SERVICE TAX

2019-TIOL-3446-CESTAT-DEL

Synergy Baxi Logistics Pvt Ltd Vs CCE

ST - During the course of audit by the department, it was observed that the appellant had entered into an agreement dated 10.11.2011 (the First Agreement) with its principal Akzo Nobel India Limited ('Akzo') who appointed it as clearing and forwarding agent - Later on M/s Akzo and the appellant entered into another agreement with effect from 01.01.2013 and valid up to 31.12.2013 for providing GTA service, which as per the Department was with intention to not to pay the full service tax on C & F Agent service in terms of First Agreement - Commissioner has confirmed the demand of service tax amounting to Rs. 61,12,779/- along with penalties etc. - Aggrieved, Assessee is in appeal before CESTAT.

Held: Issue is as to whether the territory freight agreement, which has been entered upon by the Appellant with its principal (Akzo) on 01.01.2013 is required to be considered as a part of First Agreement dated 01.10.2011, and therefore, the value of the transportation service is required to be added for computation of service tax under the Clearing and forwarding services being undertaken by the Appellant - Upon examination of both the agreements, it is evident that the second agreement is offer for GTA service for the first time after execution of the second agreement which is specific to the transportation of the goods of the principal as per their direction. Therefore, the first agreement cannot be treated as a part of the second agreement as contended by the Revenue - In this regard, Bench also finds that both the agreement have to be read in whole which is complete in itself - As per the CBEC trade notice No. 87/97 dated 14/07/1997, C & F agent is primarily responsible for delivery and forwarding and not the transport activities as such - It is a clear admission on part of the appellant that no such transportation has ever been arranged by them on behalf of their principal till the second agreement was executed between them, which was specifically for transportation of the goods - The two agreements have been perused by the Bench very critically and it is found that there is no interlinkage between the two, the first agreement was exclusively for C & F agent service while the second agreement was for the transportation of goods - Bench also finds that the Ministry, in its Circular dated 01.08.2002, has clarified that the transportation service and Cargo service can be treated together only if the services are provided in a composite manner, but if the two services are billed separately on actual basis, the tax would be leviable only on the Cargo Handling charges - appellant has submitted CA certificate and the relevant ledger on the direction of Bench which has also been perused and it leaves no room for any doubt regarding separate treatment for amount collected for C & F services and transportation services in their ledger and other books of accounts - Bench has also perused the invoices with respect to both the services and finds that the same are independent of each other and, therefore, this cannot be clubbed together for charging of service tax under cargo handling services as has been held in the impugned order - appellant has also submitted a CA certificate stating that the principal has paid the service tax on the reverse charge basis as contemplated under the Act, therefore, there is no force in the arguments raised by the Revenue regarding inappropriate consignment note vis-?vis rule 4A, 4B of STR, 1994 - Impugned order cannot be sustained, therefore, same is set aside and appeal is allowed with consequential relief: CESTAT [para 7, 8, 9, 12, 13, 14, 18]

- Appeal allowed: DELHI CESTAT

2019-TIOL-3435-CESTAT-HYD

Surya Engineers Vs CC, CE & ST  

ST - Demand under Commercial or Industrial Construction Services cannot sustain for the period prior to 01.06.2007 as per the decision of the Hon'ble Apex Court in the case of Larsen and Toubro Ltd - 2015-TIOL-187-SC-ST - where it is held that such services are classifiable under Works Contract Services - in respect of the period June 2007 to March 2008, the department has confirmed the demand under works contract services, applying the rate of service tax as 4.12% - During the relevant period i.e. prior to 01.04.2008, the rate of service tax is 2% - The appellant has filed returns by calculating the tax at the rate of 2%, therefore, the demand made by the department applying the rate aa 4.12% cannot sustain - entire demand cannot sustain - appeal allowed with consequential reliefs: CESTAT [para 6 to 8]

- Appeal allowed: HYDERABAD CESTAT

2019-TIOL-3434-CESTAT-MUM

Superintendent of Police Vs CCE & ST

ST - Commissioner (Appeals) vide the impugned order dated 03.08.2017, has rejected the appeal filed by the appellant on the ground that the appeal was preferred before him with a delay of 490 days - plain reading of statutory provisions contained in s.85 of FA, 1994, it transpires that the statute in clear and ambiguous terms has prescribed the time limit, within which the appeal has to be preferred and the Commissioner (Appeals) was also empowered to condone the delay within the prescribed condonable period - In this case, since the appeal was preferred by the appellant beyond the period of three months from the date of receipt of the adjudication order, which is an admitted fact on record, the appeal rejected by the Commissioner (Appeals) is proper and justified and cannot be interfered with - Appeal dismissed: CESTAT [para 4, 5]

