2019-TIOL-3360-CESTAT-BANG

Ashish Oberoi Vs CCT

ST - The assessee filed an application claiming refund being the amount paid as Service Tax for the purchase of an independent Villa from M/s RBD Shelters LLP, Bangalore - Same was filed as per the exemption provided under S.No.14 of Notfn 25/2012-ST - Subsequently, a SCN was issued proposing to deny the refund claim on the ground that exemption notification is not applicable - There is a separate agreement entered between the assessee and the contractor for construction of individual house for which separate approval has been sanctioned - Further, the definition of 'residential complex' is not applicable because all the conditions which are required to be fulfilled for a complex to be residential complex are not fulfilled - The ground for rejection is that there are common facilities like park and roads but in view of the Relinquishment Deed produced on record, it is found that these common facilities like parks and roads have been relinquished to the Government and hence the same are not the common properties of the owner - It is rather a public property which cannot be considered as common facilities - The impugned order is not sustainable in law and therefore the same is set aside: CESTAT

- Appeal allowed: BANGALORE CESTAT

Ashok Kumar Mittal Vs CCE & ST

ST - The issue in this appeal is, whether the demand under category of construction of residential complex service have been rightly raised under admitted fact that the assessee have constructed individual row houses, where in each block there is one residential unit - It is an admitted fact that the assessee have constructed individual row houses/units and not a building/buildings having more than 12 residential units which is the condition precedent for categorization of service under category of 'construction of residential complex service' - The ruling of a coordinate Bench of this Tribunal in Gandharva Infrastructure & Projects Ltd. 2017-TIOL-3180-CESTAT-DEL is per incurrium as it have erred in ignoring and not following the binding ruling of Supreme Court in the case of Macro Marvel Projects Ltd. 2008-TIOL-1927-CESTAT-MAD wherein row houses were constructed under a housing scheme having one unit in each house, it have been held that such activity is not liable to Service Tax under 'Construction of Residential Complex Service' - Accordingly, following the same, the demand and penalty are set aside: CESTAT

- Appeal allowed: DELHI CESTAT

CENTRAL EXCISE

CCE, C & ST Vs Amit Decorative Plywoods Pvt Ltd

CX - Allegation of clandestine removal and undervaluation of goods - SCN issued - Assessee chose to settle their case before the Settlement Commission and Vide Final Order dated 2nd September, 2014, the Settlement Commission settled the case, on condition of payment of duty, by Respondents No. 1 and 2, of Rs. 1,56,11,930/-, along with interest of Rs. 44,17,956/-, and penalties of varying amounts - Additionally, the Settlement Commission also gave Respondents No.1 and 2 the option to redeem the seized goods, on payment of redemption fine of Rs. 5,00,000/- - immunities from prosecution was also granted in terms of s.32K of the CEA, 1944 - Aggrieved by this order, DGCEI, and the CCE have filed the present writ petition.

Held:

+ Conferment on the Settlement Commission of the "powers of a Customs officer", or the "powers of the Central Excise Officer" would not, ipso facto, result in the Settlement Commission metamorphosing into an adjudicating authority - The "powers of a Central Excise Officer", or the "powers of the Customs officer", conferred on the Settlement Commission are so conferred to further its aims and objectives, i.e. to further the process of settlement, and assess whether there has, or has not, been full and true disclosure of liability by the applicant before the Settlement Commission - The Settlement Commission does not, by the conferment of such power, become a parallel adjudicating authority, adjudicating the Show Cause Notice - Complex issues of fact, or cases in which determination of the liability of the assessee is dependent on detailed appreciation of evidence would, by their very nature, stand excluded from the purview of jurisdiction of the Settlement Commission - The repeated refrain, of the respondents, before the Settlement Commission, was that the evidence in the Show Cause Notice was insufficient to make out a case of clandestine removal or undervaluation, to the extent alleged therein - These very submissions, by themselves, indicate that the Settlement Commission ought not to have proceeded with the case, let alone settle it for less than one-tenth of the demand proposed in the Show Cause Notice - Having not chosen to submit themselves to adjudication, the contention that the Revenue had not been able to produce evidence, to support its case of clandestine removal and undervaluation, against Respondents No.1 and 2 , to the extent alleged in the Show Cause Notice, was, in the view of the Bench, entirely unavailable to the respondents: High Court [para 31, 34, 35]

