2020-TIOL-NEWS-013, Dated: Wednesday, January 15, 2020

ST - The assessee-company is engaged in providing Business Support Service, Business Auxiliary Service and other services - Investigation against the assessee led to presumption that whole amount shown as receipt in the balance sheet is the amount for the service provided by the assessee - Further investigation revealed that the assessee collected service tax from clients but was not depositing the same with the Department - SCN was issued to the assessee invoking extended limitation to raise duty demand - On adjudication, the duty demand was sustained with interest by denying threshold exemption and various other exemptions claimed by the assessee - On appeal, the Commr.(A) allowed partial relief and remanded the matter for requantification of duty - Hence the present appeal.

Held - As the assessee charged service tax from their clients from day one, the amount of service tax collected from the clients is required to be deposited with the Department - Further,the assessee is charging service tax @ 25% of the service provided by them on 'manpower recruitment and supply agency service' and is entitled for the exemption Notification No. 30/2012 dated 20/06/2012 - Further, 'out-of-pocket expenses' are exempted in full as per the said notification - Such benefit has already been granted by the Commissioner (Appeals) in the O-i-A - Further, the amount of service provided by the assessee shall be treated as cum-tax, if the same is shown in the balance sheet as whole of the invoice price - The adjudicating authority is directed to quantify the demand and if some amount is payable by the assessee the same shall be paid by the assessee within 30 days along with interest after quantification of the demand of the service tax by the adjudicating authority - The assessee is also liable to pay penalty in terms of Section 78 of the Act: CESTAT

ST - The assessee-company is a recovery agent for telecom companies - Its function is to recover amounts from telecom service recipients where its principal is not getting payments towards providing telecommunication service - The payment recovered is remitted to its principal - Based on Form 26AS, the Revenue found out that the assessee provided Commission Agent service but did not pay service tax - Investigation was commenced whereupon it was reiterated that the assessee was not paying service tax which was liable to be paid - SCN was issued by invoking extended period of limitation - On adjudication, the demand was confirmed with interest and penalties u/s 77 & 78 of the Act - Hence the present appeal.

Held - The assessee is only contesting the invocation of extended period of limitation - During investigation, several queries were raised from the assessee, leading to the conclusion that there was no intent of the assessee to suppress or mis-declare facts - Hence penalty u/s 78 of the Act cannot be imposed - Hence the demand beyond normal period of limitation is quashed: CESTAT

2020-TIOL-96-CESTAT-ALL

Srikant Chaurasia Vs CCE & CGST

CX - The premises located at 328 Ka, Churamanpur, Varanasi was searched by Oficers of Central Excise - During search, four electriccally operated FFS machines were found installed, out of which three were found running - The oficers of Central Excise found that production of chewing Tobacco and packing was going on and also recovered four bags each containing 19440 plain pouches of chewing tobacco and 48 medium size packets each containing 360 small tobacco pouches - Further 470 Kg of loose tobacco and 35 roll packing material and 200 Kg BOPP film bags were found in the said premises - It appeared to revenue that said quantity of packed chewing tobacco had been clandestinely manufactured and was intended to be removed clandestinely - The Original Adjudicating Authority did not allow the cross examination of any of witnesses, whose statements were relied upon for issue of SCN - Original Authority has relied upon statements recorded on 12.09.2014 which is date the search was conducted in premises belonging to Shri Srikant Chaurasia - Further, the original authority had denied authenticity of all the documents that were produced before Departmental Authorities on 05.01.2015 which included invoices issued on 07.09.2014 in respect of sale of two pouch packing machines to Shri Srikant Chaurasia by M/s Ambey Engineering, Kanpur - The Original Authority has held the said documents to be fabricated and therefore by relying on all the statements dated 12.09.2014 and confirmed the demand and imposed penalties - The transporter and seller of FFS machines and seller of tobacco are also assessee before this Tribunal and they have during the hearing confirmed the authenticity of all the documents which were produced by Shri Srikant Chaurasia on 05.01.2015 - Since, Original Authority has not allowed cross examination of any of the persons, none of the statements are admissible evidences for arriving at the decision - It was held in case of Arya Fibers Pvt. Ltd.- 2014-TIOL-15-CESTAT-AHM that clandestine removal by a manufacturer needs to be established by collecting evidence in relation of procurement of raw materials - Revenue could not make out a case bringing no evidences as required for establishment of clandestine clearance as held in case of Arya Fiber Pvt. Ltd. - Further, the Original Authority has refused to accept the invoices issued by M/s Anmol Packaging and M/s Ambey Engineering even when revenue could not produce any positive evidence about the procurement of said FFS machines in the month of December, 2013 and January, 2014 - Further, revenue did not find a single pouch of finished goods in market as per available record - Further, Revenue did not establish that the electric connection required for four FFS Machines was available with Shri Srikant Chaurasia since January, 2014 and he had paid electricity bill required for manufacture of goods involving duty of around Rs.9 crores - The impugned order is not sustainable, same is set aside: CESTAT

