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SERVICE TAX 2019-TIOL-3502-CESTAT-AHM
Gokul Agency Vs CCT & ST
ST - The assessee obtained a registration under category of Manpower Recruitment or Supply Agency Services from March, 2007 and started paying taxes since then - They did not discharge the Service Tax liability from 16/06/2005 i.e. the date on which the services became taxable to 28/02/2007 under category of Manpower Recruitment or Supply Agency Services - Also the assessee did not discharge the Service Tax liability on provident fund paid directly by M/s GHCL Ltd for the period from June, 2005 to December 2008 - Accordingly, a SCN was issued proposing demand of Service Tax under 'Manpower Recruitment service' alongwith interest and penalty - From the contract of assessee with the service recipient M/s GHSL, it is seen that though the work assigned by the recipient of service is of handling of various goods in their factory premises, however, as per the rate chart, it is seen that though the rates are per metric tonne, but it is also on the basis of per person employed for such work - It can be seen that there is a heading 'loading guarantee' and 'stacking guarantee' which is on the basis of 4 mt, per person per gang, 6 mt per person per gang and 6.85 mt per person per gang respectively - This clearly shows that the payment is towards the supply of manpower for the various jobs as described in the agreement - Moreover, the service recipient is making a separate payment towards the provident fund of the workers deputed by service provider - From the debit note, it can be seen that the service recipient are obliged to pay a separate amount of provident fund to the assessee - If the contention of assessee is considered, that the rate is as per tonne basis, but in such case, the recipient should not be responsible for any other payment except the actual rate given in the contract - However, from the debit note, the assessee is receiving a separate amount towards the provident fund of employees deputed by assessee - In such a case, it is a clear case of supplies of manpower - As per the contract, the services provided by assessee is of 'Manpower Recruitment Agency and Supply Services', accordingly, it is taxable - As regard the penalty imposed under section 76 & 78, the High Court of Gujarat in case of Raval Trading Company 2016-TIOL-112-HC-AHM-ST held that once the penalty under section 78 is imposed, no separate penalty under section 76 should be imposed - Accordingly, the penalty imposed under section 76 is set aside - Remaining portion of the order is upheld: CESTAT
- Appeal partly allowed: AHMEDABAD CESTAT
2019-TIOL-3501-CESTAT-AHM
Shree Gurukrupa Construction Company Vs CCE & ST
ST - The assessee had obtained work orders from Gujarat State Police Housing Corporation Limited (GSPHCL) and had constructed residential quarters for the staff of Gujarat Police - They had also carried out construction of residential complex for Rajkot Municipal Corporation (RMC) as sub-contractor of M/s. Avadh Construction - The assessee had not paid service tax on the said construction service provided to GSPHCL and RMC, therefore the demand was raised and confirmed under category of Residential Complex Service - There is no dispute on the taxability as has been held by Larger Bench that the subcontractor is independently liable to pay service tax even though service tax liability has been discharged by the main contractor - Therefore, the demand on merit is clearly sustainable - As regards the limitation, the confusion arose due to Board Circular issued in 2002 wherein the Board has clarified that in case of sub-contractor, the service tax is not payable by sub-contractor if service tax is discharged by the main contractor - However, the Circular was amended in 2005 and thereafter the issue became clear that the sub-contractor was required to pay service tax and the conflicting judgments were due to the earlier Board Circular - However, after 2005, there was no reason for the assessee to believe that the sub-contractor is not liable for payment of service tax - If any assessee is of the belief that being sub-contractor they are not liable to pay service tax, in the light of amendment in Circular in 2005, the assessee should have approached the department and make the position clear regarding their bonafide belief - But in the present case, the appellant did not approach the department regarding their bonafide belief nor they obtained the registration - Therefore, when the Board issued amendment in 2005, it cannot be said that the assessee entertained bonafide belief correctly - In the case of Max Tech Oil & Gas Services Pvt. Limited - 2016-TIOL-2996-CESTAT-DEL, on the identical issue of taxability on sub-contractor, it was clearly held that extended period is invokable - Similarly, in the case of Sew Construction Limited - 2011-TIOL-61-CESTAT-DEL, the Tribunal has dealt with the liability to pay service tax by the sub-contractor and has clearly held that since registration was not sought, claim of bonafide belief cannot be accepted and demand for the extended period was maintained and penalty was also intact - The impugned order is upheld: CESTAT
- Appeal dismissed: AHMEDABAD CESTAT
CENTRAL EXCISE
