2019-TIOL-NEWS-266, Dated: Tuesday, November 12, 2019

ST - The only grievance of the appellant in this appeal is the denial of refund claim made by them for the refund of ST of Rs.11.32 lakhs paid in excess by them.

Held: Orders of the lower authorities reveal that the Revenue is not questioning the eligibility of the appellant for refund; they have only held that the application for refund was filed after the one year time-limit -the Revenue placed heavy reliance on the order of the Hyderabad Bench of the Tribunal in the case of Oil India Ltd. - 2019-TIOL-1336-CESTAT-HYD and particularly referred to paragraphs 5 and 6, to buttress their contention that the officers have no jurisdiction since no provision of the Act, including section 11B, applies to the present case–in stark contrast to the minority view in the decision in Mafatlal Industries Ltd. - 2002-TIOL-54-SC-CX-CB relied upon by the Hyderabad Bench, decided by a Constitutional Bench of nine judges, on going through the majority view which is at paragraph 68, there cannot be any doubt with regard to the absolute clarity the above judgement enjoins which clearly excludes the jurisdiction of a Civil Court and in view thereof, the contentions of the Revenue cannot be accepted -there could also be a possible view to not accept the above arguments of the Revenue because, the authorities should not have, in the first place, accepted the payment -the Revenue, after all, is neither a collection agent nor a post box and nor even a hundi; every demand and collection is only with or under the authority of law -hence, it is difficult to accept that the officers lacked jurisdiction to sanction the refund under the Act when under the same Act, they have accepted the payment -consequently, it cannot be said that for accepting the payment alone the said Act applies and that the Act would not apply when it comes to sanctioning the refund -it is not the case that the tax or duty which has been held to be unconstitutional, or even void for that matter, has been claimed as refund -it is just that excess amount paid by the assessee and happily accepted by the Revenue without raising any objection, which is being sought by the appellant - hence, the decision of the jurisdictional High Court in the case of 3E Infotech - 2018-TIOL-1268-HC-MAD-ST squarely applies, wherein the Court has even ordered for refund when the ST itself was paid by mistake and that the claim for the same could never be barred by limitation - in view of the above, the impugned order cannot sustain and, consequently, the appeal is allowed with consequential relief : CESTAT [para 7.1, 7.2.1, 7.2.2, 7.3, 7.4, 8, 9]

ST - Renting of Immovable Property - The issue is with regard to the demand of ST on co-owners when the property is jointly owned by them - SCNs have been issued alleging that the co-owners have to be held as 'association of persons' and that they are liable to pay ST.

Held: Tribunal in the case of Sarojben Khusalchand - 2017-TIOL-2284-CESTAT-AHM had occasion to analyse the very same issue as to whether co-owners can be considered as an association of persons – this Tribunal in the case of Shri A. Abdul Huq. & ors. - 2018-TIOL-3852-CESTAT-MAD had followed the above said decision to hold that individual co-owners are eligible for SSI exemption while assessing their liability to discharge ST -furthermore, pertinently when family members come together to rent property belonging to the family or inherited by operation of law, it cannot be considered as an 'association of persons' -the levy of ST on Renting of Immovable Property is on the income received from the service provided -the co-owner can lease only that part of the property belonging to him -in view of the above, and following the above decisions, the impugned Orders cannot sustain and are required to be set aside, and is set aside - however, for verification as to whether these appeals fall within the threshold limit, it is necessary to remand the matter back to the adjudicating authority for the limited purpose of verifying the threshold limit of the individual co-owners, as may be applicable during the relevant periods of dispute -the appeals are partly allowed and partly remanded with above direction : CESTAT [para 7.1, 7.2, 8, 10, 11, 12]

ST - Appellant in order to avail the benefit of VCES scheme, worked out their tax dues, which shows that the total tax payable by them for the said period is Rs. 10,13,623/- and after deducting Rs. 20,143/- already deposited on 20th April 2010, the balance dues are Rs. 9,93,480/- - Accordingly, the appellant deposited 50% of the said tax dues of 9,93,480/- or Rs. 4,96,740/- on 28th December, 2013 and filed their VCES-1 form on 20th December, 2013 - However, in the Serial No. 6 of the VCES-1 form, they erroneously declared total tax dues at Rs. 10,13,623/- instead of Rs. 9,93,480/- - SCN was issued dated 12th September, 2014 as it appeared to Revenue that the appellant have not deposited 50% of the tax dues as required and the same fell short of 50% or Rs. 10,072/- - SCN was disposed of ex-parte in absence of any reply and the claim for benefit under the Scheme was rejected – as Commissioner(A) upheld this order, the assessee is in appeal before CESTAT.

