2020-TIOL-NEWS-065, Dated: Wednesday, March 18, 2020

ST - Appellants have provided 'output services' i.e., Sterlisation of Pharma and Food products for which they charged consultancy fees on process development and other aspects relating to the management of company, namely labour law, legal opinion etc. - SCN was issued alleging that the CENVAT credit availed on various services do not satisfy the definition of 'input services' as laid down u/r 2(l) of CCR, 2004 - demand confirmed with interest and penalty - Commissioner(A) partly allowed the appeal - assessee is before CESTAT and submits that even though they have disputed the allegations made by the department, they have reversed credit with interest on many of these input services and have now chosen to contest the credit for Rs.1,22,673/- on professional charges and Rs.1619/- relating to travel expense incurred by the employees of the appellant contending that professional charges are incurred in relation to providing of output services and the travel expenses is related to visit of the employees to various places in connection with sales and support services.

Held: Issue of admissibility of credit on "Professional charges" services is covered by the judgement of High Court of Allahabad in the case of HCL Technologies = 2014-TIOL-2001-HC-ALL-CX , hence the said service is an input service within the scope of definition prescribed under Rule 2(l) of CCR, 2004 and credit availed on such Input Services is admissible - Insofar as 'travelling expenses' incurred by the Appellant is concerned, the same are in relation to sales promotion and post sales related activities undertaken by the Appellant and also covered by the judgement of Dr. Reddy's Laboratory - 2013-TIOL-1071-CESTAT-BANG - Hence, credit on such input services is also admissible - impugned order is modified and the penalty imposed is set aside and the appeal is allowed to the extent mentioned: CESTAT [para 7, 8]

ST - The assessee-company is a joint venture between two companies - During the relevant period, the Revenue gathered intelligence that the assessee was not paying service tax under the requisite categories - The Revenue observed there to be expenses incurred by the assessee on salary payable and also an agreement for employment of persons of the home companies at the assessee's premises - Hence the Revenue opined that the assessee was liable to pay service tax under Manpower Recruitment and Supply Agency Service, Computer Network Service, On-line information and database access and/or retrieval services and Consulting Engineer Service - SCN was issued proposing to raise duty demand under these categories, along with interest and also imposing penalties - On adjudication, the demands were confirmed - Hence the present appeal.

Held: As per the relevant secondment agreement, the employee of the assessee shall be an employee of its home company - During the deputation, the employee would not be subject to the foreign company's supervision or direction - Moreover, the home company is responsible for payment to its seconded employees of the differential expenses incurred while residing in India and the assessee is to reimburse any such expenses to the home company - The assessee also deducted TDS on the salaries paid, as per provisions of the Incone Tax Act - The amount paid to the foreign company is nothing but salary of the deputed employees - It is not consideration for any service of the nature of manpower recruitment or supply agency service - Hence the demand raised on this count merits being set aside: CESTAT

Held - OIDAR service - It is seen from the invoice that the assessee paid the amount to the Japanese home company - At most the same is reimbursement of charges and therefore cannot be subjected to levy of service tax, as settled by the Apex Court in M/s. Intercontinental Consultants and Technocrats Pvt. Ltd. - As there is no evidence of a service provider-service recipient relationship with the Japanese company to whom the assessee made payment in this regard, the demand raised under this category merits being set aside: CESTAT

Held: Consulting Engineer service - It is seen that the assessee paid service tax under this category but did not include the amount paid in the nature of travel expenses as stated in the SCN - Being reimburseable expenses, it is concluded that levy of service tax on the same is not sustainable: CESTAT

Held: Limitation - All the issues at hand are interpretational in nature and litigation was pending before various courts - Hence invocation of extended limitation alleging suppression of facts, wilful mis-statement is without any basis - Hence the demands merit being quashed on grounds of limitation as well as on merits: CESTAT

Industrial Personnel & Security Services Pvt Ltd Vs Commissioner of Central Goods & Services Tax Delhi South

SVLDRS - The present writ assails the rejection of the petitioner's application under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 on grounds that the investigative agency concerned submitted that the amount is neither quantified nor communicated to the assessee.

Held - Since in the present case, the petitioner pleaded that it was eligible to file an application despite the amount having neither been quantified nor communicated to the assessee by the Department till June 30, 2019, an opportunity of personal hearing be given to the petitioner before passing an adverse order - Hence the commununications in question are quashed with directions to decide the matter after giving opportunity of personal hearing: HC

CX - The petitioner claimed rebate of excise duty paid on the goods exported in terms of rule 18 of the Central Excise Rules, 2002 [CER] - the petitioner filed 6 rebate claims between January 2008 and March 2008 for the goods exported by it between November 2007 and January 2008 for a total sum of Rs.22.45 lakhs - the 1st respondent partially sanctioned the rebate claims for a sum of Rs.14.48 lakhs by way of re-credit into the cenvat account of the petitioner - he rejected the rebate claims to an extent of Rs.8.00 lakhs on the ground that the description of the export goods in the export invoices were at variance with the description in Form ARE-1s and hence the petitioner was not entitled to rebate to that extent - the 2 nd respondent confirmed the orders of the 1 st respondent - vide the impugned order, the 3rd respondent, Joint Secretary to Government of India, dismissed the revision applications filed by the petitioner, hence the Writ Petition.

