of earlier Bill of Entry, the new Bill of Entry has been filed within three days - From the facts, it cannot be said that the assessee has committed any act or omission in causing delay in filing the Bill of Entry - The department does not have a case of any malafideness in the import of goods - Further, the standing order issued by department gives clear direction as to when the late fee can be imposed - In the present case, delay occurred only because of the original importer failed to clear the goods - The subsequent importer who is the assessee cannot be saddled with the late fee as he has taken efforts to get the IGM amended as well as cancelling the earlier Bill of Entry within a reasonable time - The standing orders issued by Board states that the late charges due to delay in filing the Bill of Entry has to be considered judiciously and the late fee should not be imposed on a routine manner - So also, it states that when there is a delay due to any reasons which is considered a bonafide, the late fee should not be imposed - The Tribunal in the case of Blueleaf Trading Company had occasion to consider a similar situation wherein the late fee imposed was set aside - The late fee imposed is not legal or proper: CESTAT