- Appeal dismissed: MUMBAI CESTAT

CENTRAL EXCISE

Vijay Kumar Garg Vs Pr.Commissioner of CGST

CX - There are two issues involved in this appeal, one is regarding the availability of Notfn 4/2006 regarding the manufacture of PVC granules from old and used plastic materials and SSI benefit to the manufactured PVC soles by assessee - It is apparent from the two SCNs and O-I-O that the case has emanated from the searches made on 29.4.2011 on various firms/companies including that of the assessee, which appeared to be the firmly concerns - A common SCN has been issued to all of the units and their Director/proprietor, which has also been adjudicated by a common O-I-O, which is under challenge in this appeal - The appeal filed by M/s J.N. Footwears Pvt. Ltd. which was also in one of the party in the proceedings initiated by Revenue has been decided by Tribunal vide Final Order in - 2019-TIOL-955-CESTAT-DEL - As it has been held in said order that the brand names, have been used by assessee is eligible for SSI exemption under Notfn 3/2003 - The said Final Order relied upon the decision of Delhi High Court in the case of Minimax Industries 2011-TIOL-319-HC-DEL-CX and Anil Pumps Pvt. Ltd. and following the same, SSI benefit is available to the assessee - The denial of exemption Notfn 4/2006 is incorrect as the notification nowhere says that addition of some other material would disentitle the exemption notification in this regard - The CBEC vide its Circular 52/94 has clarified the issue which favours assessee - The department has also failed to produce that the assessee clandestinely removed goods by way of corroborative evidence as held in case of Juhi Alloys - 2014-TIOL-2693-HC-ALL-CX , Continental Cement Company - 2014-TIOL-1527-HC-ALL-CX and Kuber Tobacco India Ltd. - 2016-TIOL-769-CESTAT-DEL - Accordingly, the impugned order is not sustainable - As the demand against the main assessee is not sustainable there is no question of imposition of penalty on the other assessees and hence the same is also being set aside: CESTAT

- Appeals allowed: DELHI CESTAT

2019-TIOL-3432-CESTAT-MUM

JV Seamless India Vs CCE

CX - The assessee, a partnership firm engaged in trading of scrap, is registered with the Central Excise Department as a dealer of excisable goods - It issues dealer invoices in passing out the Cenvat credit to the customers - During the relevant period, DGCEI officers searched the factory premises of a third entity, whereupon a truck loaded with scrap, was found - An invoice issued by the assessee was found is the truck driver's possession - On examination, it was found that the goods in the truck were not as per the description mentioned in the invoice and were locally procured scrap on which no Excise duty was paid - The Revenue issued SCN proposing to deny credit and also proposing to confiscate the goods and to impose penalties - On adjudication the demands were confirmed - Hence the present appeals.

Held - Rule 14 mandates recovery of credit and payment of interest in the eventuality where credit is taken or utilized wrongly - On reading the provisions of Rule 14, it transpires that it is applicable only for initiating proceedings against the manufacturer or service provider - As the assessee is neither a manufacturer of excisable goods nor a service provider providing taxable service, the provisions of Rule 14 cannot be invoked to recover credit or for payment of interest - Regarding invocation of Section 119 of the Customs Act, 1962, it is not the Revenue's case that the assessee used any other goods to conceal the offending goods, namely scrap - Thus confiscation of the goods is improper & unjustified - Hence no redemption fine can be imposed - As the goods are not liable for confiscation, the provisions of Rule 25 will not be attracted for imposing penalty - The provisions of Rule 26 are correctly invoked on the second assessee as he was instrumental in issuing wrong invoices to the customers, facilitating availment of ineligible cenvat credit - Nonetheless, the quantum of the penalty merits being reduced in view of the overall facts and circumstances: CESTAT