- Appeal allowed: ALLAHABAD CESTAT

2020-TIOL-95-CESTAT-AHM

CCE & ST Vs General Motors India Pvt Ltd

CX - The assessee-company manufactures Motor vehicles and is also registered for payment of service tax for providing and receiving taxable services under several categories - On audit of records, it was found that there were entries relating to income under ledger codes for reimbursement income and mark up/other income - On inquiry, it emerged that the assessee was providing various engineering services to M/s General Motor Global Technology (GMGTO) under an agreement - Such income related to export of services and so no service tax was paid on such income shown in the ledger ports - From the agreement between the two entities, it emerged that they had an agreement for providing engineering services as per work plan proposed by the assessee in response to the engineering products identified by Global Motors Engineering Leadership Counsel (GELC) a Company for undertaking of engineering projects of General Motor Corporation - As per the agreement, the assessee was required to provide service as requested by GMTO from time to time - An SCN was issued alleging that the assessee provided taxable service to GMGTO which was actually consumed in India and not abroad, owing to which the same could not be considered to be export of service as per Rule 3(2)(a) of the Export of Service Rules 2005 & Rule 6A of the Service Tax Rules - On adjudication, the duty demands were dropped - Hence the present appeal by the Revenue.

Held - The duty demand was dropped by the adjudicating authority on grounds that there is no evidence in the SCN to show that the consulting services were not provided to GMGTO - The agreement relied upon in the notice clearly shows that the automotive technology developed by the noticee will be owned by and be the sole proprietor GMGTO - In such a backdrop, the service recipient would be GMGTO - The SCN alleged that the services were used by the assessee in India - The use of service provided by the respondent to GMGTO is the only issue which can be subject to service tax if at all - The Revenue sought to rely on Rule 2(i) of the Place Of Provision Of Service Rules, 2012 while relying on Rule 2(i)(b)(ii), the Revenue ignored the existence of Rule 2(i)(b)(i) while Rule 2(i)(b)(ii) prescribes that the place of use would be relevant, which prescribes the location of the business established would be relevant - In the present case, the business establishment of the service recipient, ie GMGTO is the USA - Hence the location of the service recipient is the USA and not India - Hence the Revenue's appeal merits being dismissed: CESTAT

- Revenue's appeal dismissed: AHMEDABAD CESTAT

Cus - Dispute is in the nature of scrap i.e whether the goods satisfy the description "Shredded Aluminium 6063 Extrusion Scrap "Tread" "as declared by the appellants - Panchnama dated 19.02.2009 records that "The cargo was mainly consisted of oval and cylindrical pieces of aluminium alloy. The thickness of the said pieces varied from approximately 2" to 21/4' (feet) and the diameter varied from 6" (inches) to 1' (feet)." - From the examination conducted as per the above said panchnama, Bench has no hesitation in holding that the goods imported goods were not "shredded aluminium scrap" as declared by the appellants - Bench, therefore, agrees with the findings recorded by the Commissioner that imported goods have been misdeclared in terms of description and hence are liable for confiscation under Section 111 (d) and (m) of the Customs Act, 1962 - redemption fine imposed of Rs 7,00,000/- is not excessive and hence upheld - Penalty imposed is reduced to Rs.2 lakhs as the same would meet the ends of justice: CESTAT [para 4.4, 4.6, 5.1]

Cus - Appellants imported 'Ceramic Tiles' and cleared the same availing the benefit of notification 95/2006-Cus which exempts Anti-dumping duty levied under notification 73/2003-Cus - After clearance of the goods, it was noticed that the Examiner's report made at the time of clearance indicated that the goods were manufactured by M/s. Nanhai Shangyuan Construction Ceramic Co. Ltd., PRC - SCN was issued demanding differential duty of Rs.40,18,214/- - original authority confirmed the demand but the Commissioner(A) set aside the OIO and held that exemption is available to the appellants as the invoice, packing list and Certificate Of Origin indicated details as per the Notification - Revenue in appeal.

Held: Commissioner(A) has set aside the OIO for the reason that while the Department had only the examination report on hand the appellant submitted copies of commercial invoice, packing list and Certificate of Origin(COO), all of which show M/s. Heyuan Wanfeng Ceramics Co. Ltd. PRC, as the manufacturer, M/s. Foshan Lungo Ceramics Co. Ltd. as exporter and M/s. Enterprise Trading FZE, UAE as the trader - Commissioner(Appeals), however, has not given any findings on the examination report except saying that as per appellants, the examination report was not given at the time of clearance - It is also not forthcoming as to why inspite of the existence of the examination report, clearance was allowed by the Customs authorities; if the country of origin certificate has been challenged through proper verification procedure and if any action has been initiated against the officers who have permitted clearance despite the examination report - Commissioner(Appeals) has not dealt with this issue and simply relied upon on the copies of the documents produced by the respondents - In the interest of justice and for a better appreciation of the facts and circumstances of the case, Bench remits the issue back to the original authority for a proper appreciation of the facts and circumstances of the case: CESTAT [para 4, 5]