Held: On perusal of the form VCES-1, along with calculation of duty or tax dues, it is found that there has been a clerical error on the part of assessee in filling up the form VCES-1 properly - Accordingly, the substantial benefit should not be disallowed for mistake of clerical nature - Moreover, in the calculation sheet annexed to form VCES-1, the amount of tax dues under the scheme is evident at Rs. 9,93,480/- - Accordingly, assessee had paid 50% of tax dues correctly - The rejection of their Form VCES-1 is set aside: CESTAT

ST - Appellant provided construction services to various parties including Government Departments - In terms of serial no. 12(a) of the Notification 25/2012-ST, construction services provided to the Government enjoyed exemption, however, the benefit was withdrawn vide Notification No. 06/2015-ST dated 01.03.2015 by omitting the said serial number - nonetheless, benefit was re-introduced w.e.f. 01.03.2016 vide Notification No. 09/2016- ST - For the intermediary period, when no exemption was available, a special provision was introduced by enacting Section 102 of the Finance Act, 2016 in terms of which a time limit of six months was provided from the date on which the Finance Bill, 2016 received the assent of the President, for preferring such refund claims - accordingly, the time limit of six months for preferring refund claims was available up to 13.11.2016 - Assessee filed refund claim on 08.01.2018 and which was rejected - appeal to CESTAT.

Held: Time limit specified in Section 102 is required to be satisfied for extending the benefit of refund - Since the claim has been preferred beyond the date set out in Section 102, no infirmity in the impugned order rejecting such claim - impugned order upheld and appeal rejected: CESTAT

2019-TIOL-3282-CESTAT-CHD

Quark City India Pvt Ltd Vs CCE

CX - During the audit of the financial records, it was observed that the assessee has availed cenvat credit during the period January 2005 to March 2008 in respect of various services, which do not qualify to be as input services –the department entertained a view that the credit taken by the assessee on these input services either has not been used in providing output service or these cannot be input services for the output services provided by the appellant - it has further been observed by the department that the assessee during the period 1.1.2005 to 15.6.2005 was registered for payment of ST only for GTA service, which does not constitute an output service of the assessee to make them eligible for input service credit -SCN dated 24.9.2009 was issued to the assessee demanding cenvat credit reversal of Rs.1.02 crore by invoking the extended period of limitation - ST of Rs.1.00 lakh and Rs. 42,368/- has also been demanded - vide impugned order, all the charges have been confirmed, however, no penalty under sections 76 and 78 of the Act have been imposed as proposed in the SCN - against this order, assessee and Revenue before CESTAT.