- Appeals partly allowed: MUMBAI CESTAT

CUSTOMS

2019-TIOL-3436-CESTAT-MUM

DSC Ltd Vs CC

Cus - M/s.D.S.Construction Ltd. [Appellant 1] filed B/E No.369860 dated 2.7.2003 for clearance of "Asphalt Electronic Paver Finisher" and claimed the benefit of exemption from payment of customs duties, in terms of Sl. No.230 of notification no.21/2002-Cus dated 1.3.2002 -after the clearance of the goods, intelligence was developed that the importers were evading the payment of Customs Duty by diverting the imported goods to other entities much before the completion of five years from the date of import and were not using the goods in terms of the conditions of the notification and thereby not adhering to end use conditions -after completion of investigations, it was revealed that the importer had sold the said imported goods to M/s.Gawar Construction Co. without intimating to the Customs, and much before the expiry of period of five years from the date of importation - a SCN dated 9.1.2009 was issued to the Appellant 1 asking him to show cause as to why the Custom Duty Exemption under Notification No 21/2002- Cus earlier granted at the time of clearance be not denied, the paver finisher imported under B/E No.369860 dated 2.7.2003 should not be confiscated under section 111(o) of Customs Act, 1962 [Act], the custom duty amounting to Rs.55.52 lakhs short paid by them should not be demanded under proviso to section 28(1) read with section 12 and section 125(2) of the Act and interest under section 28AB should not be demanded, and penalty should not be imposed on them under section 112(a) & (b) and/ or 114A of the Act -SCN also called upon Appellant 2, Appellant 3 and Appellant 4, to show cause as to why for their act of omission and commission leading to confiscation of the imported goods, penalty should not be imposed on them under section 112(a) & (b) and/ or section 114A of the Act - customs duty exemption denied, imported goods confiscated and option to redeem the same upon payment of redemption fine of Rs.21 lakhs given, recovery of duty amounting to Rs.55.52 lakhs ordered, penalty of Rs.10 lakhs imposed on Appellant 1, penalty of Rs.1 lakh each imposed on Appellant 2, Appellant 3 and Appellant 4 - appeal to CESTAT.

Held: Appellants have, in their submissions made, stated that said imported machine after seizure was released to M/s.Gawar Construction (Buyer) as per the direction contained in the order of Bombay High Court dated 29.9.2009 [Gawar Construction Ltd. - 2009-TIOL-541-HC-MUM-CUS the importer is marked as third respondent in the matter -since Bombay High Court has already determined the issues in respect of breach of conditions of Exemption Notification and liability to confiscation of the imported goods, transferred/sold by the Appellant 1, it is not prudent to dwell on this issue again -from the facts as are available, it is admitted that Appellants had claimed the exemption in respect of the said pavers by producing the documents in respect of projects namely Major Maintenance works of State High way No 47 portion between Meerut and Bijnore of 65 kms under UP State Road Project and construction of rehabilitation of State Highway 47 of portion between Bijnore to Nazirabad of 53 kms length -the paver was permitted clearance under exemption 21/2002-Cus, which allowed clearance under complete exemption subject to the condition that the goods were actually used by the importer himself in the projects for which said goods are cleared - undisputedly these pavers were never used by Appellant 1 in any of the two projects for which the said goods were cleared, thereby contravening the conditions prescribed by the exemption notification -on the contra these were transferred by the Appellant 1, in first instance for use in Delhi Gurgaon Project of Jaypee DSC Infrastructure -it is now settled position in law that exemption notification needs to be construed strictly and it is for the person claiming the exemption to satisfy that all the conditions prescribed by the notification are fulfilled - thus, by transferring the imported goods cleared for use in particular projects to some other project, Appellant 1 had at that instance itself contravened the conditions of exemption granted subject to actual user condition -for the contraventions done by transferring these pavers to Delhi Gurgaon Project without using them in the projects for which the goods have been cleared, the goods had become liable for confiscation under section 111(o) - at the time of clearance of the goods under exemption, Appellant 1 have given an undertaking binding himself, that the subject goods namely Electronic Paver Finisher imported by them and cleared by them under exemption, shall be actually used by them for construction of National Highway by the said importer - by selling the imported goods to M/s.Gawar Construction Ltd., the Appellant have contravened the undertaking given by them and should have paid the duty as stated in the undertaking - in terms of the above undertaking, in case of transfer of the goods to some other project or to some other person by way of sale or otherwise, the appellants should have paid the duty themselves - in view of the decision of the Larger Bench of Tribunal in the case of Bombay Hospital Trust - 2005-TIOL-996-CESTAT-MUM which has been affirmed by the Bombay High Court - 2006-TIOL-170-HC-MUM-CUS and the fact that Appellants had given an undertaking to use the goods cleared under exemption according to prescribed post importation conditions, demand of duty made under section 12 of the Act cannot be faulted with - it is also worthwhile to point out that section 28 is a machinery provision for determination of the duty short paid/not paid or erroneously refunded - when there is no such determination needed and duty as determined at time of assessment but for the exemption allowed subject to certain post importation conditions, the quantum of duty short paid/not paid is not to be determined again and Appellant 1 should have in terms of undertaking given deposited the duty amount immediately in case of violation of any post importation conditions - when the duty has been demanded in terms of the undertaking given by the Appellant 1, that they will in case of violation of post import conditions pay back the duty determined in respect of the said goods but for exemption, the duty demand has to be made from them only in terms of their undertaking - in view of the law laid down by the decisions in the cases of Kay Bee Spin Tex 2017-TIOL-199-HC-AHM-CX Visteon Automotive Systems India Ltd. [2018 (9) GST 142 (Mad.)] and Bharat BharadGhanshyam [2017 (338) ELT (T-Mum.)], it is quite evident that goods become liable for confiscation on account of violations as prescribed by section 111 of the Act - once the goods are held liable for confiscation, the physical availability of the goods or their presence is not mandatory for proceeding under section 125 or section 112 and 114A of the Act - in the present case, Appellant 1 has, by way of undertaking, agreed to comply with the post import conditions, in case of non compliance with the same, he could have been proceeded against even in absence of the goods - accordingly, the order of the Commissioner demanding duty from the Appellant 1 and also the imposition of penalties on Appellant 1 is upheld - the order of the Commissioner confiscating the goods and the imposition of redemption fine is also upheld - but since the confiscation of goods and redemption are action in rem on the goods and not on the person, the Bench is not in agreement with that part of order whereby Commissioner states that option of redemption is given to Appellant 1 - it is also found that the redemption fine imposed by the Commissioner is Rs.21 lakhs, which is about 20 percent of the declared value of the goods - since the salvage value of the goods was determined around Rs.24 lakhs, ends of justice will be met if the redemption fine is reduced to Rs.2.5 lakhs - now coming to the penalties imposed on the appellants, no reason found to differ with the findings in respect of each of the appellants, for their acts of omission and commission leading to confiscation of goods - hence, the penalties are rightly imposable on them in terms of section 112 (1) of the Act - in view of discussions as above, the order of Commissioner is modified in respect of Appellant 1 to reduce the redemption fine imposed on the goods from Rs.21 lakhs to Rs.2.5. lakhs and the option of redemption given to Appellant 1 is modified stating that goods may be redeemed on payment of redemption fine imposed - appeal of Appellant 1 is disposed accordingly - appeals filed by Appellant 2, Appellant 3 and Appellant 4 are dismissed : CESTAT [para 5.2, 5.3, 5.4, 5.5, 5.6, 5.7, 5.8, 5.12, 5.13, 5.14, 5.15, 6.1, 6.2]

