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SERVICE TAX 2019-TIOL-3555-CESTAT-HYD
Bharat Sanchar Nigam Ltd Vs CC, CE & ST
ST - Appellant is a public sector undertaking engaged in providing telephone services and telegram services etc., and is registered - Issue is Whether the appellant is entitled to the benefit of exemption notification 03/94 (ST) dt.30.06.1994 (Sl.No.12 & 13) which is available to only telephones used for local calls, in respect of those telephones which were used for long distance calls as well as calls to mobile phones; Whether the demand invoking extended period of limitation is sustainable; Whether penalties can be imposed upon the appellant.
Held: Exemption notification 03/94-(ST) makes it clear that it is available only for departmentally run telephones meant for local calls as well as guaranteed public telephones operating only for local calls - if a telephone is used for other than local calls, in terms of the Indian Telephone Rules, 1951, this cannot be called a local call and a phone used for such calls cannot be called as telephone meant for local calls only - Further, mobile networks also do not form part of the exchange system in the aforesaid definition, therefore, calls made to mobile networks also cannot be called as local calls - In the absence of any contrary definition of local calls anywhere, Bench has no choice but to hold that the appellant is not entitled to the benefit of exemption notification which was available for public telephones to be used for local calls - Accordingly, on merits the demand is sustainable – Moreover, for the subsequent period the appellant themselves have started paying service tax on the same services: CESTAT [para 8]
ST- Limitation and Peanlty: Allegation in the show cause notices is that the assessee had suppressed the facts with intent to evade payment of service tax - However, from the SCN, the intention to evade payment of service tax is not very evident - No doubt the appellant has wrongly availed exemption notification 03/94 (ST) in respect of these services and as the department dealing with the telephones, the appellant should have known better than anybody else what local calls are - They should also have known that they have enlarged the scope of the public telephones to make calls to mobiles and to the entire state of Andhra Pradesh - They should have paid duty on these services and they have failed to do so - However, the intention to positively suppress this information and evade service tax is not evident from the SCNs or from the impugned order, therefore, the revenue has not established the case to invoke extended period of limitation – There is no doubt that the appellant were extremely careless in not paying service tax on the disputed services but Bench is unable to accept that there is a positive effort to suppress the facts or an intention to evade payment of service tax - Penalty under Section 78 imposed upon the appellant is, therefore, also not sustainable - demands, if any, within the normal period of limitation need to be upheld along with interest, as applicable – However, Penalties under Section 76 & 77 are upheld and need to be recomputed – Matter remanded for the said purpose: CESTAT [para 9 to 11]
- Matter remanded: HYDERABAD CESTAT
2019-TIOL-3554-CESTAT-BANG
Adarsh Developers Vs CCT
ST - Issue is as to whether the appellants are liable to pay service tax on the 'Construction of complex services' and 'Consulting Engineer Service' for the period 01.04.2007 to 31.03.2012 and whether the SCN dated 19.10.2012 is time barred.