Held: Insofar as the demand of ST amounting to Rs.1.00 lakh for the period from 16.6.2005 to 30.6.2005 in respect of Maintenance & Repair of Immovable Property service and for the ST demand amounting to Rs.42,368/- on GTA service, no denial of this demand has been made by the assessee on any legal ground - further, the entire demand of ST of Rs.1 lakh and Rs.42,368/- has been deposited by the assessee along with the interest on 26.3.2009 - so far as the demand of reversal of the cenvat credit of Rs.1.02 crore, it is found that w.e.f. 19.4.2006 after explanation proviso to rule 2(v) of the Service Tax Rules, 1994, it has been made clear that the input services in respect of GTA services are not admissible even prior to 19.4.2006 - it has been made very clear that the CCR are applicable only to manufacture of excisable goods or the provider of the taxable output service - it has further been clarified from the provision of rule 68(2) (sic) that the person providing GTA service is neither the provider of the output service nor the manufacturer of final product as required under CCR - it has further been clarified that the recipient of the taxable services, even if, they discharge their ST liability under rule 68(2) (sic) are not entitled to avail the credit of ST paid on taxable services received by them as per CCR - from the above clarification, there remains no doubt that credit on input services in respect of GTA services are not admissible even for the period prior to 19.4.2006 - so no credit of input service is admissible for payment of ST in respect of output service of GTA provided by the assessee -with regard to the credit of ST paid in respect of other input services, it is found that the assessee has availed the credit of input services used by them for providing output service of Maintenance & Repair of Immovable Property situated at plot no. A- 45, Phase VII B, Mohali and that of Renting of property again for the said building – it is further found that the services for the input service credit availed by the assessee have actually not gone into providing any output service of Maintenance & Repair of the building or for service of Renting the property -it is pertinent to note that the assessee had started paying STw.e.f. 16.6.2005, the date on which the ST became payable for the service of Maintenance & Repair of Immovable Property -the service of Maintenance & Repair was meant for the building situated at plot no. A-45, Phase VII B, Mohaliwhich has already been fully constructed and under occupation and given on rent to various entities before 16.6.2005 -once the building was ready on 16.6.2005, it is very difficult to believe that input services such like erection, installation, fabrication, architect etc. have been used by the assessee after the building has been constructed –it is also found that renting of immovable property service came into effect from 1.7.2007 and, therefore, no credit is admissible in respect of input services like erection, installation, fabrication, architect etc. which have might been used by the assessee for other purposes - it is also found that the assessee has also used the input service credit on the strength of invoices which are in the name of some other legal entities -it is beyond imagination how an assessee can avail the credit of such services - the findings of the order under challenge are based on facts and no legal infirmity found in the same -it is also found that the assessee has agreed to demand of ST as raised in the SCN and confirmed by the O-I-O and had already deposited the entire amount during the course of investigation and thereafter -in view of the above, the O-I-O is legal and correct – therefore, no ground found to interfere with the findings in O-I-O – thus, the same is upheld and the appeal filed by the assessee is dismissed –no merit found in the appeal filed by the department also and the same is also dismissed : CESTAT [para7, 8, 9, 10, 11, 12, 13]

- Appeals of Assessee/Revenue dismissed: CHANDIGARH CESTAT

2019-TIOL-3281-CESTAT-DEL

Smart Steels Vs Pr CIT

CX - In a case of clandestine clearances of excisable goods, demand of Rs.13.62 crores along with interest confirmed against the main appellant – further, a demand of Rs.3.57 lakhs has also been confirmed against the main appellant in respect of shortage of goods detected at the time of verification of the stocks – equivalent penalty imposed – penalties imposed on the Directors of the main appellant – CE duties also confirmed against the other appellants, penalties imposed – appeal to CESTAT.

Held: Search and seizure proceedings were made in violation of section 100 of Cr PC read with section 18 of the Central Excise Act, 1944 [Act] –the panchanama dated 19.2.2016 not only speaks of 2 CD(s) but also that computer data was retrieved after a gap of 4 years which itself creates a suspicion – it is evident from the panchanama, record of cross-examination that the investigating officer had failed to follow the safeguard as mandated under section 36B of the Act –further, the burning process of data into CD and their subsequent retrieval was not made in presence of any computer expert and, therefore, in light of the judgement of the Apex Court in the case of Anwar P.V. Vs. P.K. Basheer - 2014-TIOL-118-SC-MISC , the said data cannot be relied upon to prove the charges of clandestine removal against the appellant - similar findings was made by the Gujarat High Court in the case of Ambika Organics [2016 (334) ELT A-67] and the Tribunal in the cases of Premier Instruments & Controls Ltd. - 2005-TIOL-61-CESTAT-MAD , JayshreeVypasa Ltd. [2015 (327) ELT 380 (Trib.) and Agarvanshi Aluminium Ltd. - 2013-TIOL-1332-CESTAT-MUM –the Tribunal, in the case of Popular Paints & Chemicals - 2019-TIOL-1239-CESTAT-DEL , under similar facts and circumstances, has set aside the demand based on such unauthenticated data -in view of the above, the charges of clandestine removal based on such unauthenticated data is not sustainable and hence are set aside –it is evident from the panchnama dated 7.8.2012 that the shortage was detected on the basis of eye estimation and also on average weight without physical weighment -further, the loose documents which were recovered from the car of the accountant were not put to test for ascertaining to the authorship of these documents -moreover, these documents could not be co-related with the corroborative evidence -the details contained in the loose sheets and third party documents are actually not comprehensible and, therefore, cannot be accepted as admissible piece of evidence - moreover, the Panchnama proceedings have been challenged on the ground that the Panch-witnesses were not present at the time of the resumption of the evidence - also, during the cross-examination, the Accountant has categorically stated that he has already retracted his earlier statements and he has never stated that the said document pertains to production and clandestine removal of the goods from the appellant factory -the charges of clandestine removal of the goods cannot be upheld merely on assumptions and presumptions, but has to be proved with positive evidence such as purchase of excess raw materials, consumption of excess electricity, employment of extra labour, seizure of cash, transportation of clandestinely removed goods etc. - all these material evidences are missing in the present case and the evidences brought into the record by the department are incomplete, inconsistent and not a reliable piece of evidence to prove charges of clandestine removal -the shortage which was detected by the officers is on average weight method basis and, therefore, mere admission by the directors, who deposited the duty for the shortage, is not enough to prove that the goods were clandestinely cleared from the appellant's factory -the shortage detected on average basis is not sustainable and, therefore, the demand is set aside –the Bench has considered the submissions made by the other appellants as regard to demand of duty and penalty imposed against them –it is found that no material evidence except few statements was brought on record to prove the charges against them -most of the raw material suppliers have enclosed their invoices on the basis of which the goods were cleared by them to the appellants after payment of CE duty -under the circumstances, the duties and penalties imposed on the other appellants are also set aside -accordingly, the impugned order is set aside and all the appeals are allowed : CESTAT [para22, 23, 24, 25, 26, 27, 28, 29]

