2020-TIOL-NEWS-037, Dated: Thursday, February 13, 2020

ST - The assessee-company is engaged in providing and also receiving various taxable services - The Revenue observed that service tax is payable on varios income also under reverse charge on expenses in foreign currency, such as commission on sales - Alleging non-payment of service tax w.r.t. the services vide separate SCNs, duty demands were raised with interest and proportionate penalties - Subsequently, the Tribunal remanded the matter back to the adjudicating authority for de novo adjudication whereupon the demands were re-iterated in respect of the relevant year and also for the subsequent years - Hence the present appeal.

Held - The burden was on the Revenue to prove the alleged shortcomings after the records of the assessee along with CA certificate is already produced before the adjudicating authority - Hence, neglecting such evidence without referring to any other evidence proving short payment of duty, the confirmation of duty demand is not sustainable - The assessee also claimed that an SCN cannot be referred to as 'the previous' SCN for proposing demand in four SCNs - Perusal of the four SCNs shows that nothing is discussed in the SCN for the relevant period - All four SCNs speak about certain records which admitted do not pertain to the period of demand in any of these SCNs - Hence the SCNs are vague - As follows from the decision of the Apex Court in Commissioner of Central Excise, Bangalore Vs Brindavan Beverages Pvt. Ltd an SCN is the foundation for the Department to have built up the case - Any lack of details therein amounts to denial of opportunity for the assessee to counter the allegations - The Department laid emphasis on Section 73 of the Finance Act 2012 - However, this provision for treating a subsequent SCN as continuation of the previous SCN where the issue remains the same, came into effect in the year 2012 - Hence it cannot be applied retrospectively - Hence each SCN has to be self contained, including all details and basis for alleging short or non payment of service tax - Thus two of the four SCNs are excluded from the scope of this provision - The SCN issued in 2014 could rely upon the contents of the SCN of the year 2012 but later also, no details were provided except for reliance upon the SCN of 2008, which is not permissible - Thus, all four SCNs are silent on providing any basis to proceed against the assessee - The legal provisions for charging service tax on export of services cited in the SCN of 2008 have no relevance for the subsequent period - The order under challenge is the outcome of the said remand not only for the show cause notice under adjudication in the said order but to the subsequent three SCNs - As the subsequent SCNs make no specific allegation for the period therein, therefore the order under challenge has actually not complied with the directions of said verification - Lack of evidence in the given circumstances is held to be erroneous ground to confirm the demand as the evidence to be verified is already available on record - Hence the order confirming the demand is proposed by the four separate SCNs is erroneous and contrary to settled law - Hence the same are not sustainable: CESTAT

SVLDRS - The issues raised in the present appeal pertain to whether or not the appellant is entitled for credit of duty paid on capital goods after taking corrective action in the year in which credit was taken - The appellant also assailed the findings of the CESTAT in holding that the appellant claimed depreciation even though the same admittedly was allowed for the limited purpose of carry forward - The appellant also claimed that the Tribunal did not examine its contention of the former being under the bona fide belief based on the latter's earlier order, that once corrective actions are take, credit can be taken even when the depreciation is claimed in earlier AYs.

Held - The appellant expressed its desire to avail benefit under the Sabka Vshwas Legacy Dispute Resolution Scheme - However, the same is not possible as long as the present appeal is pending - Hence the appellant is permitted to withdraw the present appeal - No opinion expressed on merits in respect of the grounds raised: HC

SVLDRS - The appellant sought permission from the court to withdraw the present appeal in favor of resolving the same under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.

Held - The appeal is disposed of as withdrawn with liberty to revive the same, if for any reason, the application made under the SVLDRS is not accepted: HC

CX - The assessee-company manufactures Cooling tower components on job work basis for M/s Paharpur Cooling Tower Ltd - The principal purchased inputs under cover of invoices, which were endorsed by them in favor of the assessee & based on the same, the assessee availed cenvat credit of duty paid on the same - During the relevant period, the assessee availed credit on the strength of such endorsed invoices - The Revenue objected to the same & initiated proceedings proposing denial of cenvat cedit on grounds that endorsed invoices were not eligible documents for availing cenvat credit - Subsequently, the High Court settled the issue in favor of the assessee - During the course of litigation, the assessee had deposited a certain amount of duty - On passing of a favorable order, the assessee filed refund claim which was sanctioned - On Revenue's appeal, the Commr.(A) held that there was no provision for allowing refund of cenvat credit in cash - Hence part of the refund amount was directed to be added to the Cenvat a/c - Hence the present appeal.