Held: Petitioner has used goods/inputs procured on payment of CE duty and Additional Duty of Customs equivalent to CE duty along with goods imported under the Advance Authorisation Scheme to manufacture export goods to claim rebate under rule 18 of the CERon the finished goods exported from the Coimbatore unit of the petitioner - normally, only after export obligation undertaken/specified in the Advance Authorisation is discharged, a manufacturer would be entitled to either sell the manufactured goods in the domestic tariff area i.e. in the domestic market on payment of excise duty or export them and claim rebate of excise duty paid on such goods under rule 18 of the CER - to allow rebate claim to the petitioner without the petitioner discharging the obligation undertaken under the relevant customs notification read with Foreign Trade Policy under which the inputs were imported may result in unintended incentives being granted to the petitioner without proper examination - therefore, the matter would require a fresh consideration by the 1st respondent - the 1st respondent is, therefore, directed to examine whether the petitioner would be gaining any unintended export incentive under rule 18 of the CER by utilising inputs procured without payment of duty/taxes under the relevant Advance Authorisation Scheme - under these circumstances, the impugned order passed by the 3rd respondent is set aside and the cases are remitted back to the 1st respondent to pass a speaking order within a period of three months - in case, the petitioner is held entitled to rebate otherwise, the respondent shall not deny the rebate claim on account of minor variation in the descriptions between the export documents and Form ARE-1 - the writ petition thus stands disposed by way of remand: High Court [para 21, 22, 23, 24, 25, 26]

CX - There is no manufacturing process involved in press mud's production - "Bagasse, pressmud and composed fertilizer" is not 'goods' but merely a waste or byproduct, therefore, Rule 6 of the Cenvat Rules shall have no application in the present case and they are bound to come into existence during the crushing of the sugarcane and are an unavoidable agricultural waste - Since press mud is also not manufactured, the same cannot be held to be excisable, in which case the amendment to rule 6(1) by notification 6/2015-CX(NT) dated 01.03.2015 which has been relied upon by the authorities below as well as by the Revenue, would not apply - appeal allowed with consequential relief: CESTAT [para 4, 5]

CX - Respondent had availed the benefit of S.S.I. Exemption Notification No.8/2003-CE in respect of clearance of furniture without payment of duty - alleging that the Respondent did not consider the value of clearance of "other furniture and parts thereof" and "wood continuously shaped", while computing the S.S.I. Exemption limit, demand issued for recovery of CE duty of Rs.1,50,66,615/- - as proceedings dropped by Commissioner, Revenue is in appeal.

Held: Demand has been made without segregation of the dutiable and non-dutiable invoices - On the other hand, the Respondent had produced the statement of clearance of job-work items and dutiable items within exempted limits, which statement is not disputed by the Anti-evasion branch - Respondent had also produced the Chartered Accountant Certificates of each year certifying that it was prepared on the basis of the books of accounts, records and documents produced and such certificate cannot be brushed aside in the absence of any material to rebut the same - no merit in the appeal of Revenue, hence dismissed: CESTAT [para 6 to 8]

CUSTOMS

2020-TIOL-592-HC-MAD-CUS

Segudawood Ameer Vs ADDL CC

Cus - Petitioner had carried with him 32 gold chains weighing 177 grams valued at Rs.3.84 lakhs and when he landed at Chennai Airport with the aforesaid gold chains, it was confiscated and he was asked to pay a redemption fine of Rs.1.92 lakh under section 125 of the Customs Act, 1962 [Act] and a penalty of Rs.38,000/- imposed on him under section 112(a) of the Act - on appeal, the Commissioner (Appeals) reduced the redemption fine to Rs.1.55 lakh and penalty to Rs.19,000/- and benefit of notification no.31/2003-Cus dated 1.3.2003 was allowed to the petitioner - the Revisionary Authority, vide impugned order, upheld the order of the Commissioner (Appeals) - appeal to High Court.