- Appeals allowed: DELHI CESTAT

2019-TIOL-3280-CESTAT-DEL

Steel Authority Of India Ltd Vs CC & CE

CX - Demand of Rs.1,43,60,596/- (in six notices) was confirmed on account of alleged irregular availment of Cenvat Credit on capital goods - Further, the demand of Rs.4,44,85,077/- was confirmed on account of irregularly availed Cenvat Credit on ineligible documents – remaining 13 show cause notices were also adjudicated and demand of Rs.32,84,802/- was confirmed on account of irregularly availed Cenvat Credit on capital goods and demand of Rs.11,40,572/- was confirmed on account of availment of Cenvat Credit on ineligible documents - In de novo proceedings ordered by Tribunal vide order dated 23.08.2005 , all show cause notices were adjudicated by disallowing the Cenvat Credit of Rs.5,54,14,430/- and ordered for recovering the same along with interest and imposed penalty of Rs.10 lakhs – appeal before CESTAT.

Held - (I) Air Cooler, Air conditioner, Ventilation systems, water cooler - in order to monitor uninterrupted production process though various computer systems to have desired quality of final product, the appellant have installed air conditioner/coolers/ventilation system for supply of cool air in the blast furnace, steel melting shop, blooming and billet mills, rails mills on which cenvat credit has been availed - as per rule 57Q, the capital goods used for producing or processing, although is not directly used and indirectly used, the same will satisfy the requirements of rule 57Q, therefore, the appellant is entitled to avail cenvat credit on these items: CESTAT

(II) Bulldozer and excavators – these items are specified capital goods which are used as handling equipments in the sintering plant, coal handling plant etc. for feeding various raw materials during the course of the manufacturing of final product and it is integrally connected with the manufacturing process - therefore, in the light of the apex court decision in the case of Ultratech Cement, the said bull dozers and excavators are integral part of the plant and machinery - therefore, appellant is entitled to apply for cenvat credit: CESTAT

(III) Electric Tele communication signals, telephone push bottons, telecom A.V. Aids, Video Amplifier Cord, telecom parts, telephone cables and telecom cords - the items in question were used in control system and various production shops like blast furnace, steel melting shop, blooming and billet mills, etc. for communicating transfer of raw material and intermediate goods to the next process and also for communicating the production process data to the next stage users so that production process be carried on without interruption for manufacturing of final product - in view of this, the said items in question have been integrally used by the appellant in the manufacturing process of final goods -therefore, the same are entitled to cenvat credit: CESTAT