+ Show Cause Notice is the terminus a quo of the adjudicatory process, and not the terminus ad quem thereof - Leading of evidence, by the Revenue, in support of the case sought to be made out in the Show Cause Notice, and production of evidence, by the assessee, in reply thereto, are incidents of adjudication - The exercise of production of evidence, reliance thereupon, and appreciation thereof, would arise only in adjudication proceedings, by the competent adjudicating authority - Having, by moving the Settlement Commission, not allowed the adjudicatory process to take off, it was not open to the respondents to urge - or, for that matter, for the Settlement Commission to hold - that the Revenue had failed to produce evidence in support of its case: High Court [para 37]

+ While it is open to an applicant, before the Settlement Commission, to question the legality of the demand, proposed in the Show Cause Notice, on points of law, or the like, an applicant, before the Settlement Commission, cannot wish away the effect of the evidence, on which reliance is placed in the Show Cause Notice - Questioning of the value, or the quantum or sufficiency, of the evidence cited in the Show Cause Notice, necessarily requires subjection, of the assessee, to the adjudicatory process: High Court [para 42]

+ Findings recorded in the impugned Final Order, as contained in paras 24.1 to 24.4 thereof, in fact, amount to a truncated adjudication of the Show Cause Notice, without the trappings of the regular adjudicatory process, which would have included admission of the evidence cited in the Show Cause Notice, rebuttal thereof by the respondents, adducing of evidence by the respondents in their favour and rebuttal thereof by the Revenue - Such a summary adjudication, as has been undertaken by the Settlement Commission, is unknown to the Act, or to any other law governing the field - Settlement Commission was never intended to operate as a parallel, summary adjudicatory forum, which could substitute the process of regular adjudication before the competent adjudicating authority - Detailed appreciation and analysis of evidence, or of the value of the evidence cited in the Show Cause Notice, is an exercise which the Settlement Commission is required to forebear itself from undertaking, such an exercise being contemplated, by the statute, only by a competent adjudicating authority, in accordance with the procedure prescribed in the Act, the relevant rules, and judicial precedents, in that regard - Bench is, therefore, unable to sustain the impugned Final Order, or the findings of the Settlement Commission - Settlement Commission fell into serious error of jurisdiction, in settling the case arising from the Show Cause Notice, dated 16th January, 2013 supra, for an amount of Rs. 11,80,12,105/-, along with interest, as it has chosen to do - impugned Final Order dated 2nd September, 2014, of the Settlement Commission, is quashed and set aside - writ petition is, accordingly, allowed - matter to be decided by adjudicating authority - amounts, if any, deposited are to be retained and shall be subject to the outcome of the adjudication proceedings: High Court [para 47 to 49, 53]

- Writ petition allowed: DELHI HIGH COURT

2019-TIOL-3358-CESTAT-CHD

Alfa Steels Vs CCE & ST

CX - The assessee-company was served an adjudication order and as per records of the order of the Commr.(A), the same was sent to the assessee after almost 8 months of the order having been passed - No records were found of the delivery of such order to the assessee - Nonetheless, the Commr.(A) proceeded to dismiss the appeal against the O-i-O on grounds of limitation - Hence the present appeal.

Held - The only question to be answered is whether or not the adjudication order was served to the assessee - The same is evident that no acknowledgment receipt has been produced by the Revenue in support of the service of the adjudication order - Moreover, during the relevant period, service through speed post was not deemed to be proper service in terms of Section 37C of the CEA 1944 - Hence the adjudication order was not served to the assessee, on account of which the appeal could not have been dismissed by the Commr.(A) as being time barred - Moreover, the O-i-O is itself an ex parte order - In such circumstances, the order is remanded back to the adjudicating authority for fresh adjudication: CESTAT

