2020-TIOL-324-CESTAT-MAD

Broekman Logistics India Pvt Ltd Vs Commissioner of GST & CE

ST - Appellants are engaged in the business of logistics supply, chain management, clearing & forwarding, licensed CHA etc. - Alleging that they did not pay any service tax on the services provided by them from Free Trade Warehousing Zone (FTWZ) exclusively to foreign based clients, SCN was issued for recovery - original authority held that the services provided to foreign clients do not qualify as export of services and thus confirmed the demand, interest and imposed penalty - as Commissioner(A) upheld this order, the assessee is before the CESTAT.

Held: Section 26, Clause (e) of the SEZ Act, 2005 provides for exemption from service tax - Section 51 states that the Act will have overriding effect notwithstanding anything inconsistent in any other law - This Act, therefore, overrides the Finance Act, 1994, as well as the Rules framed thereunder to give effect to the exemption contained in Section 26 - In such circumstances, the department cannot press into application Service Tax Rules, Place of Provision of Service Rules or other Rules to hold that the appellant has not exported any services - The meaning of service and export contained in the special legislation of SEZ Act, 2005 by which SEZ or FTWZ has been created has to be given effect - The Service Tax Rules, 1994 cannot be pressed into application so as to defeat the intention and purpose of Section 26 - When the intention of creating such FTWZ within India is to give exemption from levy of all duties and taxes, the department ought to have confined to the definitions contained in Section 2(z) and 2 (m) of the said Act - Further, the consideration is received in foreign currency as well as the service recipient is a person placed outside India, therefore, the department cannot contend that there is no export of services - The demand of service tax on consideration received by the appellant from the foreign service recipient under Storage and Warehousing services cannot be subject to levy of service tax under reverse charge mechanism - The first issue is found in favour of the appellant: CESTAT [para 5.3, 6]

ST - Reimbursements - Appellants have not produced necessary documentary evidence before the adjudicating authority to establish the nature of these amounts and which the appellant contends are actual reimbursements and, therefore, not includible in the gross taxable value in terms of the apex court decision in Intercontinental Consultants & Technocrats Pvt. Ltd. - 2018-TIOL-76-SC-ST - appellant has to be given a further opportunity to furnish necessary documents in this regard, therefore, matter is remanded: CESTAT [para 5.4, 6]

- Appeal partly allowed: CHENNAI CESTAT

2020-TIOL-321-CESTAT-BANG

Sankla Industries Vs CC, CE & ST

CX - The assessee-company manufactures Excisable goods such as PVC compounds, PVC Master Batch and LDPE/HDPE falling under Chapter heading 3904 and 3901 of CETA 1985 - The final product cleared by the assessee is cleared on payment of duty as per CEA - In some cases, the final products cleared by the assessee would be rejected by the customers for various reasons - On receipt of such returned goods, the assessee availed Cenvat credit of duty paid on such goods u/r 16 of CER 2002 - The returned products could not be re-processed, refined or reconditioned as such & so were re-melted and used along with regular manufacturing batch to obtain fresh final products, which were again cleared on payment of duty - The Revenue proposed to deny SCN availed on the rejected goods and sought to recover the same with interest - Penalty was also imposed - On adjudication, the demands were confirmed u/s 11A with interest u/s 11AB and equivalent penalty u/s 11AC - The assessee was issued a similar SCN proposing to deny credit availed in a different period - The proposals in such SCN were confirmed as well - The assessee appealed to the Commr.(A) and meanwhile, also reversed cenvat credit with interest to avoid 100% penalty - The assessee also paid 25% of the penalty and informed the Revenue of the same - The Commr.(A) allowed the assessee's appeals - Thereafter, the assessee claimed refund of the amount deposited by it at time of filing appeal - Such refund was denied on grounds that the same was time barred as per Section 11B of the CEA - Such rejection of refund was further sustained by the Commr.(A) - Hence the present appeal.

Held: The issue of refund of pre-deposit u/s 35F has been considered by High Court of Bombay in Nelco Ltd. Vs UOI wherein it had been held that for refund of mandatory pre-deposit u/s 35F, the provisions of Section 11B of the CEA were not applicable - Such findings of the High Court were further sustained by the Apex Court - Besides, the High Court of Delhi in Nestle India Ltd. held that pre-deposit was not towards payment of tax liability but rather to avail remedy of an appeal - Therefore, the order rejecting the refund claim u/s 11B is not sustainable and merits being set aside - In light of such precedent cases, it is also clear that the assessee is entitled to interest on the delayed refund immediately after expiry of three months from date of passing of the O-i-A till date of actual payment: CESTAT

- Assessee's appeal allowed: BANGALORE CESTAT