(IV) CTD Bars and forged blanks and GC Sheet – CTD Bars were used to form the bed to put sinter material, therefore, it is clear that they are used as part of capital goods and eligible for credit - the forged blanks are used as parts of various capital goods throughout the plant in the blast furnace, steel melting shop, blooming mills etc. and, therefore, qualify as parts and accessories of the specified capital goods, for which direct use is not a requirement - the GC sheets were also used as structures which are part of the various capital goods in the production area, therefore, to be treated as part of capital goods - hence cenvat credit cannot be denied - further, the steel items have been used in fabrication/manufacture of various plant and machinery installed inside the factory premises which ultimately contribute in manufacture of final product - in view of this, the appellant is entitled to avail cenvat credit on the said items: CESTAT

(V) Carbon Tetra Chloride, Bell Cleaning System, Cleaning chemical and floor cleaning machine - these items have been used in various production mills for removing carbon which is accumulated in the machines -the removal of carbon is essential for the manufacture of the dutiable products as it affects the quality of the goods -the floor cleaning machine is used for recovery and collection of waste in the floors and to ensure smooth and uninterrupted production activity - further, these items are to be considered to be pollution control equipments under section 57Q of the Central Excise Rules -therefore, on the said items appellant are entitled to avail cenvat credit: CESTAT

(VI) Lamp tube/sodium vapour lamp - lighting fittings are essential as they illuminate the factory area in order to maintain continuity in manufacturing process round the clock without any hindrance, especially in darkness when natural light is not sufficient and also not available at night, in various areas of the plant -therefore, said lighting fittings are essentially a pre-requisite for manufacture of goods, therefore, entitled to cenvat credit in terms of rule 57Q and rule 57A of CE Rules: CESTAT

(VII) Amonia Plaper/photo chemical/ammonia printing machine/photocopying apparatus - ammonia paper is used for preparation of drawing and designing of final products and blue prints of various spare, components etc. which are manufactured in the various workshops within the factory of the appellant, without which the manufacture of goods is hindered -hence, by applying the user-test principle, the said item qualify as capital goods under rule 57Q of the CE Rules: CESTAT

(VIII) Monoblock Concrete Sleepers and body crossing etc . - these items have been used as part of transportation and material handling equipments within the factory of production and the credit has been availed in respect of these items which have been used within the factory -the use of these materials is essential for manufacture of finished goods -thus it falls within the scope of equipment defined under rule 57Q in as much as it has been used in or in relation to manufacture of final product -therefore, said items are specified clearly under which are used as handling equipments in the sintering plant, coal handling plant etc. for feeding various raw materials during the course of manufacturing of final product and is it integrally connected with the manufacturing process -the Material handling equipment has to be construed as used for production on processing or for bringing about "change in the nature of final product" -therefore, relying on the decision of this Tribunal in the case of Ultratech Cement Ltd.the appellant is entitled to avail cenvat credit: CESTAT

(IX) Safety and firefighting equipments, toughened glass, safety glass - the items in question are essential in view of high temperature involved in various production areas -therefore, it is considered to be used for production or processing final goods -the toughened glasses are used in cranes, furnace and rolling mills areas handling hot metal and semi finished goods in hot conditions -they are part of the material handling equipment and control rooms operating the machines -in view of this, the appellant is entitled to availcenvat credit on the said items: CESTAT

(X) Bunker wide bracket/forklift truck part /rail brace, clamp plate, elastic rail - these items have been used as material handling equipment for storing/mixing /transporting the raw material in ore handling plant, sintering plant, coal handling plant, steel melting shop and other workshops - further, without the internal transport of raw material, manufacture cannot take place, hence, is entitled to avail cenvat credit on the above said items: CESTAT

(XI) Motor Vehicle parts - these items are used as part of ingot metal, bogie cars and fork lift trucks which are used for transportation of various raw materials within the factory and is integrally and essentially connected with manufacture of final products -hence, qualify as capital goods under rule 57Q -therefore, the appellant is entitled to avail cenvat credit on the above items: CESTAT

(XII) Diesel oil engine - the diesel oil engine is used in various places like water treatment plants, coke oven etc. for the purpose of recycling of waste water - the cenvat credit was allowed on caustic soda, water treatment chemical etc. as input as it is essentially used in relation to manufacture of final product -hence, the said item is eligible for cenvat credit as input if not eligible for credit under the category of capital goods -because the diesel oil engine is used in water treatment plants, coke ovens, etc. for the purpose of recycling of waste water, it is a part of manufacturing process of the appellant -therefore, appellant is entitled for availing cenvat credit: CESTAT

