2020-TIOL-178-CESTAT-MUM

Chevron Phillips Chemicals India Pvt Ltd Vs CCGST & CE

ST - Issues in appeal before the CESTAT - Whether (i) the appellants are an 'intermediary' and hence the services rendered by them fall outside the scope of export service as the service provider is deemed to be located in India in view of rule 9 of the POPS Rules, 2012 and consequently the appellants are not eligible to cash refund of accumulated credit under rule 5 of the Cenvat Rules, 2004 (ii) some services received since having no nexus with the outputs services, hence, not an input service, consequently no cash refund under the said rule is admissible even though credit is allowed and not disputed.

Held: There is merit in the contention of the appellant that since 'goods' were not covered under the scope of definition of 'intermediary', therefore, for the period prior to 1.10.2014 confirmation of demand is bad in law - the definition of 'intermediary' cannot be made applicable to sale of goods for the period prior to 1.10.2014 in view of the principle law laid down by the Tribunal in the case of Croda India Co. Pvt. Ltd. - 2019-TIOL-2651-CESTAT-MUM -for the period after 1.10.2014, on merit also, the appellant cannot be called as an 'intermediary' -on a simple reading of the agreement, it is clear that the appellants are appointed by their overseas counterpart CPC Global for sales promotion of the goods for their client in the defined territory -the appellant has no role in fixation of price nor they negotiate in any manner between CPC Global and their clients relating to sales promotion of the goods sold -therefore, the appellant cannot be called as an intermediary, consequently, fall outside the amended definition of 'intermediary' under rule 2(f) and rule 9 of the POPS Rules, 2012 -similar view has been expressed by the Tribunal in the case of Lubrizol Advance Materials India Pvt. Ltd. - 2019-TIOL-892-CESTAT-MUM and R.S.Granite Machine Tools Pvt. Ltd. 2019-TIOL-836-CESTAT-MAD -as far as denial of credit on various input services namely, Management and Business Consultant services, Business Auxiliary Service, Business Support Service, Membership of Club or Association, Convention Services, Renting of Immovable Property & Telecommunication services, the finding of the Commissioner (Appeals) that it is not an 'input service' is contrary to the principles of law laid down by this Tribunal in various judgments submitted by the appellant -no contrary decision has placed by the Revenue -therefore, on this count also, the order of the Commissioner (Appeals) is unsustainable -in the result, the impugned orders are set aside and appeals are allowed : CESTAT [para 16, 17, 18, 19]

- Appeals allowed: MUMBAI CESTAT

2020-TIOL-177-CESTAT-KOL

Himadri Speciality Chemicals and Industries Ltd Vs PR CST

ST - Registered Office of appellant is registered with Service Tax department for payment of service tax under Reverse Charge Mechanism on various input services and also as an Input Service Distributor (ISD) for distribution of input service credit to its various manufacturing units - Proceedings were initiated by DGCEI, Kolkata, for enquiry of foreign remittance made by appellant for availing External Commercial Borrowings and on the basis of said enquiry, Show Cause Notice dated 29.11.2013 was issued to the appellant ISD proposing demand of service tax of Rs.53,40,800/- under RCM in respect of foreign remittance made for the period April 2009 to August 2011 - SCN also proposed disallowance of Cenvat credit of Rs.42,87,401/- for the period March 2010 to October 2012 in respect of services provided by Axis Bank - Adjudicating authority dropped demand for service tax of Rs.45,95,105/- (out of total service tax demand of Rs. 53,40,800/- pertaining to foreign remittances) and also confirmed the demand for recovery of Cenvat credit to the extent of Rs.40,17,000/- - Penalty and interest also imposed - appeal to CESTAT.

Held: Commissioner in para 4.2.1 page 41 of impugned order, while referring to letter dated 19.08.2010 issued by Axis Bank, has observed that no amount of service tax has been paid by appellant for which credit has been availed - Upon perusal of the said letter issued by the Bank, it is observed that the Bank has accepted the request of assessee for cancellation of loan facility, however, there is no mention that service tax amount has been refunded back to appellant - Therefore, Bench is of the view that the observation made by the Commissioner for denial of credit that service tax amount has not been paid by appellant is purely on assumption basis - Moreover, the fact that processing for loan financing has been done by the Bank is not in dispute, therefore, the Bank has rendered the service of loan processing which has been duly received by the appellant - Had there been no rendition of service, the question of service tax levy would not have arisen - Further, Tribunal in case of Mahindra and Mahindra - 2018-TIOL-1235-CESTAT-MUM has duly noted the contents of letter dated 10.03.2014 issued by the CBEC wherein it has been accepted by the Board that there is no legal provision in Rule 14 of the Credit Rules to recover credit from an ISD inasmuch as the said provisions stipulate recovery only from the manufacturer and the service provider - the issue is, therefore, no longer res integra inasmuch as the various co-ordinate Bench of the Tribunal as relied by the appellant have duly held that duty demand consequent to denial of credit cannot be raised from an ISD - impugned demand of Rs.40,17,000/- on the appellant which is an ISD cannot be legally sustained and hence the same is set aside - demand of service tax on RCM, since the appellant has chosen not to contest the issue, the demand of Rs. 63,207/- is upheld - Appeal partly allowed with consequential benefits: CESTAT [para 7]