- Case remanded: CHANDIGARH CESTAT

Amit Kumar Alias Amit Shukla Vs CCE

CX - The Department, acting upon information received visited the premises of assessee and during search, certain goods viz. Rounak Pan Masala, Rounak Tobacco and Paawan Gold Mouth Freshner were recovered - The assessee failed to produce any documentary evidence with respect to seized goods - SCN was issued to assessee proposing recovery of Central Excise duty along with interest - The Notice also proposed confiscation of the seized goods under Rule 25 of CER, 2002 and imposition of penalty on assessee under Section 11AC of the Act read with Rules 25 and 26 of CER, 2002 - As per the report submitted by Assistant Commissioner (Preventive), Gorakhpur, there was no discrepancy found in the functioning of K.G. Pan Products, Gorakhpur and the report stated that the goods could have been procured from the open market since the products of the said company were being traded openly - Therefore, the payment of duty on the said goods cannot be disputed - The goods found in possession of assessee were manufactured by said company and even if the assessee had obtained the goods from somewhere else and not from the company, the duty on the said goods had been received by Revenue under the compounded levy scheme - In any case, Central Excise duty is required to be paid by manufacturer and since the assessee is not the manufacturer of said goods, duty cannot be recovered from assessee - Further, it has been recorded by Commissioner (A) that there is no evidence on record to show that the assessee had manufactured the said goods - The Department is of the view that the assessee had gotten impugned goods manufactured from somewhere else and was operating under the guise of being a simple trader - The investigating authority has neither proven that the goods were being manufactured by assessee nor established that the goods could not have been procured from the open market - Since, there is no evidence to the contrary, the contention of assessee is accepted that the goods had been procured before the ban on sale of Chewing Tobacco and since the assessee could not trade in impugned goods pursuant to the ban, the goods were simply lying at the assessee's premises - The impugned orders cannot be sustained and the same are set aside: CESTAT

- Appeal allowed: KOLKATA CESTAT

CUSTOMS

2019-TIOL-2625-HC-DEL-CUS

Honeycom Synergies Vs CC

Cus - Petitioner did not contest any part of the demand proposed in the Show Cause Notice dated 24th March, 2017 and admitted, and paid, the entire proposed differential duty liability of Rs. 84,28,058/-, along with interest, thereon, of Rs. 22,12,969/- - Settlement Commission settled the case by appropriating the amounts paid and also imposed penalty of Rs.8,54,000/- - Seeking a rectification of this order, the petitioner submitted that the Settlement Commission had imposed penalty on the petitioner on the basis of an erroneous finding that the petitioner had consciously chosen to spread out its imports through various ports and had, thereby, devised a planned strategy to evade Customs duty, however, no such allegation, the petitioner sought to point out, was contained in the Show Cause Notice, dated 24th March, 2017, issued to the petitioner - Pointing out that the penalty imposed by the Settlement Commission was exorbitant, the Rectification Application filed before the Commission prayed that the "error apparent on the face of the order" dated 1st November, 2018 supra, be rectified and the decision, to impose penalty on the petitioner, be, accordingly, reconsidered - Petitioner calls into question the decision of the Settlement Commission dated 18.02.2019 to reject the Rectification Application filed as in its view there was no error apparent in the order dated 1 st November 2018 of the Settlement Commission.

Held: Bench is unable to subscribe to the contention that the finding, of the Settlement Commission, regarding the petitioner having spread out its imports over various ports, so as to explore the chance of evading duty, is foreign to the Show Cause Notice - Para-12 of the Show Cause Notice clearly sets out, in tabular form, the ports through which imports had been effected by the petitioner, as well as the number of Bills of Entry filed at each port - A glance thereat reveals that imports were effected via 77 Bills of Entry filed at ICD, TKD (Export), 6 Bills of Entry filed at ICD, TKD (Import), 1 Bill of Entry filed at Chennai Sea Port, 2 Bills of Entry filed at ICD, Nagpur and 6 Bills of Entry filed at ACC, Delhi, totaling 92 Bills of Entry - The fact that the petitioner had spread out its imports through various ports is, therefore, part of the record, with specific allusion, thereto, available in the Show Cause Notice - That the petitioner had done so, in order to create an orchestrated system of evading duty, was a finding arrived at, by the Settlement Commission, which, was entirely within the province of jurisdiction of the Settlement Commission, and at which it was quite competent to arrive - Bench cannot, therefore, accept the submission of the petitioner, that the said finding, by the Settlement Commission, travelled beyond the allegations in the Show Cause Notice - The Settlement Commission has chosen to pent furcate the total quantum of penalty, depending on the quantum of imports effected at different ports and, in doing so, we do not see that the Settlement Commission committed any "rectifiable" error - In that view of the matter, it cannot be said that the decision, of the Settlement Commission, to impose penalty on the petitioner, suffers from any error apparent on the face of the record - Immunity from penalty can be granted, by the Settlement Commission, either in whole or in part - The quantum of penalty, as awarded by the Settlement Commission, is only 10% of the duty evaded by the petitioner, and is, therefore, much less than the penalty which the petitioner might have had to suffer, had the matter proceeded to adjudication - It cannot, therefore, be said that the penalty imposed, by the Settlement Commission, on the petitioner, was unreasonably high: High Court [para 16, 17, 18, 21]

