2019-TIOL-NEWS-265, Dated: Monday, November 11, 2019

ST - On the basis of intelligence that the appellants are not paying ST on services provided under the category of C & F Agent, the officers gathered the details of services rendered -on further investigation, it appeared that they have been doing business of consignment commission agent and were not paying ST on the gross amount received – SCN issued – demand confirmed along with interest, penalties imposed under sections 77 and 78 of the Finance Act, 1994 – appeal to CESTAT.

Held: As per the agreement between the parties, the appellants have been appointed as selling commission agents and they sell the goods received from the principal under their name and their own invoices and are also paying the Sales Tax/CST on the same - further, the appellant receives commission as a percentage of the sales done by them - the said activity carried out by the appellant does not fall in the definition of "Clearing and Forwarding Agent" because the appellants are not clearing and forwarding agency - further, in the case of Sri Sabarey Enterprises - 2015-TIOL-2025-CESTAT-MAD , it has been held that once it is clear that the principal activity of the assessee is that of a sale and marketing of goods, then the same cannot be classified under the taxable category of "Clearing and Forwarding Service" - similarly, the Tribunal in the case of Susheel Yarn Pvt. Ltd. has held that activity of agent in promoting sale of the products of the principal is not covered under the category of "Clearing and Forwarding Agent Service" - the ratio of the decisions cited by the appellant is squarely applicable in this case - further, it is also found that a person to fall in the definition of "Clearing and Forwarding Agent"undertakes both clearing and forwarding operations whereas in the present case, it has not been established by the Revenue that the appellants are carrying both the operations and, therefore, in view of the decision relied upon by the appellant in the case of Carryfast Agencies - 2017-TIOL-1735-CESTAT-DEL , the appellant did not fall in the definition of "Clearing and Forwarding Agent Service" - as far as limitation is concerned, the period in dispute is from 1.4.2002 to 31.3.2005 and the SCN was issued on 26.7.2006 and the Revenue has not brought anything on record to show that the appellant indulged in any fraud, mis-statement, collusion or suppression of fact with intent to evade duty, rather the appellant was under a bona fide belief that the activity undertaken was that of a selling commission agent on which no ST is payable on the basis of certain decisions rendered by the Tribunal during the relevant period - therefore, the extended period of limitation cannot be invoked in the present case and the entire demand is barred by time - in view of the above, the impugned order is not sustainable on merit as well as on limitation and, therefore, the same is set aside by allowing the appeal of the appellant : CESTAT [para6]

ST - Appellant, engaged in providing "Banking and Other Financial Services' in India,during the period 2006-07 to 2008-09, paid SWIFT charges to one Belgium company M/s.Society for Worldwide Inter-Bank Financial Telecommunication (SWIFT) for the purpose of transmission of financial and other related messages internationally - DGCEI initiated industrywide enquiry on levy of ST on SWIFT charges paid by the Banks of India on reverse charge basis and issued letter dated 29.2.2009 to the appellant in that connection -appellant decided not to dispute the ST and made prompt payment of ST of Rs.25.47 lakhs along with interest – SCN dated 29.1.2010 was issued to the appellant for recovery of equivalent penalty of Rs.25.47 lakhs under section 78 and penalty under section 77 of the Finance Act 2004[Act] – duty along with interest, penalties confirmed in O-I-O and O-I-A – appeal to CESTAT.

Held: SWIFT charges were paid in foreign exchange for transmission of financial and other related messages internationally to M/s.SWIFT Belgium -going by the provision of Banking and other financial services, as was in force during the relevant period, that has been enumerated in section 65 (105)(12)(a)(vii) read with section 65 (105)(zm), the service is to be provided by a Banking company or financial institution to any other body/corporate -there is nothing available in the case record to indicate that M/s.SWIFT is a Banking company but as its name appears, it handles transmission of financial and other telecommunication net working for the Banks -further, as can be observed in the OIA, the Commissioner (Appeals) put the services in the ‘transfer of information and data processing' which is included in the Banking and Financial service' definition - the allegation against appellant in the show cause is found to be use of service of transmission of financial and other related messages -in common parlance, "transfer of data" and "transmission of messages" could be different from each other but as SWIFT charges has been held to be taxable in variousjudgements, judicial precedent dictates that the same principle is to be respected for all times to come unless over-ruled by a larger Bench or Appellate Forum -however, having regard to the fact that taxability on SWIFT charges and application of reverse charge mechanism during the relevant period was in hegemony, imposition of penalty by invoking the extended period is beyond the purview of section 78 (4) unless the intention to evade payment of tax on ground of suppression etc. is established - section–77 penalty is for not reflecting the taxable service in the periodic Returns -therefore, in conformity to the findings of the Tribunal, given in the decisions cited by the appellant, particularly in the decision of The KarurVysya Bank Ltd., the appeal is allowed to the extent of setting aside penalties u/s 77 and 78 of the Act and the impugned order is, accordingly, modified : CESTAT [para5, 6]