- Appeal partly allowed: KOLKATA CESTAT

2020-TIOL-171-HC-MAD-CUS

German Express Shipping Agency India Pvt Ltd Vs ASSTT CC

Cus - The issue at hand in the present petition revolves around the provisions of Section 63 of the Customs Act 1962 - However, such provisions were deleted from the Act w.e.f. 14.05.2016.

Held: Proceedings are stated to be pending before the NCLT as against the exporter and a moratorium u/s 14 of the Insolvency and Bankruptcy Code has been granted with a Resolution Professional (RP) being appointed for initiating Corporate Insolvency Resolution Process (CIRP) - The petitioner is permitted to approach the RP with a claim for the amount due from the Corporate Debtor - Such claim if submitted, will be considered by the RP strictly in order of priority, as set out u/s 53 of the IBC 2016 - Considering that the commodity in question, i.e., Sugar, is a perishable commodity, necessary steps need to be taken by the RP to take possession of the consignment and ensure expeditious disposal of the same, through public auction within four weeks' time from date of receipt of a copy of this order: HC

- Writ petition disposed of: MADRAS HIGH COURT

2020-TIOL-179-CESTAT-BANG

Eastern Silk Industries Ltd Vs CC

Cus - Issue is whether the demand of duty from the appellants on the issue of shortages, shrinkages, non-accountal and non-receipt of goods from job workers etc. and as to whether the allegation is sustained by evidence so as to be legally valid.

Held: The main allegation on the appellant is about non-reconciliation of stock of raw material and shortage of raw material -the shortage has been arrived at on the basis of assumption or presumption or on the basis of calculations - there is neither any allegation nor evidence regarding the clandestine clearance of such short-found material in the domestic market -that being the position, demanding of duty on mere shortages cannot be acceptable - the apex court in the case of Oudh Sugar Mills Ltd. 2002-TIOL-307-SC-CX-CB has held that allegations based only on calculation of raw material fed into the process or on working of the machinery is not a basis for demanding duty -with regard to the alleged import and clearance of fabrics in DTA, force found in the appellant's contention that they have not mis-declared and the imports have been permitted by the customs officers after due examination at the time of import and they were also warehoused in the presence of customs officers - it was incumbent on the officers to verify whether the import of fabric was permissible in view of the license issued to them -keeping in view, the fact that a Bill of Entry was filed at the time of import and the goods were warehoused under the supervision of an officer, the appellants cannot be found fault with -the department alleged that the appellants have used the excess waste formula due to an error in the EXIM Policy - EXIM Policy as on 1.4.2001, admittedly allowed wastage of 53% and, therefore, there was nothing wrong in the appellants utilising the same - the appellants cannot be faulted for a lacuna in the law - w.e.f. 19.10.2001, with the issuance of public notice, permissible wastage was taken back to 35% and it is not the charge of the department that even after 19.10.2001, the appellants continued to avail excess percentage of wastage than the permissible limit - any change in the law is to be applied prospectively only and cannot, in any case, be applied retrospectively to the detriment of the appellants -in view of the same, demand of duty on this count is not sustainable -it was also alleged that the appellant had sent goods to three job workers and that, the wastage was not returned from the job workers along with the processed fabrics -the appellant submits that silk waste (including cocoons unsuitable for reeling, yarn waste and generated stock) falls under heading 50.03 of Central Excise Tariff Act, 1985 attracting 'Nil' rate of duty -under such circumstances, even if it is held that the appellants have not received waste back from their job workers or the subcontractors of job workers, the applicable duty payable would be 'Nil' -the whole exercise will be futile -moreover, like the case of shortage in raw material, the department has not proved anything with evidence to show that the scrap has been cleared in the domestic market -in view of the above, it is found that the show-cause notice and the impugned order are not sustainable on any of the issues raised therein - therefore, the duty demand is not sustainable -once the duty demand itself becomes non-sustainable, the levy of penalties, on the appellant-company and the Managing Director, does not arise -in view of the above, the impugned order is set aside and the appeals are allowed with consequential relief : CESTAT [para 14, 15, 16, 17, 18, 19]

