2019-TIOL-NEWS-296 Part 2, Dated: Tuesday, December 17, 2019

ST - The assessee-company is engaged in providing works contract service of supply and installation of electrical equipments - The issue at hand pertains to the application of the Works Contract Composition scheme so as to enable the assessee to avail benefit of concessional rate of duty - The assessee paid service tax on the construction contract which involved supplying materials such as Cement and Steel - On adjudication, the benefit of composition scheme was denied on grounds that the assessee did not exercise option of payment of service tax under the scheme prior to payment of service tax under the respective works contract - On appeal, the Tribunal remanded the matter to the original adjudicating authority with directions to allow such benefit subject to the assessee producing the requisite documentary proof - The assessee then filed application for rectification of the Tribunal's order but the same was dismissed on grounds that the assessee was seeking to review the order under the guise of its modification - Hence the present appeal.

Held - There is nothing in the Tribunal's order which could deny the benefit of composition scheme to the assessee - The remand order directing the assessee to go for regular assessment instead of Composition Scheme merely because the option was not conveyed to the Department in writing, even though the Revenue prescribed no format for the same, is not valid ground to deny the benefit to the assessee - If a judgment previously rendered by the same Tribunal and authored by the same Member is brought to the Tribunal's notice through a Rectification application, it is the duty of the Members to rectify their mistake by applying the previously rendered judgement to the case of the present assessee - The failure of the Tribunal to do so resulted in miscarriage of justice and unnecessary litigation - Hence the order of the Tribunal merits being set aside: HC

ST - Input Service - rule 2(l) of CCR, 2004 - It appears that appellant is trying to remould its grounds of appeal at the argument stage to give it proper shape that would confirm to the provisions of law since primarily the rejection was on the ground that the services were excluded from the definition of ‘Input Service' under the rule - Appellant has also failed to substantiate that those services were not primarily for personal use or consumption of employees or not covered within the exclusion clause - No irregularity or illegality can be attributed to the order passed by the Commissioner (Appeals) - appeal dismissed: CESTAT [para 3, 4]

ST - The assessee-company provided service of carriage to broadcasters - The assessee did not own any infrastructure for the channel but got the channels transmitted through other broadcasters - It availed Cenvat credit of input services - Audit was conducted for the relevant period, whereupon it was observed that the assessee took some amount of cenvat credit in the original ST-3 returns for the relevant period - Scrutiny of revised returns and the cenvat credit a/c reflected that the assessee had reflected only a part of the credit amount availed - It was also found that the assessee had availed some amount of credit by back-dating the incorporation of entries - The assessee was observed to have reversed some amount of credit under different entries in the revised cenvat credit ledger account on different dates, leading to the conclusion that the assessee substituted credit invoices without actual receipt of input services - No supporting invoice was furnished by the assessee despite visit by the audit party to the premises and issue of summons - Therefore it appeared that the assessee did not have the requisite original cenvatable documents and availed credit without receipt of documents as per Rule 9 of CCR and without actual receipt of input services - It was also found that the assessee subsequently reversed the credit after apprehending that the same would be denied by the Revenue - This act was construed to mean wrong availment of credit with intent of evasion of payment of duty - Hence duty demands were raised for reversal of credit, along with interest and penalties.

Held - The assessee entered into a tripartite agreement wherein the intermediary services provided to the assessee used to issue invoices to M/s Fastway and the assessee took cenvat credit thereof - Later, such practice was abolished and the intermediary broadcaster has issued direct invoices and the assessee took cenvat credit - In fact the services were provided to the appellant by intermediary broadcasters who issued invoices to the appellant and the appellant paid the amount of services rendered by intermediaries to them directly not through M/s Fastway - Owing to such reason, the assessee had to file ST-3 returns and took credit of the invoices issued by the intermediary broadcasters, the availment of credit is not disputed and payment thereof, thereby the cenvat credit cannot be denied - The adjudicating authority relied solely on the original returns, when in fact the assessee filed revised returns, owing to which the original returns become null and void - Hence the original return cannot be considered to be legal document - Hence the assessee correctly availed cenvat credit on the strength of the revised ST-3 returns for the relevant period - Hence no demand for service tax can be raised against the assessee: CESTAT

2019-TIOL-3579-CESTAT-KOL

Dharampal Satyapal Ltd Vs CCE

CX - The assessee-company commenced manufacture of branded chewing Tobacco prior to 28.2.2001 and availed benefit under Notfn No 32/99, which was rescinded by Notfn No 8/04-CE - The assessee continued to avail benefit of exemption from payment of duty - SCN was issued proposing duty demand on grounds that the assessee was not entitled for exemption in respect of production in 2 sheds, considering that production in these sheds commenced only after 28.02.2001 - The Revenue claimed that the assessee after acquiring these sheds applied for amendment in the Central Excise registration which was duly allowed and the two sheds were incorporated in the earlier registration - The assessee claimed that the two sheds are part of their factory which commenced production before such date and hence were entitled for exemption - It was also claimed that the relevant details regarding investment in terms of the notification were submitted to the Investment Appraisal Committee and no objection was raised by the Committee - The Revenue alleged that in these two sheds, the assessee started manufacturing branded chewing tobacco under a different brand name and as per the notification, exemption was denied to units which commenced production on or after 28.02.2001 - Hence benefit under the Notfn was denied - Thus the present appeal.