ST - Appeal filed against denial of refund under notification no.41/2007-ST dated 6.10.2007 - said claim was rejected on the ground that the claim pertaining to the period October 2008 to December 2008 was filed on 28.5.2009 i.e. within the period of six months as prescribed in notification, however, without the duty paying challans - it was held that since the duty paid challan was submitted on 11.8.2009, therefore, the complete refund claim was not filed within a period of six months and, therefore, the same was held as barred by limitation.

Held: In identical circumstances, in the appellant's own case, the issue has been decided by the Tribunal - 2018-TIOL-2011-CESTAT-AHM in appellant's favour - following the said decision, the appeal is allowed: CESTAT [para4]

ST - The assessee, a 100% EOU is rendering software enabled services in relation to pre-publication and exporting such services out of India - They filed two refund claims under Rule 5 of CCR, 2004, out of which the claim relating to service tax paid by assessee for Renting of Immovable Property Service provided by its Director in her individual capacity, was rejected being ineligible - The first order of this Bench came to be passed on 13.04.2017 - This Bench after considering the plea that the payment of service tax in respect of Renting of Immovable Property was by mistake however, concluded, that the refund could not be claimed under Rule 5 ibid - It is surprising to note as to how the adjudicating authority chose to read conclusion as direction, which was not there, in her order dated 31.10.2017 as to the filing of a separate claim under Section 11B ibid - She has also gone further, when she concludes that clause (ec) to Explanation B of Section 11B ibid would come to the rescue of assessee - The assessee consciously filed its application for refund under Rule 5 ibid and even though there were no such directions by this Bench, it impressed upon the adjudicating authority to obtain an order and succeeded - Albeit there were no such directions, when the assessee chose to file refund claim by invoking Section 11B ibid, the authority scrutinizing the above application is expected to verify the same and ensure that the application is in order, meeting the requirements of law in terms of limitation as well - Thus, prima facie, clearly the O-I-O cannot sustain and has rightly been set aside by the first appellate authority - The assessee taking a cue from the earlier order of this Bench that Rule 5 ibid could not be invoked, chose to file an application under Section 11B ibid - It is intriguing to find that no appeal was filed against the first order of this Bench which rejected the assesse's claim made under Rule 5 - However, in the subsequent order of this Bench which has been extensively relied by assesse, this Bench has concluded that the denial of refund under Rule 5 of CCR, 2004 was not justified and in any case, even though the assessee was aware of earlier order of this Bench in its own case dated 13.04.2017, has not placed the order for the benefit of this court and thus, the second order dated 10.08.2017 came to be passed without referring to the earlier order - It is equally surprising to note as to how even the Revenue missed this out - No infirmity found in the impugned order and consequently, the appeals of the assessee are dismissed: CESTAT

ST - The assessee-company is engaged in providing taxable service under Immovable Property Service & liable for payment of service tax - During the relevant period, the assessee rented its property to one of its customers - For providing property on rent, the assessee issued monthly rental invoices along with applicable service tax to the customer - While making the payment of service tax to the Govt exchequer, the assessee claimed benefit of Notfn No 24/2007-ST - Since the benefit of such notfn availed by the assessee was not passed on to the customers, the Revenue issued SCN proposing to raise duty demand - On adjudication, duty demand was raised with interest and penalty u/s 77(2) - On appeal, the Commr.(A) sustained such demands.

Held - Admittedly, the amount in issue was paid back by the assessee to its customer subsequent to issuing of SCN - Hence it could not be said that the provisions of Section 73A are applicable for recovery of such amount, considering that the same as a collection of excess service tax from the customer - Besides, an identical situation stands settled by the Tribunal in Commissioner of Central Excise, Jaipur Vs. Vinayak Agrotech Ltd. - Even though the decision was rendered u/s 11D of the CEA 1944, its ratio applies squarely onto the present case as the provisions of Section 11D and Section 73A are in pari materia - Hence the O-i-A merits being quashed: CESTAT