Held: Admittedly, part of the amount was debited by the assessee from its Cenvat a/c during pendency of appeal - Whether such accumulated credit could be used by the assessee in the relevant period, is not clear from the facts of the case - If on account of such debit, which was on the basis of the Revenue's objection, the assessee was compelled to pay the duty during the relevant period from its P&L A/c, then the said refund of debited credit would be available to the assessee in cash - As such facts were not available on record, it is fit case to quash the order and remand the same to the original adjudicating authority: CESTAT

CX - Appellant was not able to produce the "proof of export " within the period as prescribed in respect of the goods cleared by them for export without payment of duty as per Notification No 42/2001 CE(NT) 26.06.2001, therefore, proceedings were initiated against them for recovery of the duty not paid by them at the time of clearance of sugar in term of the bond executed by them - demand for Central Excise duty amounting to Rs 3,15,73,845/- confirmed along with interest and penalty imposed of Rs.75 lakhs in terms of rule 26 of CER, 2001- appeal filed before CESTAT.

Held: It is a settled position in law that any person claiming the benefit of an exemption notification is required to fulfill the conditions specified in the notification - Bench is also not in agreement with the submissions made by the appellant that they are not able to co-relate the documents in view of the certain erroneous method adopted by the Customs Authority while endorsing the documents - It is also a settled position that when law requires something to be done in particular manner then that has to be one in that manner only and all other methods of doing so are barred - While upholding the demand made by the adjudicating authority in respect of the documents (ARE-1/AR- 4) in Annexure B and C, Bench sets aside the demand confirmed in respect of Annexure A and remands the matter back to adjudicating authority for consideration of the same vis-à-vis the documents that may be furnished by the appellant - Penalty imposed is also set aside and the same needs to be re-determined by the adjudicating authority after taking into account the total of demand confirmed against the appellant in respect of Annexure B and C and the demand confirmed upon remand in respect of Annexure A - as the matter is quite old, adjudicating authority is directed to decide the matter in remand proceedings within four months: CESTAT [para 4.8, 4.9, 4.11, 4.14, 5.1, 5.2]

CX - Based on investigation conducted and statements recorded, Revenue had alleged that the respondent assessee had manufactured and cleared M.S. Ingots without payment of duty during the relevant period - SCN issued for recovery of total duty of Rs 67,97,677/- with interest and penalty - in adjudication, Commissioner dropped the proceedings, hence Revenue is in appeal before CESTAT - Revenue contends that Commissioner has not analysed any of evidences gathered but simply quoted various judgments and dropped the proceedings.

Held: Commissioner has not recorded the reasons while analyzing evidences in detail about its reliance and reliability vis-à-vis in arriving at the conclusion on the allegation of clandestine removal of the goods by the respondents - in the absence of detailed reasoning, conclusion in the order cannot be sustained - matter remanded to the adjudicating authority: CESTAT [para 5, 6]

CUSTOMS

2020-TIOL-351-HC-MAD-CUS

Sabin Logistics Pvt Ltd Vs CC

Cus - Customs Broker License Regulations, 2013 [CBLR, 2013] - licence suspended and later order passed for continuation of suspension - The writ petitioner seeks the quashing of Notice bearing No. F.No.54/CB5 dated 13.8.2018 proposing revocation of licence.

HELD: Issue as to whether the 90 day time limit for issuance of notice for revocation of licence under Regulation 20 (1) of CBLR, 2013 is mandatory or directory is no longer res integra - there are a series of decisions of the courts that have decided the same holding it to be mandatory - the Revenue does not dispute this position either - however, the counsel for the Revenue urges that in the facts of this case, the period be computed excluding the period when the order of suspension passed under Regulation 19 was stayed by this Court - the impugned notice has been issued on 13.8.2018 - in the present case, though there was an order of stay passed on 24.4.2018 by this Court, there was nothing that prevented the respondent from issuing the show cause notice under Regulation 20 (i) of the CBLR, 2013, within the period of 90 days since the aforementioned period commences from the date of offence report, which, in this case, is 27.2.2018 - the Regulation stipulates a seamless procedure commencing from the date of offence report and there is nothing in the regulation that indicates distortion of this time frame by intervening events - the Delhi High in the case of Atharva Global Logistics - 2016-TIOL-1072-HC-DEL-CUS considered a similar plea by the Customs department as advanced in the present case - the plea was for exclusion of the period when the suspension of the license was rejected - the Court negatived the same holding that there was no provision for such exclusion under Regulation 20 - this Court is of the view that where a provision/regulation spells out a specific period of limitation, such period is mandatory and any exclusion therefrom should also be provided for specifically - in view of the above, the writ petition is allowed and the impugned order is set aside : HIGH COURT [para 16, 17, 21, 22, 23, 24]