- Appeals disposed of: MUMBAI CESTAT

2019-TIOL-3431-CESTAT-HYD

Andromeda Foundation India Pvt Ltd Vs CC, CE & ST

Cus - Assessee is an importer of medical equipment and Dr Sudhakar Krishnamurthy is its Director - They imported medical equipment through Air Cargo Complex Hyderabad claiming ‘Nil' rate of duty as per Notfn 64/88 - This was a conditional exemption notification and in support of their claim, the importer submitted duty exemption certificate issued by DGHS, New Delhi - The DGHS vide letter dated 06.10.1997 rejected the importer's application for grant of exemption certificate and also cancelled the duty exemption certificate already issued to them - Further, investigations by the department revealed that the importer had violated certain other conditions of the notifications also - Accordingly, the demand notice was issued proposing to deny the benefit of notification and demanding the differential duty along with interest and a penalty was proposed to be imposed on the importer as well as its Director - As far as the eligibility of exemption Notfn 64/88 is concerned, there is no doubt that the assessee have not been issued an installation certificate by DGHS and the exemption certificate has also been cancelled - Therefore, they have not fulfilled the conditions of Notfn 64/88 - This Notification gives exemption to hospital equipment imported by specific category of hospitals subject to certification by DGHS - Assessee has not even got the DGHS certificate - The non-issue of certificate by DGHS was challenged by them through a writ petition in High Court of A.P. and subsequently before the Supreme Court through an SLP - Both the Courts have upheld the decision of DGHS of not issuing the certificate - Section 28 of Customs Act 1962 clearly refers to recovery of duties not paid short paid - Such recovery can be ordered within one year or five years from the relevant date - In case of provisional assessment, the relevant date is the date of finalisation of assessment - In this case, the assessments were finalised denying them the benefit of exemption notification and the differential duty has accrued consequently - Therefore, assessee is liable to pay differential duty under Section 28 - As far as the interest under Section 28AB and imposition of penalty under Section 114A of the Customs Act are concerned, both these provisions were not in existence at the time of import - As held by High Court of Delhi in case of Diwan Chand Satya Pal Agarwal Imaging Research Centre - 2016-TIOL-600-HC-DEL-CUS , these provisions have no retrospective application - Hence demand of interest under Section 28AB and imposition of penalty on the importer under Section 114A are not sustainable - Their goods are squarely covered by Section 111(o) of the Customs Act 1962 - Although the goods were valued at Rs 6,50,382/- considering the condition of the age of the machines, the original authority has imposed a redemption fine of Rs 1,00,000/- under Section 125 of the Customs Act 1962 - No reason found to interfere with this confiscation or the amount of redemption fine imposed - Duty involved in this case was Rs 7,33,306/- and therefore penalty of Rs 1,00,000/- imposed on Dr Sudhakar Krishna Murthy who is the Director of the importer firm appears just and reasonable : CESTAT

- Appeals disposed of: HYDERABAD CESTAT