- Appeals allowed: BANGALORE CESTAT

2020-TIOL-175-CESTAT-BANG

Intel Technology India Pvt Ltd Vs CCE & ST

Cus - Refund - Section 142 of the Customs Act, 1962 is attracted only when the confirmation of demand has attained finality - so long as the demands have not attained finality, the same cannot be called as arrears which could be adjusted against the refund sanctioned - impugned order is not sustainable in law and, therefore, the same is set aside by allowing the appeal of the appellant with consequential relief: CESTAT [para 6, 7]

- Appeal allowed: BANGALORE CESTAT

2020-TIOL-174-CESTAT-MAD

Zymonutrients Pvt Ltd Vs CC

Cus - The assessee-company and one M/s Zeus Biotech Ltd imported Inactive Dried Yeast - Animal Feed Supplement and classified the same under CTH 23099020, claiming the same to be "preparations of a kind used in animal feed" - However, the Department re-classified the same under CTH 21022000 - The assessee paid duty under protest and cleared the same under test bond - Test report confirmed that the goods were unfit for human consumption or to be inactive dried yeast - The Department finalized the bills of entry by rejecting the classification favored by the assessee - The Commr.(A) later dismissed the assessee's appeals on merits, while also holding it to be mandatory for the Department u/s 17(5) of the Customs Act to pass a speaking order - Some of the appeals were dismissed on grounds of time bar, having been filed beyond the condonable period from the date of BoE - Hence the present appeals. Held: One of the issues at hand is as to what could be the relevant date for appeal in terms of Section 128 of Customs Act, 1962, in the absence of such speaking order - On perusal of the provisions, it is clear that in cases where the re-assessment is contrary to the assessment done by the importer and where the assessee does not accept such re-assessment in writing, the proper officer is to pass a speaking order under re-assessment - Presently, the assessee claimed classification under CTH 23099090 whereas the Department proposed assessment under CTH 21022000 - It is evident that the assessee was done contrary to the claims of the assessee - The assessee registered its protest against the same - It is not the Department's case that the assessee accepted the re-assessment in writing - Hence as per Section 17(5) of the Customs Act, the Department was obliged to issue a speaking order - The Commr.(A) accepted in principle that the order u/s 17(5) was mandatory - However, the Commr.(A) was not correct in rejecting some of the appeals on the basis of time bar - Regarding the issue of relevant date for filing an appeal u/s 128(1) of the Customs Act where BoE are finalized contrary to assessee's claims and without issuing a speaking order, it could not be legislative intent that the aggrieved party wait indefinitely for such order before proceeding to appeal - In such cases, the provisions of Section 128(1) themselves take care, by virtue of which, mere finalization of BoE itself becomes an order or communication of the order - Therefore, the appeals are to be filed in such circumstances within a time period from the date of re-assessment: CESTAT

Held: Regarding the issue of the correct classification of the goods in question, it is seen that CTH 2102 covers Yeasts (Active or Inactive); other single cell micro organisms, dead (but not including vaccines of Heading 3002); prepared baking powders and under 8 digit Heading 21022000 inactive yeasts, other single-cell micro-organisms dead - Considering the test report of CRCL, the goods in question are inactive yeast - In view of the explanatory notes to Chapter 21, dried yeast is also known as inactive yeast and for that reason, inactive yeast is to be considered as dried yeast - Though the assessee claimed that the goods are not fit for human consumption based on CFTRO report & hence are not classifiable under CTH 2102, it is seen that such heading does not require that the goods should be fit for human consumption - There is no exclusion for yeast which is declared not fit for human consumption - The CTH 23.09 has only two single dashes - One single dash contains dog or cat food, put up for retail sale and the second single dash contains "others" and the various foods and concentrates for animals are listed subsequently - The CTH 2309 clearly talks of preparations of a kind used in animal feeding - Hence it cannot be said that the products imported by the assessee are animal feed - At best, they may be used for preparing animal feeds - Hence they are raw material used for preparing animal feed, whereupon they cannot be classified along with animal deeds by virtue of the inclusive definition given in the Explanatory Notes for CTH 2309 of CETA - Hence in respect of classification of the goods, the O-i-A does not warrant interference with: CESTAT

- Assessee's appeals partly allowed: CHENNAI CESTAT