HELD: Services rendered by appellants before the issuance of completion certificate were not taxable as they were deemed to be services rendered by the builder to himself - CBEC circular dated 29-1-2009 and the trade Facility notice No 1/2011 dated 15-2-2011 issued by Pune Commissionerate have amply clarified that same - As submitted by the appellants, the tribunal has consistently taken the stand that the explanation inserted by Finance Act, 2010 cannot be retrospective - Under the circumstances, it is to be held that such service was not liable to service tax before 1-7-2010 – Moreover, prior to the present proceedings, Revenue issued another show cause notice to the appellants which came to be confirmed by Order-in-Original Sl.No.3/2011 dated 31.01.2011 and Tribunal vide Final Order No .20942-20943/2018 dated 04.07.2018/10.07.2018 , - 2018-TIOL-2798-CESTAT-BANG decided in favour of the Appellants and held that the Appellants were not required to pay any service tax for the construction services before 01.07.2010 – Inasmuch as since the Department was well aware of the activities and transactions while issuing the first show cause notice itself, therefore, no suppression could be held against the Appellants and invoked while raising demand for the subsequent periods – Held, therefore, that the demand is hit by limitation and hence demand raised for the period 01.04.2007 to 31.3.2011 is not sustainable – Demand for the normal period 1-4-2011 to 31-3-2012 is sustainable, matter remanded back to the original authority for re-quantification - looking in to the facts and circumstances of the case, where the issue is mired by frequent changes in law, clarifications and judicial pronouncements, it is not proper to allege that the appellants had a mens rea in the case - Therefore, for extended period penalty is not imposable - For normal period also, Bench finds that there are enough grounds to waive penalty in terms of Section 80 of Finance Act, 1994: CESTAT [para 5, 6, 9]
ST - Construction of Villas - As per definition given in Section 65(91a) of the Finance Act, 1994, residential complex should have more than twelve residential units in it - This is the first and foremost condition under the definition - The other conditions like parking facility, common areas, common facilities, common layout etc., are only supplementary to the main condition that complex should have a building having more than twelve residential units or the buildings in the complex should have more than twelve residential units in it - Villa is a single residential unit and the entire project would not have a building with more than twelve residential units to fall within the ambit of definition of 'residential complex' under Section 65 (91a) - In view of the above, construction of villas would not fall within the ambit of 'construction of residential complex service' and no service would be liable to be paid on villa receipts: CESTAT [para 7]
ST - Demand under 'Consulting Engineer's Service' has been accepted by the appellants and paid before issue of Show Cause Notice - Penalty imposed under Section 78 of Finance Act, 1962 is set aside - Penalty imposed under Section 76 is sustained: CESTAT [para 10]
- Appeal partly allowed: BANGALORE CESTAT
CENTRAL EXCISE
2019-TIOL-3553-CESTAT-AHM
Ashok Transformers Pvt Ltd Vs CCE & ST
CX - During the relevant period, duty demand was raised against the assessee on grounds that the assessee sold goods and upon the sale, raised separate bills for transportation and insurance - The Revenue opined that the amount collected by the assessee was in excess of the freight amount paid by the assessee to the transporter - Similarly, insurance was collected in some cases where there was no corresponding payment to any insurance company - Hence duty demand was raised against the assessee in this regard.
HELD - The decision of the Apex Court in Central Excise, Noida v/s. Accurate Meters Limited settled the issue at hand in the present case - The assessee specifically mentioned that it supplied goods to various electricity boards and paid duty on the entire value of the goods contracted - It also claimed that in any case, transportation and insurance charges related to post clearance actions are not includible in the assessable value - The Revenue relied on a large number of cases where the facts were significantly different - Hence this court is in complete agreement with the decision of the Apex Court wherein it was held that the amount claimed by way of transportation charges and insurance cannot be considered for determining the value of the goods supplied: CESTAT
- Assessee's appeal allowed: AHMEDABAD CESTAT
2019-TIOL-3552-CESTAT-BANG
Ambassy Contractors Pvt Ltd Vs CCE
CX - The assessee-company manufactures various structures of Steel required for industrial and residential constructions classifiable under Chapter 73 of CETA 1985 - Based on intelligence gathered, the DGCEI officers visited various premises and collected documents - Based on investigation conducted, an SCN was issued for the relevant period raising duty demand, which was confirmed upon adjudication, along with interest & penalty u/s 11AC, along with personal penalty u/r 26 of the CER 2002 imposed on the director in the assessee-company.