2019-TIOL-528-SC-CX-LB
Unicorn Industries Vs UoI
CX - The assessee-company established a unit in 2006 for manufacturing mouth freshener, an excisable commodity covered under Chapter 21 of the First Schedule to the CETA 1985 - It claimed that excise duties were recovered under diverse nomenclature on the products cleared by the asssessee - The duties included Basic Excise Duty of 37.5% ad valorem, NCCD @ 23% ad valorem u/s 136 of the Finance Act 2001, Additional Excise Duty @ 5.5% ad valorem u/s 85 of the Finance Act 2005 and Education Cess @ 2% ad valorem u/s 91 of the Finance Act 2004 - As per Notfn No 71/2003-CE, the assessee was entitled to refund of such duties and the same was granted by the Revenue authorities - The Revenue also issued a certificate of re-utilization of Excise duty for a particular month and the assessee would re-credit the amount of Excise duty - During the relevant period, the assessee was served an SCN seeking recovery of NCCD for period between July-December 2006, on grounds that exemption was not permissible under the Notfn for units located in Sikkim - Later, the Revenue considered the assessee's objections and proposed to recover such duty u/s 11A of CEA 1944, along with interest and penalty - Thereafter, the Notfn No 71/2003-CE was amended to the effect that exemption on pan masala came to an end vide Notfn No 21/2007 - In writ, the High Court held that the assessee was entitled to exemption from payment of Excise duty on manufacture of pan masala for ten years from the date of commencement of commercial production - The assessee claimed to have filed about 14 separate claims for refund of AED and ED on grounds that these too were excise duties for which exemption was granted for ten years - Later, the High Court dismissed a writ petition filed by the assessee, holding that NCCD, EC and SHEC were not included in the exemption Notfn No 71/2003-CE and that the assessee illegally availed exemption in its regard - Hence the present appeal.
Held: The main issue arising for consideration is when 100% exemption has been granted for Excise duty for a 10 year period, then whether exemption Notfn issued for Sikkim would be confined to the BED and AED, which were specifically mentioned in the Notfn or would it also include cess and duty imposed by the Finance Acts of 2001, 2004 and 2007 - Rule 8 of CER 1944 authorised the Central Govt to exempt any excisable goods from whole or part of duty leviable on such goods - The word 'duty' is defined u/r 2(v) to mean duty as levied under the Act - The Notfn dated 9.9.03 clarifies that exemption was allowed u/s 5A of the Act regarding additional duties under the Act of 1957 and additional excise duties under the Act of 1978 - There is no reference to the Finance Act 2001 by which NCCD was imposed and the Finance Acts of 2004 and 2007 were not in vogue - The Notfn could not have contemplated the inclusion of EC and SHEC imposed by the Finance Acts of 2004 and 2007 in the nature of Excise duty - The NCCD, EC and SHEC qualify as additional excise duty and it would not mean that the exemption notfn covers them particularly when there is no reference to the notfn issued under the Finance Act 2001 - There is no question of exemption being allowed in respect of a cess which is not in vogue at the relevant time - The provisions of CEA 1944 and Rules thereunder are applicable to refund and the exemption is only a reference to the source of power to exempt the NCCD, EC, SHEC - A notfn has to be issued for providing exemption under such source of power - In absence of a notfn containing an exemption to such additional duties such as EC and SHEC, they cannot be said to be exempted - The assessee's proposition urging that simply because one kind of duty is exempted, other kinds of duty automatically fall, is unacceptable as there is no difficulty in computing additional duties payable under NCCD, EC and SHEC - Moreover, a statutory notification must cover the duty which is specifically exempted - When a particular kind of duty is exempted, other types of duty or cess imposed by a different legislation cannot be said to have been exempted - Hence the present appeals merit being dismissed and the orders of the High Court are upheld: SC Larger Bench
- Appeals dismissed: SUPREME COURT OF INDIA
2019-TIOL-3510-CESTAT-DEL
Vedanta Ltd Vs CCGST
CX - Issue is whether the appeal filed by the appellant against the order passed by the Assistant Commissioner dated 29.08.2017 was within the time limit prescribed u/s 35(1) of the CEA, 1944 and accordingly the appeal be remanded to the Commissioner(A) for deciding the case on merit or further enquiry is necessary to ascertain the date of communication of the order - CESTAT President, one of the Members of the Division Bench, perused the Speed Post as well as Despatch Registers and arrived at the conclusion that the order has been communicated to the appellant only on 6th August 2018 and thus the appeal filed on 04.09.2018 before the Commissioner(A) is not beyond the period of limitation prescribed u/s 35(1) of the CEA - However, the Member(T) was of the opinion that further enquiry in the matter is required to be carried out - In view of the difference in opinion, the matter was referred to the Third Member.