(XIII) Drilling Machine - the said machine is used as parts, components, etc. of various machine, shops and other engineering shop for the purpose of manufacturing of various capital goods and also used for maintenance of various capital goods in workshop -therefore, the appellant is entitled to avail cenvat credit: CESTAT

Conclusion:

In view of the above, the appellant is entitled to avail the cenvat credit except Rs.4.30 crores - the Bench also takes note of the fact that the cenvat credit of Rs.4.30 crores has been disallowed on account of invalid documents -but the Commissioner, in the impugned order, has not discussed and given the finding how the documents are invalid and why the appellant is not entitled to avail cenvat credit on these documents -the said aspect is required to be seen by the adjudicating authority on the explanation/supportive defense produced by the appellant -therefore, for denial of cenvat credit of Rs.4.30 crores, the matter is remanded back to the Adjudicating Authority to pass a detailed order either denying or holding appellant entitled for cenvat credit on the basis of documents produced by the appellant after hearing the appellant and further production of documents in their defense -apart from the cenvat credit of Rs.4.30 crores, the rest of the cenvat credit denied by way of impugned order is allowed -in these terms, appealsare disposed of : CESTAT [para 15, 16, 17, 18]

- Appeals disposed of: DELHI CESTAT

2019-TIOL-3279-CESTAT-DEL

Udaipur Cement Works Ltd Vs CCGST

CX - Appellants are engaged in manufacture of cement -during an audit, the Department observed that he appellant has written off inventory of stores and spares on 30.9.2012 by reversing credit of 12.36% and 14.42% - the appellant terminated its production in the year 2002, hence, the store and spares would have been purchased in or before the year 2002 when the rate of CE duty was 16% and the assessee, therefore, would have availed the credit of duty @16% -forming an opinion that the reversal was also required to be @ 16% the amount reversed is alleged to be short -resultantly, vide SCN dated 26.4.2017,cenvat credit amounting to Rs.23.90 lakhs was proposed to be recovered from them alleging the same to be short reversed by the appellant -interest at the appropriate rate and the proportionate penalty were also proposed - the said proposals were confirmed vide O-I-O dated 21.12.2017 -the appeal thereof was rejected, hence the assessee is in appeal before CESTAT.

Held: Apparently and admittedly, the cenvat credit was reversed in the year 2012, no doubt, the duty of CE at the time of purchase of such store and spare was @ 16%, and that the credit has been reversed @ 12.36% but simultaneous fact of this appeal is that there is no documentary evidence on record -the initial burden was definitely of the appellant to prove the mode of reversing the credit at the lower rate but the simultaneous fact remains that no document is produced by Department to support the allegations -it is apparent from the order under challenge that there is clear acknowledgement on part of the Department that the appellant has informed the reversal of credit as was done by them vide their letter dated 26.9.2013 itself -the said acknowledgment on part of the Department is sufficient to hold that present case is not at all of suppression of facts as is alleged in the Order under challenge -the SCN herein is of 26.4.2017 i.e. beyond 4 years of the acknowledged date of receiving information -the extended period was not allowed to be invoked by the Department to issue the SCN –the Bench is convinced to hold the SCN to be barred by limitation -from the SCN, it is also apparent that the same has been issued invoking rule 14 of Cenvat Credit Rules, 2004 [CCR] -the applicability of rule 14 with respect to the cenvat credit as has been taken but subsequently "written off " came into existence only by virtue of notification no.3/2013 dated 1.3.2013 vide which an explanation was added to rule 3(5B) of CCR -apparently and admittedly, the written off qua stores and spares was made in the year 2012 with the reversal of cenvat credit, thereof, i.e. prior to the aforesaid notification of March, 2013 -hence, it becomes clear that Department vide this SCN proposing recovery under rule 14 of CCR has given retrospective effect to the said notification -notification is clear enough to be effective w.e.f. 1 March, 2013 only - the Department was not entitled to invoke rule 14 while proposing the recovery of reversed cenvat credit alleging it to be short -no reason to differ with the decisions in the cases of Ericsson India Pvt. Ltd. - 2019-TIOL-1356-CESTAT-DEL and BCH Electric Ltd. - 2016-TIOL-962-CESTAT-CHD of the coordinate benches - the order under challenge is definitely not based upon any of the documents -in view of the above, the Order under challenge is hereby set aside -appeal stands allowed: CESTAT [para5.1, 6, 7, 9]