2019-TIOL-3262-CESTAT-KOL

Swapna Printing Works Pvt Ltd Vs CCE

CX- The appellant company is engaged in the business of printing of diaries for Life Insurance Corporation (LIC) - it is the case of the Department that the appellant did not intentionally pay duty on the goods classifiable under chapter sub heading 48201090 of the CET which became liable to duty on 1.3.2006 after withdrawal of exemption notification no.10/2003-CE dated 1.3.2003, vide notification no.10/2006-CE dated 1.3.2006 - the period in dispute is March 2006 to January 2008 - SCN issued - the appellant's contention that they were entitled to SSI exemption benefits as per notification no.8/2003-CE dated 1.3.2003, was denied on the sole ground that the goods manufactured by them bear the brand of LIC making the appellant as ineligible for the said SSI exemption -duty of Rs.50.31 lakhs confirmed along with interest, equivalent penalty imposed, personal penalty of Rs.5 lakhs imposed on the Director of the company - appeal to CESTAT.

Held: Issue regarding admissibility of SSI exemption benefit in the instant case is no longer res integra as has been decided by the co-ordinate benches of this Tribunal in series of decision including the decision in the case of Central Press Pvt. Ltd. [2019 (365) ELT 570 (Tri-All.)] for the very period in dispute - it has been held therein that such diaries are being manufactured by the appellant under job work on orders of LIC which were meant to be used as gifts by LIC and it cannot be said that the appellant has manufactured the same with the brand name of another person - insofar as limitation is concerned, it is found that in the impugned SCN dated 23.3.2009, no evidence of any positive action has been shown to prove that the assessee has willfully not paid the demanded duty amount -the only allegation that has been made is that after the withdrawal of the exemption notification 10/2003-CE dated 1.3.2003, vide notification no.10/2006-CE dated 1.3.2006, the assessee became liable to pay duty from 1.3.2006 from which date the instant demand has been raised - in view of the decision in the case of Grand Ashok [ 2019 (365) E.L.T. 828 (Tri. - Bang.) ], the appeal is allowed by way of remand to the original authority to quantify the duty for normal period i.e. 23.3.2006 to 22.3.2007 and to appropriate the same towards the amount already paid -further, it is on record that the duty amount if payable by the appellant would be reimbursed by the client, LIC, which in fact has been done in the instant case and, therefore, the Bench agrees with the arguments advanced by the Advocate that the appellant would not stand to gain by not depositing the duty amount which escaped payment due to withdrawal of exemption notification as was applicable on the subject goods manufactured by the appellant prior to the period in dispute -in absence of any positive action brought on record and in view of the circumstances which prevailed for non-payment of duty, the larger period of limitation is not available to the department in the instant case and, therefore, the demand raised beyond the normal period of limitation is unsustainable - the demand of duty, interest and penalty cannot sustain and are, therefore, set aside -the appeals filed by the appellant Company as well as the Director, are allowed in the above terms : CESTAT [para 7, 8, 9]

- Appeals disposed of: KOLKATA CESTAT

2019-TIOL-3261-CESTAT-MUM

Vardhaman Remedies Pvt Ltd Vs CCE

CX- Whether the physician samples manufactured by the appellant on job work basis and sold on principal to principal basis to customers be valued as per Rule 4 of the Central Excise Valuation Rules, 2000by adopting the pro rata value of the trade pack of the medicamentsor Section 4(1)(a) of the Central Excise Act, 1944 when sold on transaction value and the goods manufactured on job work basis be assessed as per Rule 8 of the Central Excise Valuation Rules, 2000, accordingly.

Held: Tribunal following the ratio laid down by Supreme Court in the case of Sun Pharmaceuticals Inds. Ltd. - 2016-TIOL-10-SC-CX , observed in the case of Medispray Laboratories Pvt. Ltd. - 2017-TIOL-916-CESTAT-MUM that Rule 4 of the Valuation Rules, 2000 will not apply to the aforesaid situation - the aforesaid finding of the Tribunal is based on the ratio laid down by the Supreme Court in the case of Sun Pharmaceuticals Inds. Ltd. relating to sale of physician samples on principal to principal basis to customers and Biochem Pharmaceuticals Ind. Ltd.'s case - 2015-TIOL-320-SC-CX relating to manufacture and clearance of physician samples on job work basis to principal manufacturer - consequently, following the aforesaid precedent, the respective impugned orders are set aside and the appeals allowed : CESTAT [para6, 7, 8]

- Appeals allowed: MUMBAI CESTAT

2019-TIOL-3260-CESTAT-AHM

Sunshine Corporation Vs CCE

CX- The case against the appellant is that they had been surreptitiously clearing 'automotive paints/coats' under the brand name 'SUNLAC', manufactured by the appellant which was being sold under the invoices of M/s.Spraylac [a trading entity] - relying on an affidavit filed before the competent authority for regulation of trade marks pursuant to an application for securing of brand 'SUNLAC' and reinforcing its claim by the high turnover which was not reflected in the excise documents, the investigating authority, concluded that, with the data furnished for the purpose of sales tax assessment corroborating the turnover, the charge of surreptitious manufacture and clearance was established - it is common ground that the records of production for the period of dispute are not available and that the charges of clandestine clearance have been inferred from lateral evidence - a pendrive and data afforded by access to the computer installed at the searched premises is the basis for this conclusion - appeal to CESTAT.