Held: Assessee contends that no doubt the speed post was received by them from Range office, but the content in the envelope is different; that the envelope with speed post no. ER924187517IN is of the size 23cm x 10cm in which the letter dated 01.09.2017 relating to some other subject addressed to the appellant by the Range Superintendent was delivered - Envelope bearing the Speed post no. ER924187517IN issued on 01.09.2017 and the envelope bearing speed post no. ER956130766IN with its contents received by the appellant on 11.08.2018 are also presented - Size of the former envelope is of 23cm x 10cm and is a window envelope whereas the second one is of 27cm x 12cm size - On examination of the envelopes it is fairly accepted by all concerned that the first envelope is not large enough to contain the order dated 29.08.2017 which is of eleven pages and legal size paper - also the postal charges levied for speed post of both letters are different, the second one with higher charge the weight being 90 grams, therefore, the order dated 29.08.2017 could not have been despatched in the envelope containing speed post no. ER924187517IN, for which minimum speed post charge is levied - Even though the appellant has not disputed the receipt of the Speed post letter no. ER924187517IN dated 01.09.2017, it is contended that the same was a letter written by the Range Superintendent to the appellant in the context of applicability of service tax on the license/royalty fees and the said envelope did not contain the adjudication order dated 29.08.2017 issued by the Assistant Commissioner - department has not placed any evidence to rebut the said claim of the appellant - Findings and conclusion of the President that the order dated 29.08.2017 has been communicated to the appellant only on 06.08.2018 and the appeal has been filed before Commissioner(A) within the time limit prescribed u/s 35(1) of the CEA, 1944 is agreed with, no requirement of further enquiry as it would not yield any result since the register maintained in the range office would only show the same Speed Post number - consequently, the impugned order deserves to be set aside and the matter is required to be remanded to the Commissioner(A) for decision on merits - Commissioner(A) is required to decide the appeal on merits, expeditiously and preferably within a period of three months: CESTAT by Majority
- Matter remanded: DELHI CESTAT
2019-TIOL-3509-CESTAT-MUM
Cologix Systems Ltd Vs CCE
CX - Notfn. 8/2003-CE - What constitutes simultaneous availment - Member (J) took the view that manufacturing and clearing own goods under exemption and branded goods on payment of CE duty by availing MODVAT/CENVAT is not simultaneous availment but clearing own goods under exemption as well as on payment of duty by availing credit, which the notification does not provide, is ‘simultaneous availment'; that an interpretation as contended by Revenue would lead to making the notification infructuous/otiose; that an interpretation which deviates from the legislative intent and leads to absurd results has to be avoided; that Central Excise Authorities cannot control the Business plans of a manufacturer - Member (T) held that manufacturing and clearing own goods under exemption and branded goods on payment of CE duty by availing MODVAT/CENVAT is simultaneous availment and, therefore, demand has been rightly made - in view of difference of opinion, Matter referred to third Member.
Held: Supreme Court in the case of Nebulae Health Care Ltd - 2015-TIOL-261-SC-CX has distinguished the ratio laid down in Ramesh Food's case - 2005-TIOL-07-SC-CX and held that an assessee can avail the SSI benefit and also CENVAT credit on inputs used in the manufacture of Branded goods cleared on payment of duty - Moreover, Notification No. 8/2003-CE dated 1.3.2003 has been amended w.e.f. 11.2.2009 vide Notification No. 2/2009-CE dated 11.2.2009 incorporating a proviso to clause (iii) of condition (2) of the said notification, which reads - "Provided that nothing contained in this clause shall apply to the inputs used in the manufacture of specified goods bearing the brand name or trade name of another person, which are ineligible for the grant of this exemption in terms of paragraph 4." - view taken by Member (J) agreed with - Appeal is, therefore, allowed: CESTAT by Majority
- Appeal allowed: MUMBAI CESTAT
2019-TIOL-3500-CESTAT-MUM
Tata Metaliks Ltd Vs CCE
CX - Appellants are engaged in the manufacture of pig iron - For charging the basic inputs namely, dolomite, manganese, quartzite, limestone etc. to blast furnace, the raw materials iron ore and coke are reduced to desired size so as to fit it to furnace - Before charging it into the blast furnace, the process of screening iron ore generates waste which is called 'iron fines' and the coke generates wastes, called as 'coke breeze' - These 'fines' and 'breezes' are generated before the raw materials are fed into the blast furnace - Since these are waste and of no use in the hands of the appellant, they are subsequently disposed of - On the ground that the appellant had availed CENVAT Credit on common inputs such as furnace oil, oxygen gas, water treatment chemicals etc., they were issued with a demand notices for the period from March, 2005 to February, 2011 alleging that since the appellant manufactured both dutiable final product as well as exempted goods namely, coke breeze/iron ore fines, therefore, they are required to pay 5%/10% on the value of clearance of such exempted goods, in accordance with Rule 6(3) of the CCR, 2004 - demand confirmed of Rs.2,47,38,827/-, hence assessee in appeal.