HELD - The assessee is undertaking contracts of fabrication of structures and erection of the same at the sites of various builders - Perusal of the contracts show that the assessee is required to bring its own labor and materials, tools & equipment and that the assessee was provided a space within the project to undertake its work - Considering the nature of the contracts, they clearly are composite contracts, of which material and fabrication is only a part - The assessee is registered with the Karnataka State Sales Tax Department as works contractor - The nature of the assessee's work is composite contract, which cannot be taxed under Central Excise law - The duty if any is limited to the items manufactured in the premises of the factory/job worker and later brought to different sites for fabrication - The Department did not arrive at the actual value of the items manufactured by the assessee in the job worker's premises - Merely because the assessee did not maintain or produce records for their manufacture, it is not free for the Department to allege that the entire consideration received from their projects indicates the value of the excisable goods manufactured by them - It is clear from the work orders that the work is composite in nature and fabrication of large items done at site - Hence it cannot be alleged that the entire amount received by the assessee as shown in the balance sheet pertains to the value of excisable goods alleged to have been manufactured - Clandestine manufacture and clearance is a very serious charge which is required to be proven right from the procurement of raw material, use of raw material, deployment of labor, consumption of power, transportation of final products to alleged destinations and financial flow therefrom - None of these parameters were conclusively addressed by the Department - In fact, the assessee demonstrated figures from the balance sheet pertaining to the power consumption in the unit - No evidence was adduced by the Department to contradict these findings - Though the Department alleged that various items were fabricated in the factory and carried to work sites, not a single case of transportation of such goods is put forth - No proof of deployment of labor or raw material is put forth: CESTAT
HELD - From the statement of the director, it is seen that the assessee sometimes fabricated smaller items in the factory - Hence it cannot be assumed that the assessee manufactured the entire goods in its factory premises - Besides, even if there is oral evidence such as a statement, it has to be corroborated with documentary evidence - Hence the allegations of clandestine removal are unsustainable and the duty demands are quashed - Consequently, the penalties too are quashed: CESTAT
- Assessee's appeal allowed: BANGALORE CESTAT
CUSTOMS
2019-TIOL-2817-HC-KERALA-CUS
AS Marine Industries Pvt Ltd Vs Foreign Trade Development Officer
Cus - Petitioners challenge the order of the Jt. Director, DGFT which held that the petitioners had erroneously claimed MEIS benefits on export of Leather Jacket Fish which fell in the family of 'Carangidae' meriting classification under HS Code 0303 8999 of the ITC HS Code, which classification was not included for the MEIS benefits during the period when the exports were effected - JDGFT directed the petitioners to surrender the un-utilised MEIS scrips available with them before the said office, and also directed that, till the exporters surrendered the un-utilised scrips, or furnished Customs Receipts evidencing payment of the scrip value and interest, in terms of the Foreign Trade (Regulation) Rules, read with the Foreign Trade (Development & Regulation) Act, the petitioners' company would be put under the Denied Entity List (DEL) which denies any further benefits from the said office - Petitioners contend that in passing the said orders, the JDGFT exceeded its jurisdiction under the Foreign Trade (Development & Regulation) Act and Rules in that, on a matter of classification it is only the Customs authorities who have the final say with regard to whether or not the exported goods conformed to a particular classification under the ITC HS classification.
Held: While it may be a fact that under the Customs Act the Customs authorities do look into the classification of a commodity for the purposes of recovery of the Customs duty evaded or avoided at the time of import/export of goods, it does not follow that the JDGFT is denuded of its jurisdiction with regard to the matters covered by the Foreign Trade (Development & Regulation) Act and Rules - action taken by the JDGFT is traceable to the power conferred on him under the Foreign Trade (Development & Regulation) Act, 1992 and hence, so long as the JDGFT has only found that there has been misclassification, and consequent mis-declaration of goods, by the petitioners while claiming and receiving export benefits, he cannot be seen as acting without jurisdiction, or in excess of jurisdiction, while taking remedial action against the petitioner exporters - there is no jurisdictional error occasioned by the JDGFT while passing the orders impugned in these writ petitions - Further, as per the Foreign Trade (Development & Regulation) Act and Rules, there is provision of an appeal provided against the impugned orders of the JDGFT, before the DGFT, which the petitioners can effectively pursue - Writ petitions are dismissed: High Court [para 4]