- Appeal allowed: DELHI CESTAT

2019-TIOL-3271-CESTAT-MUM

Ring Plus Aqua Ltd Vs CCE & C

CX - It is a strange case where a refund claim of assessee made in 1995 could not be settled till date under one pretext or the other - The entire case record does not bring out a case of unjust enrichment as refund was claimed against reversal of CENVAT credit which was ultimately held to be admissible by the CESTAT itself and that remained unchallenged so far - It is not understood when no duty was paid and only credits availed were refunded, how come a case of unjust enrichment could come into play when the said amount has been shown as receivable under the head "Loan & Advances" receivable from the department for a continuous period of 10 financial year and when the said amount is adjusted against 'Profit & Loss Account' under the heading "Administrative, Selling and General Expenses" - It is beyond once capability to trace out after lapse of a decade as to if such amount could be/was absorbed in exact cost of manufacturing of final product since price of a product can't remain static in all those years - Moreover, as has been observed in case of M/s Pandurang SSK Ltd., it is not invariably true that when any amount is shown as expenditure or any expenditure is required to be made, the same has to be absorbed in costing of final product unless there is a proof that pricing of the final product has specifically increased on that score, since there are various mechanisms available before the manufacturer to absorb the cost say by way of reducing profit margin of its sale, overhead expenditures of company - Assessee had justified absorbing of said cost in its administrative expenses overhead and therefore, it can be safely concluded that incidence of duty has not been passed on by assessee to any other person - The impugned order refusing refund is hereby set aside - The assessee is entitled to get refund of Rs.7,37,586/- along-with applicable interest calculated from 3 months after filing of refund application as per explanation appended to Section 11BB of Central Excise Act: CESTAT

- Appeal allowed: MUMBAI CESTAT

2019-TIOL-3270-CESTAT-HYD

Dr Reddy's Laboratories Ltd Vs CCE, C & ST

CX - The assessee is a 100% EoU and procured various items duty free under Notfn No 53/97-Cus r/w Notfn No 1/95-Ce - The Revenue issued SCN proposing recovery of duty on certain items on grounds that the items in question were not used in connection with manufacture and packing of goods and hence not eligible for such exemption - On adjudication, the proceedings were dropped - On appeal by the Revenue, such findings were reversed by the Commr.(A) - On further appeal, the Tribunal remanded the matter, whereupon the exemption was partly allowed - Duty demand was raised and was sustained by the Commr.(A) - Hence the present appeal.

Held - Considering the records of the case, the original authority dealt with all the issues at hand and concluded that three items namely (i) 3.0 Ton split AC, (ii) Radio Modem and (iii) expanded
Polyurethane Sheets and pipe sections, GI hollow profiles were ineligible for exemption - As far as Radio Modem is concerned, it is meant for updating the production details and so it cannot be said that there is no nexus between these items and the manufactured items - Hence Radio Modem is eligible for exemption - Regarding the 3.0 ton AC and the ducting system, no evidence was put forth to show that the conference room was used in connection with the production & operations as claimed by the assessee - The assessee was also not in a position to produce the records such as notices given for meeting and minutes of the meetings to prove that the conference room was used for purposes related to production of export goods, thereby showing the nexus between these goods in question and the export goods as the data is very old - Besides, it stands settled by the Apex Court in Ginni Filaments Limited that an exemption notification must be read strictly so far as eligibility is concerned - Hence the the assessee is eligible for exemption for Radio Modem but is not eligible for exemption for the 3.0 ton air conditioner and the ducting system: CESTAT