- Writ Petition allowed: MADRAS HIGH COURT

2020-TIOL-350-HC-KERALA-CUS

Ummer Abdulla Vs CCE, C & ST

Cus - (i) Whether the Tribunal was justified in imposing a penalty under sections 112(a) and (b) of the Customs Act, 1962 [Act] given that the provisions of Act does not extend beyond the territory of India ? (ii) Whether the Original Authority was bound to follow the mandatory procedure prescribed under section 138B of the Act? (iii) Whether the Tribunal was justified in penalising the Appellant on the basis of uncorroborated statements of co-accused, without any independent material evidence against the Appellant, and on the basis of conjectures and suspicions? (iv) Whether the Tribunal was justified in imposing a penalty on the Appellant ex-parte, without affording the Appellant with an opportunity of contesting the case on merits? (v) Whether the Tribunal and the authorities below were justified in imposing a penalty on the Appellant when the Show Cause Notice itself had no case that the Appellant was within the territory of India during the said period? (vi) Is not the decision of the Tribunal without any application of mind, also perverse in the facts and circumstances of the case?

HELD: There is not a scintilla of direct evidence regarding the appellant handing over any gold to the carrier, Altaf - the findings of the Commissioner is solely based on the statements given by Abdul Basheer, Manoj and Altaf, who were directly involved with the smuggling, and from whom the seizure of the contraband was effected - there is no independent evidence connecting the appellant with the mobile number other than the statements of persons who were apprehended for the direct link with specific instance of smuggling - going through the entire Annexure H order of the Adjudicating Authority, the Court does not find anything concrete to rope the appellant in the alleged smuggling of gold, but for the recorded statements of persons, who were directly involved - in view of the precedents [Krishna Brothers - 2017-TIOL-1407-HC-KERALA-CUS, Andaman Timber Industries - 2015-TIOL-255-SC-CX, Kanungo and Co. - 2002-TIOL-252-SC-CUS-LB and Mohammed Fariz & Co. - 2018-TIOL-1372-HC-KERALA-CUS, the Court is of the opinion that the Adjudicating Authority has relied on the statements recorded under section 108 of the Act without affording an opportunity to the appellant to cross-examine them - in the reply to the SCN filed by the appellant, he has specifically requested for the witnesses to be cross-examined and, therefore, the Adjudicating Authority was bound to follow the mandatory procedure prescribed in section 138B of the Act - without having done so, the order is not sustainable - the Tribunal was also not justified in upholding the order of the Adjudicating Authority in imposing the penalty, despite the infirmity pointed out by this Court - the Tribunal has not considered all these aspects in its order - the Court, therefore, sets aside the impugned order imposing penalty against the appellant - the questions of law are found in favour of the appellant and the appeal is allowed - the proceedings, if so advised, shall be recommenced providing the appellant with an opportunity to cross-examine the deponents who in their statements, implicated the appellant: HIGH COURT [para 13, 20, 21, 26]

- Appeal allowed: KERALA HIGH COURT

2020-TIOL-281-CESTAT-MUM

Sri Sai Imports Vs CC

Cus - Allegation is that the declared transaction value of the imported goods was even less than the cost of raw material i.e. Brass Scrap in case of Brass Valve and Zinc Ingots (LME price) for Zinc Valves - Proprietor of the Companies has accepted the fact about declaration of value lower than that of raw material cost - re-determined value based on the cost of raw material plus 30% manufacturing cost was accepted by the appellants and part of duty was also paid voluntarily - SCN issued and demand of differential duty confirmed with interest and penalties imposed - importer in appeal before CESTAT.

Held: Bench is in agreement with the submissions made by the appellant that the issue is squarely covered by the decision of tribunal in case of S K Dhawan - 2016-TIOL-1219-CESTAT-MUM and Raghav Overseas - 2019-TIOL-2821-CESTAT-MUM- in the said cases, same evidences were relied upon by the revenue for rejecting the transaction value and for redetermining the value of imported goods, however, tribunal had set aside the demands made along with interest and penalties - following the same, impugned orders are set aside and appeals are allowed with consequential relief: CESTAT [para 4.2, 5.1]

- Appeals allowed: MUMBAI CESTAT

2020-TIOL-280-CESTAT-MUM

Spenta Multimedia Pvt Ltd Vs CC

Cus - The assessee had sought cross examination of certain officers from the Customs Department and from the DGFT - However, such request had been denied by the original authority - Hence the present appeal was filed by the assessee, on grounds of violation of the principles of natural justice.

Held: There is no bar in the law against the assessee to approach the adjudicating authority to reconsider request for cross examination - Considering that the adjudicating authority has been changed since the time of rejection of the assessee's request and the settled position of law that the new adjudicating authority had to consider the matter afresh, the new adjudicating authority cannot rely on the rejection made by the earlier adjudicating authority in the matter - Hence it is appropriate for the assessee to approach the new adjudicating authority with its request for cross examination, who should consider the same without any bias on account of rejection made by the predecessor authority: CESTAT

- Assessee's appeal allowed: MUMBAI CESTAT