- Petitions dismissed: KERALA HIGH COURT
2019-TIOL-3551-CESTAT-KOL
Anil Kapani Vs CC
Cus - DRI found the rechargeable batteries under CTH 85078000 to actually be Lead Acid Rechargeable Batteries, the import of which is governed by Rule 6 of the Batteries (Management and Handling) Rules 2001 notified under Environment (Protection) Act 1986 - DRI alleged that Rule 6 of the Batteries (Management and Handling) Rules 2001 notified under Environment (Protection) Act 1986 was not met since the importer did not have registration with the Ministry of Environment and Forests or an agency designated by it - after that the IEC holder M/s Sky Traders submitted the original Registration Certificate issued by Central Pollution Control Board, Parivesh Bhawan, Delhi vide F.No. B-29016/BMHR/2016- Importer/HWMD/5145 dated 13.07.2016 - DRI investigated and did not find the IEC Holder M/s Sky Traders at the official or residential premise and alleged that its IEC was obtained on the basis of forged documents - DRI also alleged that by importing in the name of M/s Sky Traders, the Appellant violated Section 7 of Foreign Trade(Development & Regulation) Act, 1992 as amended in 2010 read along with Rule 12 of the Foreign Trade (Regulation) Rules 1993 and Para 2.9.2 of Handbook of Procedure Vol.I 2009-2014, clarified by DGFT in Exim Policy Circular No- 6(RE-2013) 2009-2014 dated 16.9.2013, wherein it is stated that no person shall make any import or export except under an IEC number granted by the Director general or the officer authorized by him in this behalf and also that IEC Number cannot be used by anyone other than the IEC Holder himself - Show Cause Notice issued to M/s Sky Traders, Custom Broker M/s Universal Clearing and Forwarding Agency, and Anil Kapani who is the Appellant herein, to show cause as to why the goods should not be confiscated under Section 111(d) of the Customs Act and why Penalty under Sections 112(a), 112(b) and 114AA of the Customs Act 1962 should not be imposed – O-in-O passed ordering confiscation of the goods with option to redeem on payment of Redemption Fine of Rs.4,50,000/- and penalties were imposed on all the three Noticees – Commissioner(A) reduced the penalties but upheld the order of confiscation of goods as well as the quantum of Redemption Fine - Appellant Anil Kapani is in appeal before the Tribunal.
HELD: There is force in the contention of the Appellant that it came to be known that imported goods were lead acid rechargeable batteries only when the DRI intercepted the consignment in Delhi, and as soon as this fact came to light, Registration Certificate vide F.No B-29016/BMHR/2016- Importer/HWMD/5145 dated 13.07.2016 was obtained from Central Pollution Control Board, Delhi, and this ought to be treated as valid from the date of import – Bench also finds force in the contention of the Appellant that if the foreign supplier or Kolkata Customs officials had informed the Appellant or IEC Holder regarding this, a correction could have been done under Section 149 of the Customs Act, 1962 by amending the documents because no advantage would have fallen upon the Appellant or IEC Holder as this is a purely technical and clerical issue since Registration Certificate from Ministry of Environment and Forests is easy to obtain by submitting the documents as required under the Standard Operating Procedure for Grant, Renewal or Cancellation of registration to the Importers of New Lead Acid Batteries under Rule 5 of the Batteries (Management and Handling) Rules and also that description of goods in the Bill of Entry is based on Invoice and Packing List prepared by the supplier which admittedly was rechargeable batteries, therefore, the Appellant or IEC Holder cannot be faulted - just because the official and residential premises of IEC Holder M/s Sky Traders were found closed by DRI, it is presumptuous to say that its IEC was obtained by forgery especially since it is not known whether any more measures were taken by DRI to get M/s Sky Traders to join the investigation - confiscation of goods under Section 111(d) of the Customs Act 1962 cannot be sustained since lead acid rechargeable batteries are not prohibited, but restricted and can be imported with Registration Certificate of the Ministry of Environment and Forests which was admittedly obtained vide F.No B-29016/BMHR/2016- Importer/HWMD/5145 from Central Pollution Control Board, Delhi - Once confiscation of goods cannot be sustained, penalty under Section 112(a) and/or 112(b) cannot be imposed on the Appellant since penalty under Section 112 is contingent on confiscation of goods under Section 111 of the Customs Act, 1962 - question of imposing penalty under Section 114AA of the Customs Act 1962 does not arise as far as the Appellant herein is concerned since Section 114AA can be invoked only in case of use of any false document, statement or declaration made intentionally for import transactions and not for using IEC of some other person - impugned order cannot be sustained – appeal allowed with consequential relief: CESTAT [para 7, 8]
- Appeal allowed: KOLKATA CESTAT | |
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