2019-TIOL-NEWS-279 Part 2, Dated: Wednesday, November 27, 2019

SERVICE TAX

2019-TIOL-3425-CESTAT-MUM

Sandoz Pvt Ltd Vs CCE

ST - Appellant submits that the entire amount of service tax along with interest was deposited before initiation of the show cause proceedings and in absence of the ingredients mentioned in sub-section (4) of Section 73 ibid, the benefit of sub-section (3) thereunder should be available to the appellant for non-imposition of penalties.

Held: It is an admitted fact on record that the appellant had incorrectly computed the service tax liability and had also paid the differential amount of such liability along with interest before issuance of the show cause notice - such payment particulars were duly reflected by the appellant in the periodic ST-3 returns filed - Further, the department has not substantiated the allegation of fraud, collusion, misstatement etc., in arriving at the conclusion that the appellant should be exposed to the penal consequences provided under the statute - Thus, in absence of any proper substantiation with regard to involvement of the appellant in the activities concerning fraud etc., the benefit of subsection (3) of Section 73 ibid should be extended to the appellant for non-issuance of show cause notice, especially for imposition of penalties - impugned order insofar as it relates to imposition of penalties on the appellant under Section 77 and 78 of the Finance Act, 1994 are set aside and the appeal to such extent is allowed in favour of the appellant: CESTAT [para 5, 6]

- Appeal partly allowed : MUMBAI CESTAT

2019-TIOL-3424-CESTAT-DEL

Gurnani Infra Developers Pvt Ltd Vs Commissioner of CGST

ST - Refund - Appellant is receiving a taxable service of the nature of work contract services and had been depositing the service tax under reverse charge mechanism - Realising that they were not liable to discharge the liability under reverse charge mechanism, the appellant filed a refund claim - claim allowed but by holding that the same is hit by unjust enrichment, amount transferred to the Consumer Welfare Fund - appeal to CESTAT contending that there can be no occasion for applicability of the principle of unjust enrichment in the given case for want of any possibility of passing over the incidence to anybody else by the Service recipient.

Held: Balance sheet shows that since the year 2015 till the time of filing the impugned refund claim, Appellant is showing the impugned amount of Rs 6,36,415/- as an advance recoverable in cash as being paid towards the Service Tax - There is, therefore, sufficient evidence otherwise on record to falsify any unjust enrichment as is alleged on part of the Appellant - Commissioner Appeals has committed an error while holding the unjust enrichment on part of the Appellant without any cogent reason being given to support that finding - Order is accordingly set aside and appeal is allowed: CESTAT [para 8]

