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SERVICE TAX
2020-TIOL-412-CESTAT-KOL
Emars Mining Construction Pvt Ltd Vs CST
ST - It is alleged by the department that the appellants have short paid Service Tax on 'Transport of Goods by Road', 'Mining Service', 'Site Formation and Clearance, Excavation and Earthmoving and Demolition Service' during the period 2005-06 to 2009-10 - SCDN dated 19.10.2010 was issued demanding Service Tax of Rs.9,12,40,927/-; Education Cess of Rs.18,24,821/- and Higher Education Cess of Rs.5,01,545/- - Commissioner confirmed a demand of Rs.2,90,48,791/- and imposed equal penalty with interest - appeal to CESTAT.
Held: Essence of the contract is that the contractor i.e. the appellant shall extract iron ore from the said mine and shall deliver it exclusively to the leaseholder and in consideration thereof the leaseholder shall pay to the contractor in the manner decided - rates are fixed for different types of iron ore i.e. iron ore R.O.M., iron ore fines, iron ore 10-40 R.O.M.; and iron ore 20-40 (R.O.M.) - There is also a Supplementary Agreement to bifurcate the expenses relating to mining and transportation in the ratio 40:60 while making payments - Thus it is apparent that the contracts undertaken by the appellant are composite contracts involving excavation and transportation of iron ore - For the sake of interpretation and applicability of Service Tax, the contract cannot be vivisected - The terms of the contract being categorical and the division of the amount payable in a ratio appears to be only for the convenience of the parties involved and, therefore, it cannot be concluded that the services rendered by the appellants are under two different heads - appellant, other than merely showing that there is a division of payment could not produce any documentary proof so as to conclude that the contract is vivisectable - Therefore, Commissioner has correctly concluded that the activities undertaken by the appellants is 'Mining Service' w.e.f. 01.06.2007 and is chargeable to Service Tax accordingly - appellant submits that the entire Service Tax amount has been paid along with interest and 25% of the penalty - insofar as the service tax demand of Rs.18,35,945/- under 'Cargo Handling Services' for the period April 2007 to May 2007 is concerned, that there are a catena of judgements viz. - 2017-TIOL-180-CESTAT-DEL and 2012-TIOL-290-CESTAT-DEL indicating that such service cannot be treated as 'Cargo Handling Service', therefore, to that extent the arguments of the appellants are acceptable - appellant also fairly accepts the confirmation of Service Tax to the extent of Rs.12,23,964/- for the period April and May 2007 under 'Site Formation and Clearance Service' Penalty under section 78 is restricted to 25% of the demand confirmed - appeal is partially allowed: CESTAT [para 8 to 10]
- Appeal partly allowed: KOLKATA CESTAT
CENTRAL EXCISE
CX - The assessee-company filed claim for refund of cenvat credit during the relevant period - It was claimed that such credit was availed in conformity with CCR 2004 - The Revenue issued SCN proposing to reject the refund - On adjudication, the refund was sanctioned - Such findings were reversed by the Commr.(A) on grounds that the assessee put forth no evidence showing that the incidence of the duty was not passed on to any other person - The Commr.(A) discarded the CA's certificate, ledgers and balance sheet produced by the assessee on grounds that such records cannot be accepted as conclusive evidence to show that the refund would not be hit by the principle of unjust enrichment - Hence the present appeal.
Held - Considering the O-i-O, the assessee specifically stated that the amount in question was reflected as claims receivable in the balance sheet and as such the incidence of the duty had not been passed onto any other person - However on the same set of facts and records, the Commr.(A) held that no ledger or balance sheet was produced by the assessee to demonstrate that the incidence of duty had not been passed on - The Commr.(A) also held that ledgers and balance sheet only qualifies as secondary evidence and so the CA's certificate cannot solely be relied on to allow refund - Insofar as establishing the issue of doctrine of unjust enrichment is concerned, posting of the refund figure in the balance sheet under the head "Claims Receivable" is recognised as an acceptable principle in the accounting policy - Thus on reflecting the refund amount in the balance sheet under such heads of account without making any specific treatment of the same in P&L a/c should prove the fact that the incidence of the duty was not passed onto any other person - Hence the balance sheet should be considered as the primary evidence and not secondary evidence - Since the entry in the accounting head of "Loans and Advances" under the column of "Claims Receivable" is sacrosanct for consideration of the issue of applicability of the doctrine of unjust enrichment, the case in hand merits consideration in favour of assessee - Hence refund claimed merits being paid to the assessee instead of being credited in the CWF: CESTAT
- Assessee's appeal allowed : HYDERABAD CESTAT
2020-TIOL-411-CESTAT-MAD
JK Tyre And Industries Ltd Vs CCT, CGST & CE
CX - The assessee-company manufactures tyres, tubes and flaps & is registered with the Central Excise Department - It filed refund claims for the relevant period, arising out of finalisation/determination of actual discounts passed on to buyers - They sold the goods upon allowing permissible discounts and claimed to have passed on such discounts to the dealers - The assessee availed facility of provisional assessment which subsequently was rejected - The Department claimed that even when the assessment was allowed provisionally, the assessee was not in a position to prove that Excise duty paid by them was not passed on to the buyers - An SCN was issued proposing to reject the refund claims on grounds of unjust enrichment - On adjudication, the refund was sanctioned but was directed to be credited in the CWF - Such O-i-O was sustained by the Commr.(A) - Hence the present appeal.