Held: The petitioner has attempted to smuggle gold chains and/or acted as an accessory for another person - however, the benefit of notification no.31/2003-Cus 1.3.2003 has been extended - penalty that could be imposed on the petitioner is only under section 112(ii) of the Act, which can vary only between 10% of the duty sought to be evaded or Rs.5,000/- whichever is higher - 10% of Rs.39,598/- is only Rs.3,959/- - therefore, maximum penalty that can be imposed on the petitioner could not exceed of Rs.5,000/ - the Court is, therefore, inclined to modify the penalty to Rs.5,000/- from Rs.19,000/- ordered by the Commissioner (Appeals) - accordingly, the impugned order of the 3rd respondent upholding the penalty of Rs.19,000/- to that extent stands modified - redemption fine under section 125 of the Act cannot exceed the market value of the confiscated goods, less the duty chargeable thereon - since customs duty sought to be evaded was only Rs.39,598/- by the petitioner and he being a first time offender having indulged in an attempt to smuggle 177 grams gold chains number of 32 and considering the fact that the benefit of Customs notification 31/2003-Cus has been extended to the petitioner and there being no challenge to extension of such benefit to the petitioner, the redemption fine of Rs.1.55 lakh appears to be on the higher side - under these circumstances, the Court is constrained to reduce the redemption fine to Rs.50,000/- from Rs.1.55 lakh that was modified by the 2nd respondent Commissioner (Appeals) - accordingly, the impugned order is further modified - in fine, the impugned order of the 3rd respondent upholding the imposition of penalty under section 112 and redemption fine are modified as follows :- (i) the penalty of Rs.38,000/- originally imposed by the 1st respondent and reduced to Rs.19,000/- by the 2nd respondent is further reduced to Rs.5,000/- (ii) the redemption fine of Rs.1.92 lakh imposed by the 1st respondent and reduced to Rs.1.55 lakh by the 2nd respondent is further reduced to Rs.50,000/- (iii) the respondents are, therefore, directed to refund the balance amount of Rs.1,19,500/- [Rs.1,74,500/- - 50,000/- - 5,000/-] to the petitioner within a period of three months - the Writ Petition stands disposed with the above observations : HIGH COURT [para 39, 40, 42, 43, 44, 45, 46, 47]

- Writ Petition disposed of: MADRAS HIGH COURT

2020-TIOL-588-HC-DEL-NDPS

Ganesh Pun Vs UoI

NDPS - Narcotic Drugs and Psychotropic Substances Act, 1985 [NDPS Act] - The petitioner has filed a bail application under section 439 Cr.PC in Case No.29/201 under section 8(c) & 22(b) of the NDPS Act.

Held: Perusal of the facts appearing on record prima facie reveal that petitioner is dealing with narcotics drugs - he has tried to send the drugs by concealing the same in a parcel - later on, a raid was conducted at his residence in Calcutta and huge quantity of psychotropic tablets were recovered from there - the counsel for the petitioner has submitted that petitioner has been granted bail in the other case - however, the APP has clarified the fact that it was a default bail granted by Court since charge sheet was not filed within the statutory period - so far as minor discrepancies or contradiction in prosecution version are concerned, these will no doubt be considered by the Trial Court at the appropriate stage but these cannot be examined at this stage as the law is well settled that at the time of bail, the evidence need not be discussed or analyzed in detail - in view of the above facts appearing on record and nature of offence, no grounds for grant of bail to the petitioner are made out - the bail application is, therefore, dismissed: High Court [para 12, 13]

- Bail Application dismissed: DELHI HIGH COURT

2020-TIOL-466-CESTAT-DEL

Jindal Poly Film Ltd Vs Designated Authority Directorate

Anti Dumping Duty - Whether the Designated Authority [DA] can give final findings contrary to the essential facts stated in the disclosure statement without even apprising the domestic industry.

Held: In the present case, the challenge to the final finding is principally based on the contention that the DA placed reliance upon certain material and facts for concluding the issue against the appellant, which facts did not form part of the disclosure statement and to which the appellant had no opportunity to deal with -the contention of the Appellant, therefore, has merit -failure to make available to material on which the decision is based is clearly violation of principles of natural justice -it rather amounts to placing reliance on such data not made known to the party concerned -the Supreme Court in Reliance Industries Ltd. - 2006-TIOL-120-SC-AD held that proceedings before the DA determine a lis between Domestic Industry on the one hand and the importer of foreign goods on the other -the Supreme Court further clarified that when a decision is not in consonance to the "essential facts under consideration" as were "disclosed" to the interested parties, including the domestic industry, it was incumbent upon the Designated Authority to specify the reasons for such diversion -any additional data/information/submission or methodology used by the DA while coming to such a decision was required to be made known by DA to the interested parties, including the domestic industry prior to taking a final decision- absence of the requisite disclosure of information amounts to violation of the principles of natural justice as the DA -in Nirma Ltd. - 2017-TIOL-2183-HC-AHM-CUS , the Gujarat High Court held that if any additional data or information was to be used by the Designated Authority, it was incumbent upon the DA to put the parties to notice in respect of such additional information -the non sharing of the data on which reliance has been placed by the DA while recording final findings is a breach of the principles of natural justice -it is, therefore, considered appropriate that the matter be dealt by the DA after disclosing complete "essential facts under consideration" to all the interested parties, including the appellant/domestic industry -the matter is remanded to the Designated Authority for: (i)issuing a fresh disclosure with complete details/data/information/methodology which may constitute "essential facts under consideration" (ii)to afford an opportunity to the interested parties to submit their comments (iii)after analysing the disclosure statement and the comments, if any, give fresh final findings and (iv)liberty is also given to the DA to reconsider the status of the Malaysian exporter and the genuineness of its representation -as a result of the above, the final findings and the notification issued by the Central Government are set aside -the DA shall give final findings in the light of the directions stated above, where after the Central Government shall issue a fresh notification -the present appeal is allowed in terms of the directions indicated above : CESTAT [para37, 38, 39, 40]

- Matter remanded: DELHI CESTAT