- Appeal allowed : DELHI CESTAT

CENTRAL EXCISE

2019-TIOL-3423-CESTAT-DEL

Commissioner of CGST Vs Day And Company

CX - The Noticee were engaged in manufacture of Pan Masala containing chewing tobacco (Gutkha) under the brand name "KESAR PREMIUM GUTKHA" and "KESAR GULAB GUTKHA" of MRP Rs.1.50 per pouch and Rs.5.00 per pouch - They were having 10 Pouch Packing Machine of MRP Rs.1.50 per pouch and one Pouch Packing Machine of MRP Rs.5.00 per pouch - On the Noticee's request dated, three machines out of these ten machines of MRP Rs.1.50 per pouch were sealed on 01.05.2011 and one pouch packing machine of MRP Rs.5.00 was sealed - Later, on the Noticee's request, the said seven pouch packing machines of MRP Rs.1.50 per pouch were also sealed in the midnight of 15.06.2011 - 16.06.2011 - The Noticee vide letter dated 08.07.2011 had requested for de-sealing of Five packing machines of MRP Rs.1.50 per pouch, which were de-sealed on 11.07.2011 by the Superintendent - It was also observed during the visit that there was no seal on one pouch packing machines of GUTKHA of MRP Rs.5.00 per pouch which was sealed on 01.06.2011 - Accordingly, a record of proceeding was prepared - During course of adjudication, the noticee took a categorical stand that as their factory was closed from 16.06.2011 to 30.06.2011, lot of dust had accumulated on the machines - They directed their employees to clean the factory as also to remove dust from the machine and it seems that during the course of cleaning of the machines, the seal was detached and fell down - The seal was found immediately next to the machine and the machine was admittedly unplugged with the electrical connection, thus establishing that the same was not in a working condition - Further they contended that no raw material or the final product was found near the machine thus establishing that the same was not used during the period of closure - They also submitted that an enquiry was undertaken against them by the Deputy Commissioner, who had taken into account the entire evidence on record including the Electricity Bills, Labour information and other records and had concluded that there was no mala fide intention on the part of the assessee and the records maintained by the party do not show any discrepancy and accordingly he recommended for closure of the investigations - The Commissioner in his impugned order has taken the said report of the Deputy Commissioner into consideration and has concluded that in terms of said report no irregularity was found - He further observed that there is no clinching evidence produced by the Revenue overriding the findings of the Deputy Commissioner or establishing any unauthorized manufacturing activities - In the absence of any evidence to show that the said machine has been used for manufacture of the goods, mere fact of the seal having been broken accidentally during the period of closure cannot lead to the fact that the said machine was used for production activities - He accordingly dropped the proceedings - Such report of the Deputy Commissioner is also based upon the scrutiny of various relevant documents and has not been controverted and rebutted by the Revenue - As such, no reasons found to interfere in impugned order of Commissioner: CESTAT

- Appeal rejected : DELHI CESTAT

2019-TIOL-3422-CESTAT-ALL

Durga Trading Company Vs CCE

CX - Assessee was engaged in manufacture of Gutkha having brand name Pukar - Search operations were conducted at the office premises of M/s.Laxmi Agencies, Ghatkopar, Mumbai and at Laxmi Chicken Centre, Ghatkopar, Mumbai on the reasonable belief that they were dealing with Pukar brand gutkha manufactured by assessee - Further at Laxmi Agencies 48,000 pouches of Pukar Gutkha were seized under Panchnama - Further investigations were also carried out at Bandra terminus railway station where search of a vehicle resulted in seizure of 3 lakh 60 thousand pouches of Pukar Gutkha - In respect of the goods seized, proceedings were initiated which culminated into passing of the impugned order where the seized goods were confiscated and allowed to be redeemed on payment of redemption fine - Further penalty was imposed on assessee and personal penalty was imposed on Shri Udai Chand Chaurasia, the other assessee - Assessee has submitted that they never claimed ownership of goods which were seized and further confiscated and also relied on finding of this Tribunal in - 2018-TIOL-2129-CESTAT-ALL - He has submitted that this Tribunal has found that Revenue has not carried out any investigation in respect of goods on which duty was paid by assessee during the relevant period and did not establish that the goods which were impugned in respect of said Final Order were different than the goods on which duty was paid and also pointed out that the assessee had all along submitted that he did not have any arrangement for clearance of goods to any other place other than Uttar Pradesh and he did not have control over the goods once duty was paid and cleared from his factory and therefore the assessee submitted that they did not have ownership of confiscated goods and they were not concerned with the same - There were no evidences to establish that the confiscated goods were cleared by assessee without payment of duty and therefore the duty liability cannot be fastened on them - Therefore, impugned order is set aside which deals with imposition of penalties on the manufacturer and other assessee along with setting aside the demand of Central Excise duty on the confiscated goods fastened on the assessee: CESTAT

- Appeal allowed : ALLAHABAD CESTAT

CUSTOMS

2019-TIOL-2688-HC-MAD-CUS

CC Vs EID Parry India Ltd

Cus - Revenue before High Court against the impugned order whereby the Tribunal allowed the appeal filed by the assessee/respondent and held that in view of the Corrigendum No.PN.9/2002 dated 29.11.2002 to the Notification No.43/2002-Cus., as clarified by CBEC vide Circular dated 22.1.2007, the assessee cannot be said to have violated Condition No.5 of the Notification and was, therefore, entitled to the exemption on the Customs Duty on import of raw sugar which was manufactured after refining into white sugar by the assessee and was finally exported through the third party, viz., Merchant Exporter.