- Assessee's appeal partly allowed: HYDERABAD CESTAT

Cus - The assessee is working as a CHA and they were approached by one Mr.Alexander Nathan alias Alex, employee/agent of the importer M/s. M and I Company - The said Mr. Alexander handed over the necessary authorization and KYC documents of importer to the assessee and the assessee carried out verification as required and attended customs clearance activities of the importer - The imported goods were cleared from Customs and handed over to the said Mr. Alexander - Later on, the DRI seized the gold concealed in vehicle AC compressors pertaining to the importer M/s. M and I Company - A SCN was issued and Inquiry Officer was appointed and after the inquiry, the Inquiry Officer submitted his report making the findings to the effect that; the allegation of violation of Regulation 10(a) of the CBLR, 2018, of not obtaining authorization from the importer is sustainable; the allegation of violation of Regulation 10(d) of CBLR, 2018 of not advising his client is sustainable; the allegation of violation of Regulation 10(e) of the CBLR of not complying with due diligence is not sustainable and the allegation of violation of Regulation 10(n) of the CBLR, of not verifying the IEC number, and functioning of his client at the declared address by using reliable, independent, authentic documents, data/information is not sustainable - Out of the 4 violations alleged against assessee, the Inquiry Officer has exonerated the assessee under Regulation 10(e) and 10(n) and has only found the assessee violating Regulations 10(a) and 10(d) which pertains to not obtaining authorization from the importer and not advising his client properly - As far as verification of documents are concerned, the assessee has been exonerated and it is found that the assessee was approached by one Mr. Alexander Nathan who is alleged to be the employee of the importer as per his own statement which remained unrebutted till today shows that the assessee has been properly authorized by Mr. Alexander Nathan by handing over the necessary authorization and KYC documents which were properly verified by the assessee - Further, it is not necessary that the Customs Broker should personally verify the premises of the importer - Once the Customs Broker has been approached by employee of the importer and he has verified the necessary documents, then there cannot be any allegation of violations against the CHA - The impugned order is not sustainable in law and therefore same is set aside: CESTAT

Cus - The appellant imported a paint shop in 15 different consignments - The appellant paid the freight forwarder a certain sum of money whereas in the 15 bills of entry, the appellant included a considerably lower amount, on account of which a considerable amount escaped inclusion in the assessable value - The reason given by the appellant was that at the time of filing the BoE in the first 10 cases, it was aware of the actual freight charged by the freight forwarder whereas in the last 5 BoEs, they were not aware of the actual freight payable to the freight forwarder - The reason cited was that the variable cost based on CAF/BAF was not known - Hence duty demand was raised, penalty was imposed and benefit of concessional rate of duty under Notification No. 97/2004- Customs was denied - Hence the present appeal.

Held - It is seen that the only variable in the cost is the currency adjustments which simply convert all cost payable in USD into Rupees - Thus it wont be correct for the appellant to claim that the cost of transport was not immediately available to it - The currency price is available directly on minute-to-minute basis every day - Moreover, it is seen that out of total cost paid to the freight forwarder, the appellant included only a part of the amount, in 15 consignments - Even if the actual freight of the first 10 consignments was known on actual basis, it could not have been 40% of the total freight for 66% of the total consignments - The documents based on which the freight was included on actual basis was not available with the appellant - The proviso to Rule 9(2) of the Customs Valuation Rules is invokable only where the cost is not ascertainable - The proviso cannot be invoked merely because the importer did not receive the actual freight element at the time of filing the BoE - In the present case, the cost is ascertainable and the importer also claimed to have ascertained the cost in respect of 10 of the 15 BoEs at the time of import - The intention to evade becomes obvious as the appellant avoided including amounts of freight element actually paid by it in the assessable value by adopting such a modus operandi : CESTAT

Held - Limitation - The appellant paid significantly higher amount to the freight forwarder as freight - But in the 15 BoEs filed by the appellant, only 40% of the freight was included in the assessable value - When the agreement and terms of payment are crystal clear the actions of importer are clearly intended to evade taxes - When the documents on actual freight were called for, the appellant failed to produce them - Considering the specific methodology devised by the appellant to defraud the Government, the extended limitation is justly invoked: CESTAT

Held - Confiscation - The O-i-A in question does not order confiscation and does not impose any redemption fine - As in the present case, the goods were cleared in regular course, the bond executed by the appellant is not for production of goods but for fulfilment of export obligation and to pay duty in case of failure to fulfil export obligation - The goods cannot be confiscated even if the same are liable for confiscation: CESTAT