Held: Lack of any evidence pertaining to procurement of excessive raw material, or of shipment of finished goods, to the trading unit is not in dispute - the statement of various individuals, that have been relied upon to substantiate the indirect evidence introduced in the form of submission to another statutory authority in a different context, viz., to secure of brand name, the discharge of liability of sales tax and the plea before the Settlement Commission by successor entity would necessarily have to be subject to the test of validity and reliability - the findings of the adjudicating authority, taking note of the circumstances of non-availability of records, appear to have placed excessive reliance on uncorroborated evidence - the confirmation of demand of duty rests, therefore, upon the shakiest of foundation - the adjudicating authority was required to consider the request for cross-examination of the witnesses in the light of the decision of the Supreme Court supra in the case of Andaman Timber Industries - 2015-TIOL-255-SC-CX - in order to ensure that these are complied with, the impugned order is set aside and the matter remanded back to the original authority to decide the matter afresh - appeal is accordingly disposed of : CESTAT [para 7, 8, 9]

- Matter remanded: AHMEDABAD CESTAT

2019-TIOL-2552-HC-KOL-CX

Berger Paints India Ltd Vs UoI

CX - As the respondents are represented by learned Counsel, issuance and service of notice of appeal are dispensed with - Let informal paper books be filed by appellant's advocate-on-record by 29th November, 2019, serving a copy thereof on the advocate-on-record for the respondents at least seven days before the date of hearing of this appeal: HC

- Appeal listed: CULCUTTA HIGH COURT

2019-TIOL-3250-CESTAT-DEL

Sunil Alcop Industry Vs CCE & ST

CX - The assessee is in appeal against impugned order, wherein the Cenvat credit sought to be denied on the ground that the assessee have received only invoices and not the goods as per the statement of one Sh. Amit Gupta who was investigated by DGCEI - It is a fact on record that the Revenue has failed to prove that if the said inputs have not been received in their factory, then from where the inputs have been replaced by the assessee against those invoices - M/s Prime Metalloys Pvt Ltd have specifically mentioned that they have supplied the goods to the assessee - In the absence of any contrary evidence to the above facts, the Cenvat credit cannot be denied to the assessee - Therefore, the investigation conducted by DGCEI is not proper and having various infirmities - In these circumstances, the benefit of doubt goes to the favour of assessee - Accordingly, the Cenvat credit cannot be denied to the assessee - As Cenvat credit cannot be denied, therefore, no penalty can be imposed on them - Sh. Amit Gupta whose statement has been made basis to investigate the assessee, has not made the party in SCN - In these circumstances, the investigating team has issued the SCN only on the basis of pick and choose method without proper investigation - In that circumstance also, the impugned investigation is not sustainable against assessee: CESTAT

- Appeals allowed: DELHI CESTAT

Cus - The appeals have been filed by Revenue being aggrieved by interlocutory order passed in W.P.Nos.3856 and 3857 of 2014 - As far as the SCN dated 16.09.2013 is concerned, which is the subject matter of the present proceedings, it was served on 19 noticees - The court checked up the status of W.P.Nos.27948 and 27949 of 2013, in which the SCN dated 16.09.2013 was stayed by this Court, and those writ petitions are shown to be pending as per the status report - It is left open for both the parties to raise their contentions in pending writ petitions viz., W.P.Nos.27948 and 27949 of 2013 - The interim order of stay granted in said writ petitions shall continue, as noted by the Co-ordinate Bench of this Court in the order dated 28.07.2017, till the disposal of the writ petitions: HC

Cus - Whether the impugned order of Tribunal without considering the report of and materials relied upon by DRI regarding the value of goods and in its interpretation of CVR, 2007 was erroneous in law and perverse - This prayer cannot be acceded to as the appellant and the directorate are authorities directly under the central government - However, the appeal shall be treated as one preferred by Union of India with liberty to the customs and DRI to make submissions - Leave is granted to include the report of DRI and all other materials relied upon them in the paper books to be filed: HC