Held: Tribunal has rightly held that the assessee could not be denied the benefit of exemption under the said Notification in view of the clarifications issued by the Board and the rigor of the condition No. [v] in the said Notification could not be applied to the assessee in the present case merely because the third party, viz., Merchant Exporter, availed the rebate of the export duty paid against the export made by it -the Board, in the series of Corrigendum and Clarifications has put the position of law beyond pale of doubt and, therefore, the Revenue cannot be permitted to argue against their own Circulars and Clarifications– on merits, the Revenue urged the point on the basis of Foreign Trade Policy – but it is found to the Court's dismay that such a point has not even been raised by the appellant/Revenue before the Tribunal or at any point of time except before the Court for the first time -that point too, on its own, does not advance the case of the appellant/Revenue as Paragraph 4.1.3 of the Foreign Trade Policy relied upon by the Revenue applies to Advance Authorisation Scheme which is different from the Advance License issued in favour of the assessee/respondent in the present case, against which the assessee imported raw sugar in question -the Advance License issued in favour of the assessee, admittedly, was issued after the date of Corrigendum issued by the Central Government on 17.5.2005 and this fact not being in dispute, the point raised by the Revenue even if it was to be entertained, does not have any merit in it -consequently, no merit found in this appeal and it is liable to be dismissed - accordingly, the Civil Miscellaneous Appeal stands dismissed: High Court [para 4, 5, 6]

- Appeal dismissed: MADRAS HIGH COURT

2019-TIOL-2674-HC-MAD-CUS

Transaeromarine Imex Solutions Pvt Ltd Vs CC

Cus - Suspension of license - The petitioner urged that the Tribunal in impugned order observed that the order continuing the suspension of license is already a subject matter of Writ Petition of 2018, whereas, the fact is that the same stood withdrawn with a liberty to approach the Tribunal for consideration of the appeal on merits - Thereafter, the petitioner filed a writ petition against the SCN dated 05.11.2018, in which, this Court on 02.04.2019 extended the interim stay already granted to the petitioner on 12.03.2019 but that petition is for different cause and the impugned order of the Tribunal cannot be sustained and the Tribunal should be directed to consider its own merits afresh - The Tribunal appears to have proceeded assuming that W.P. of 2018 is still pending before High Court, without perusing the order of High Court, by which, the Single Judge of this Court dismissed the writ petition by giving liberty to the appellant to approach the Tribunal and the writ petition was dismissed as withdrawn - Therefore, the very premise of the order of Tribunal as given is not correct - Accordingly, the appeal is allowed and the order passed by the respondent in Misc.Order is hereby set aside and the matter is remitted back to Tribunal to consider the stay application filed by the petitioner afresh and pass orders on merits: HC

-Matter remanded : MADRAS HIGH COURT

2019-TIOL-3421-CESTAT-HYD

Agarwal Brothers Vs CCT

Cus - Whether in a case where goods are imported by assessee after paying SAD of customs at the rate of 4% and sold thereafter under a tax/VAT invoice but where the rate of VAT applicable is nil, the assessee is entitled to refund of SAD paid under Notfn 102/2007-CUS - Assessee submits that in their own case with respect to the earlier appeals, an order was passed in their favour holding that they are entitled to refund of SAD vide Final Order dated 03.10.2019 relying on the order of Principal Bench of CESTAT in case of Gazal Overseas - 2015-TIOL-2454-CESTAT-DEL - As a decision has already been taken on identical issue with respect to the same assessee on the same issue, no reason found to deviate from the same - Accordingly, the impugned order is set aside: CESTAT

- Appeal allowed : HYDERABAD CESTAT