Held: Issue of applicability of Rule 6(3) of CENVAT Credit Rules, 2004 in respect of byproducts/waste products which emerges during the process of manufacture of finished goods is no more res integra in view of apex court decision in DSCL Sugar - 2015-TIOL-240-SC-CX wherein it is held that waste and residue that arise as a result of the process carried out on the raw material cannot be considered to fall under the scope of definition of 'manufacture' under Section 2(f) and accordingly, Rule 6 of CENVAT Credit Rules, 2004 shall not apply - following the said precedent, impugned order does not have any merit - same is, therefore, set aside and appeal is allowed with consequential relief: CESTAT [para 6, 7]
- Appeal allowed: MUMBAI CESTAT
2019-TIOL-3499-CESTAT-MUM
Vishnu Dyeing And Printing Works Vs CCE
CX - Demand of Rs.6,79,169/- is confirmed in respect of 'processed fabrics' cleared by appellant in 1997 and upto May 1998 alleging that they have mis-declared the value of the 'grey fabrics' supplied to them on job-work by their principal manufacturer - appellant submits that the filing of the classification list under rule 173B of the erstwhile Central Excise Rules, 1944 as well as the price-list under rule 173C 4 and approved thereof by the competent authority was based entirely on the basis of details furnished by the merchant manufacturer and over which they had no control.
Held: In the appellants own case, for identical dispute pertaining to a different period, the Tribunal had extended the benefit of limitation in Vishnu Dyeing & Printing Works - 2007-TIOL-1945-CESTAT-MUM , and which order was upheld by the Bombay High Court - following the same, appeal is allowed on the ground of limitation - consequences of interest and penalty are also set aside - appeal allowed: CESTAT [para 5, 6]
- Appeal allowed: MUMBAI CESTAT
CUSTOMS
2019-TIOL-3503-CESTAT-AHM CC Vs Sedna Impex India Pvt Ltd
Cus - Import of Mixed 100% Polyester Knitted Fabrics (Rolls of Assorted Colors) - Custom department was of view that the value declared by the appellant is substantially low as compared to the value of contemporaneous imports - The appellant at the time of clearance of the goods paid the duty on the enhanced value and waived the SCN - The Assessing Officer passed adjudication order whereby the declared value of the goods imported was re-determined at the value of USD 2.20 per KG under Customs Valuation Rules, 2007 - before Commissioner(A), the appellant objected to the enhancement of value and also claimed the benefit of exemption from CVD in terms of notification 30/2004-CX - Commissioner(A) set aside the order insofar as valuation was concerned but in the matter of claim of exemption opined that since the benefit was not claimed at the time of assessment of bill of entry, same cannot be claimed in appeal - both, assessee as well as Revenue are in appeal before CESTAT.
Held: As regard the enhancement of the value by the Assessing Officer, same was done only on the ground that the declared value is substantially low as compared to the value of the contemporaneous imports - as the assessee had waived the SCN, therefore, there was no occasion for the Assessing Officer to provide the detail of contemporaneous imports to the assessee, however, it is also fact that the appellant was not provided the data/documents for contemporaneous imports - As regard, the claim of Notification No 30/04-CE for claiming exemption from payment of CVD, Bench is of the view that since, the same was legally due to the assessee, the Assessing Officer should have extended the benefit of CVD exemption - Since, the appeal was filed against the assessment order passed by the Assessing Officer, the assessee was free to raise all the claims which is legally otherwise available to them at the time of clearance of the goods - Therefore, Bench does not agree with the Commissioner (Appeals) in denying the CVD exemption only on the ground that the assessee have not claimed the said exemption in the bills of entry - Bench is of the view that the matter should be re-considered in respect of both the issues of valuation and exemption notification in respect of CVD - The Assessing Officer shall provide all the documents of contemporaneous imports relied upon in the present appeal to the assessee and provide sufficient opportunity of personal hearing before passing a de-novo order - Matter remanded: CESTAT [para 4, 5]
- Matter remanded: AHMEDABAD CESTAT | |
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