Held: The main ground on which the refund was directed to be credited into the CWF, is that the assessee did not furnish documents showing that the burden of duty was not passed on - The adjudicating authority also rejected the CA certificate - It is seen that whatever Excise duty was not passed on to the buyer has been noted in the work sheet - On perusal of the CA certificate, there is no prima facie discrepancy which warrants rejection of the same - Another ground on which the rejection has been made is that the appellants have not produced payment receipts or bank statements pertaining to the transactions - When allowing discounts, the general practice is to adjust the payments by way of debit/credit notes - Hence the same per se would reflect the amount paid and payments cannot be seen from the bank transactions or such other payment receipts - Hence the allegation that the assessee did not produce payment receipts and bank statements is not sustainable - Hence the matter warrants remand so as to enable the lower authorities to re-consider the issue upon considering the relevant documents: CESTAT
- Case remanded: CHENNAI CESTAT
CUSTOMS
2020-TIOL-531-HC-MAD-CUS
GTN Textiles Ltd Vs Secretary to the Government
Cus - In WP 4846 of 2007 petitioner seeks for quashing of order 462/2006 passed against the petitioner - Petitioner manufactures and exports readymade garments and claims drawback of excise and customs duties paid on the raw materials used in such manufacture - such claims were made under All Industry Rate (AIR) - Some of the processes engaged in the manufacture, such as 'silicon washing' and 'mercerising' were sub-contracted to an entity by name Arun Processors Ltd., a 100% EOU who after completion of the processes returned the goods for further finishing to the petitioner, who carried out the final processing and, thereafter, exported the same - initially, the claim for drawback was allowed but thereafter, by invoking notification 31/1999-Cus(NT) SCN was issued seeking to reverse the drawback granted and recovery of the same - O-in-O was passed confirming the demand along with interest and penalty - said order was upheld by Commissioner(A) and also by the Revisionary authority, GOI, therefore, the present Writ petition.
Cus - In WP 4847 of 2007 Petitioner seeks issuance of a writ of declaration declaring the provisions of paragraphs 2(a) and 2(c) of the notification 31/99-Cus(NT) dated 20.05.1999 as ultra vires the provisions of rules 3 and 4 of the Custom and Central Excise Duties Drawback Rules, 1995 and also ultra vires the provisions of Articles 14, 19(1)(g) and 245 of the Constitution of India.
Held: A harmonious and purposive construction of Rule 3 of the Rules, 1995 and the notification reveals that it could not have been the intention of the legislature or the authorities concerned to deny drawback claim merely because some processes in the chain of manufacturing have been conducted in the premises of EOU/unit of EPZ, if the assessee is otherwise entitled to the benefit - Though the notifications do specifically require that the export after completion of job work is to take place only from the EOU/EPZ, this can be given effect to only in a situation where the entire process of manufacturing/finishing is occasioned in such EOU/EPZ - in a situation such as the present, where part(s) of the processes are carried out in different locations, one can hardly conclude that this operational difference would result in denial of the benefit to the exporter - original stipulation that no drawback was available for export was imposed to ensure that no double benefit was obtained - subsequently, when an EOU was permitted to engage in job work, the original condition stood modified to the effect that a manufacturer/exporter would also be entitled to drawback, provided the finished commodity was exported from EOU/EPZ itself - a situation such as the present where the goods revert back to the assessee for further processing has not been envisaged and is thus not covered, though it is also entitled to such benefit - such a situation is clearly not intended to be kept out of the beneficial sweep of notification 31 of 1999 - while answering the legal issue in favour of the petitioner and setting aside the impugned order, Bench remands the issue to the assessing authority to verify specifically whether duty has been remitted on the raw materials utilised in job work - if the result of the enquiry is positive, the petitioner is entitled to the drawback of the duty paid in accordance with law - exercise to be completed within three months - WP 4846 of 2007 is disposed of in above terms - WP 4847 of 2007 is not pressed and hence is dismissed: High Court
- Petition disposed of: MADRAS HIGH COURT
2020-TIOL-410-CESTAT-MUM
Turakhia Ferromet Pvt Ltd Vs CC
Cus - Appellant had accepted the contentions of the department and voluntarily deposited the differential customs duty along with interest - however, show cause proceedings were initiated against the appellants and the demand was confirmed along with interest and penalties were imposed u/s 114A and 112(a) of the CA, 1962 - appellants are, therefore, before the CESTAT and submit that the benefit of sub-section (2) of Section 28 should be available to the appellants and penalty under Section 114A ibid cannot be imposed; that under identical situation, the Tribunal had in the case of V.K.Industrial Corporation Ltd. set aside the penalties imposed.
Held: In the case of M/s V.K. Industrial Corporation Ltd., Tribunal vide order dated 11.12.2017 has set aside imposition of penalty on the ground that the duty amount along with interest was paid before issuance of the show cause notice - Since, the issue involved in the present case is identical to the case decided by the Tribunal, Bench finds that the ratio of the said order should be applicable to these cases for setting aside the penalties imposed in the adjudication orders dated 27.06.2012 and upheld in the impugned order dated 27.05.2013 - appeals are, therefore, allowed to the extent of setting aside the penalties imposed: CESTAT [para 5, 6]
- Appeal partly allowed: MUMBAI CESTAT
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