Held - It is not disputed that the common registration in respect of the two sheds was granted by the Assistant Commissioner, whose decision is being questioned on grounds that no such registration had in fact been granted - In this regard, the Tribunal in Balkrishna Industries Ltd. held that if the DC was not competent to decide, the matter could be put before the Commissioner - Besides, the Tribunal in Escorts Ltd answers the question as to whether exemption can be disallowed for the past if the when the Department registered the premises as one factory but later opines that they are in fact two or three factories - The Tribunal had held that unless registration is reviewed, the exemption could not be denied - It was also held that registration could not be reviewed retrospectively - Similarly, in Grasim Industries Ltd. the Tribunal held that during the period of dispute they had already been issued a common registration, they have to be treated as a composite unit - Moreover, the CBIC Circular No.960/03/2012-CX-3 dated 17.02.2012 clarifies that new plot if added should not affect the benefit - Besides, Circular No.939/29/2010-CX dated 22.12.2010 clarifies that addition of new brands would also not mean denying the benefit - Even if the Circular is modified subsequently against the assessee's interest, the modification applies prospectively - Hence the proceedings are not maintainable as per Section 72(6) of the Finance Act 2011 - Besides, since IAC has examined and re-done the whole exercise again as mandated by Section 72 of the Finance Act, 2011 and did not raise any objection on eligibility, the eligibility questioned in SCN had become redundant - Hence the orders in question merit being quashed: CESTAT

- Assessee's appeals allowed: KOLKATA CESTAT

2019-TIOL-3578-CESTAT-ALL

CC, CE & ST Vs Kortek Electronics India Pvt Ltd

CX - The assessee-company manufactures Set Top Boxes for television sets under the brand name of Tata Sky - The orders are placed by another firm to the assessee, which in turn sells them to Tata Sky - Such boxes fall under Chapter 85 of the First Schedule to the CETA 1985 - The assessee earlier paid Excise duty on transaction value u/s 4 of the Act - Later, Notfn was issued by the Government, granting abatement to Set top boxes - M/s Tata Sky informed the assessee about change in MRP of the boxes - The assessee informed the Revenue that duty on boxes would be paid after claiming abatement u/s 4A - The Revenue called for certain documents to be produced and the same were submitted by the assessee - Later, an SCN was issued proposing to raise duty demand with interest and equivalent penalty on account of short payment of duty since the printed MRP did not reflect the true MRP and the same could not be accepted for discharging duty u/s 4A of the Act - The higher MRP was considered to be the correct price - On adjudication, the demands were dropped, with observations that the printed MRP be adopted for assessment - Hence the Revenue's appeal.

Held - It is undisputed that the assessee paid duty on the various models of Boxes manufactured and cleared on the basis of MRP printed on the boxes u/s 4A of the Excise Act after availing abatement as applicable from time to time - Before this date, the assessee paid duty on the transaction value u/s 4 of the Act - The SCN alleged that on introduction of MRP based assessment on boxes under section 4A of the Excise Act, the assessee reduced the MRP of the Boxes - It was alleged that the goods were being sold at a price below the cost price - The Commissioner found that the Revenue could not substantiate that the goods in question were sold to ultimate consumers at a price that was higher than the printed MRP - The Commissioner also observed that none of the three grounds contemplated under section 4A of the Excise Act on account of which the Revenue could ascertain the retail price existed - The Commissioner also examined two invoices which clearly indicated that the boxes were sold at reduced MRP by M/s TATA SKY Ltd - No evidence was produced by the Revenue to establish that the Boxes were sold to ultimate customers at a price higher than the MRP - Thus, as per decision of the Supreme Court in the case of I.T.C. Ltd. vs. Commissioner of Central Excise, New Delhi the Commissioner observed that it was not open to the Department to determine the cost suo motu and re-compute the MRP since none of the above conditions existed - Thus, when the conditions set out in Section 4A(4) for ascertaining the retail sale price of the goods were not satisfied, the Revenue cannot be permitted to ascertain the sale price of the goods - The MRP indicated in the Boxes would alone form the basis for determining the levy of Central Excise duty: CESTAT

- Revenue's appeal dismissed: ALLAHABAD CESTAT

Cus - The second appellant and the fourth appellant imported several consignments of Medium Density Board 9MDF with Veneer Face, from Thailand - The first appellant is director of the second appellant company and a partner in the fourth appellant company - The DRI commenced investigations into the valuation and allied aspects of the imports - The evidence gathered was a series of emails exchaned between the appellant's supplier in Thailand and another importer - From these communications, it gathered that the supplier sent several consignments to the appellants at value much higher than what was declared by them for clearance of the goods - Statements of the directors and partners of the second and fourth appellants were recorded u/s 108, wherein they admitted undervaluation of goods and also furnished incriminating information regarding the quantity of the goods imported - In the BoE, the thickness of the board though not declared was admitted to be 2.5 mm and it was admitted that at their instance, the thickness of the boards was deliberately not shown by the supplier on the invoices - On completion of investigations, SCNs were issued by the DRI alleging misdeclaration of quantity and value of the goods - Demand for differential amount of duty was raised, along with proposal to confiscate the goods and impose penalties.

Held - The charges of mis-declaration of value and quantity in the present case has been made based on e-mail correspondence between the foreign supplier and another importer - On the basis of email correspondence and statements recorded during investigation, charges of under-valuation and mis-declaration of quantity were levelled against the appellant - In such cases the evidenced that are being relied on need to be established in the adjudication proceedings as per Section 138B and 138C of the Customs Act - Where the evidence relied on by the Revenue is not direct but is recovered during investigation against some party, the relevance of personal hearing increases many fold - As the order was passed without hearing the appellants, the order is found to be passed in violation of principles of natural justice - Hence the matter waarants remand to the adjudicating authority: CESTAT