Rectification of error in final order - s.127C(5A) of Customs Act, 1962 - High Court does not find any provision empowering the Settlement Commission to dispose of applications, under Section 127B(5) of the Customs Act, by circulation, without hearing the parties - Bench is also of the view that the Settlement Commission is bound to provide reasons, howsoever brief, for the order proposed to be passed, by it, on the application under Section 127B(5) - An administrative communication, such as the letter dated 18th February, 2019, signed by the SIO in the Settlement Commission, conveying the decision of the Settlement Commission to reject the Rectification Application filed by the petitioner is completely intolerable in law - applications under Section 127B(5) have to be heard in open Court by the Settlement Commission, and orders, disposing of such applications, are required to be reasoned - Though the impugned communication, dated 18th February, 2019, does not conform to these parameters, Bench, nevertheless, refrains from interfering, in the present case as, even on merits, Bench is not satisfied that the decision, of the Settlement Commission, to impose penalty on the petitioner, suffers from any infirmity, either in law or on facts - writ petition is, therefore, dismissed: High Court [para 23 to 26]

2019-TIOL-3356-CESTAT-MUM

Graphite India Ltd Vs CC

Cus - M/s Graphite India Ltd is disputing the charging of interest under section 28AB of Customs Act, 1962 on the duty liability paid by M/s Rajat Pharmachem Ltd, and accepted as 'settlement' in accordance with the provisions of Customs Act, 1962, by lawfully constituted authority for such, on imports effected by assessee and penalties imposed under section 114 A of Customs Act, 1962 - The issue for determination is the applicability of these two provisions of Customs Act, 1962 when duty liability has been fastened on the transferor of tradeable scrip - The SCN had demanded from M/s Rajat Pharmachem Ltd, and the several transferees, the duty that was, since, settled - On the basis of this statutory process, further proceedings were restricted to the several transferees and, that too, to the interest on the said duties, under section 28AB of Customs Act, 1962 and penalties under section 114A of Customs Act, 1962 as the order of settlement foreclosed such, normally devolving upon the 'person liable to pay duty', on the entity responsible for action leading to invalidation of the said scrips - According to assessee, in order dated 31 August 2015, the Tribunal had, inter alia, considered the appeal of M/s Indorama Synthetics (I) Pvt Ltd, one of the transferees, against the detriment visited upon them in the very same order now impugned before Tribunal - It was also pointed out that the High Court of Bombay in Coromandel Fertilisers Ltd had held that the questions presented for consideration by Revenue could not be construed as 'questions of law' before dismissing the appeal - Therefore, the liability of transferees, limited to detriment of interest and penalty, when acceptance of application for settlement, under a statutory process that is restricted to only to specified persons, implicitly declares such person to be liable to duty within the meaning of section 28 of Customs Act, 1962 has not been adjudicated upon in the impugned order - In the absence of any finding, Tribunal is unable to subject the said order to the test of being legal and proper - In order that the adjudication proceedings be completed, the impugned order is set aside and the matter is remanded back to the original authority for a fresh decision in accordance with law: CESTAT

- Matter remanded: MUMBAI CESTAT

TIOL CORPLAWS

PMLA - P Chidambaram satisfies bail guidelines for offences described as regular crimes but not for serious economic offences: HC

Arbitration - Counter-claim cannot be rejected by Arbitrator solely because it was not raised before other contracting party : HC