2020-TIOL-NEWS-074, Dated: Saturday, March 28, 2020

ST - In one of the two appeals, the Revenue observed that the assessee availed input service credit on various invoices addressed to its head office, and under such invoice, it had procured various input services such as management consultant services, civil engineering services, interior decorator services etc. which have been used for construction of the building/immovable property which has been let out for rent by the service provider - The Revenue opined that these input services did not have any nexus with the output service of renting of immovable property service - As per Section 65(105)(zzzz) of the Finance Act, 1991, 'renting of immovable property for use in the course or furtherance of business or commerce' is taxable & as per Board's circular No.98/1/2008-ST dt. 04/01/2008 issued from F.No.345/6/2007-TRU, 'right to use immovable property' is leviable to service tax under renting of immovable property service - It appeared to the Revenue that all these input services did not have any nexus with the output service & cenvat credit was invalidly availed - Demand was raised for recovery of the same with interest as per Rules 14 & 15(3) of CCR 2004 r/w Section 73 and 75 of the Finance Act 1994 - In the other appeal, the assessee availed input service credit in respect of civil works, structural glazing works, electrical works, piling works, compound wall, security, borewell cutting consultancy, erection of elevators, engineering consultancy etc, that were used for construction of immovable property - The Revenue opined that these services were not utilised for providing any taxable output service and that they had been availed in respect of immovable property, which is neither service chargeable to service tax nor goods liable to Excise duty and so were not subjected to either levy - SCN were issued and confirmed vide O-i-Os, seeking recovery of the credit so availed.

Held: The issues at hand are no longer res integra and are settled in favor of the assessee through several judgments of the Tribunal and of the High Court of Gujarat in the case of CCE&Cus Vs. Mundra Port and Special Economic Zone Ltd. - Hence the orders disallowing credit on input services utilised in construction of immovable property which have been further let out of the period upto 31.03.2016, are set aside - The assessee is directed to file a calculation sheet along with details and schedule of the input invoices before the original adjudicating authority for verification of the accuracy - Discrepancies if any shall be rectified - Nonetheless, it is clarified that credit is not available on these services after 01.04.2011 as the same is specifically excluded from the definition of input service u/r 2(l) - Hence the subject orders are so modified - However, the demands confirmed in respect of the other issues are not interfered with as the same have already been admitted and paid by the assessee: CESTAT

CX - Petitioner is a manufacturer of Iron Castings and controversy is as to whether the Iron Castings manufactured are un-machined castings or machined castings since if un-machined, duty exemption can be claimed - Assessee claimed that it has filed the classification lists as to explain what type of Castings the Assessee Company produced but the same was denied by the Revenue - Both the Appellate Authority as well as CESTAT concurrently held that no such classification list has been filed as claimed by the Assessee - demand confirmed by all the lower authorities, hence petition filed.

Held: Fact remains that both the Appellate Authority as well as CESTAT concurrently held that no such classification list has been filed as claimed by the Assessee - In such view of the matter while sitting in the Writ jurisdiction under Article 226 of the Constitution of India, Bench cannot go over the said factual finding which has been concurrently found by both the Authorities - If at all the Assessee still feels to file classification list to establish its case for getting exemption of the duty, it is open to the Assessee to agitate the same in the manner known to law - there is no infirmity in the order passed by the learned CESTAT, hence Writ petition is dismissed - if any appropriate petition/application is filed before the CESTAT by the Assessee on the only point with regard to the production of classification list, the same can be entertained by the CESTAT only for the said purpose and accordingly the issue can be decided: High Court [para 5 to 7]

CX - Appellants have sought adjournment of the matter on the ground that they have filed petition before the National Company Law Tribunal (NCLT) and the same has been admitted and in terms of the said order NCLT has specifically prohibited for institution of fresh suits or continuation of pending suits or proceedings in the judicial forum including the Tribunal - Bench is, therefore, of the considered opinion that the present appeals filed by the appellants cannot be proceeded further till final decision on the issue is rendered by NCLT - Matter is adjourned sine die - appellants are at liberty to apprise the Bench about further developments, in the matter pending before the NCLT: CESTAT [para 2, 3]

CUSTOMS

2020-TIOL-78-SC-NDPS

Than Kunwar Vs State Of Haryana

NARCOTICS Drugs and Psychotropic Substances Act, 1985 [NDPS Act] - The appellant was accused No.1 before the Trial Court and the appellant before the High Court, which, by the impugned judgement, confirmed the judgment of the Trial Court and convicted her under section 18 of the NDPS Act

HELD: Violation of Section 50 of the NDPS Act - Having regard to the judgment by the three-Judge Bench in the case of Baljinder Singh - (2019) 10 SCC 473 ], which directly dealt with this issue, viz., the correctness of the view in the case of Dilip [ (2007) 1 SCC 450 ] reliance placed by the appellant on paragraph 16 may not be available - as already noticed, this Court is not oblivious of the observation which has been made in the other three Judge Bench judgment of this Court in SK.Raju [ (2018) 9 SCC 708 ], which it appears, was not brought to the notice to the Bench which decided the case later in Baljinder Singh (supra) - it is noticed, however. that the later decision draws inspiration from the Constitution Bench decision in Baldev Singh [(1999) 6 SCC 172: 1999 SCC (Cri) 1080] - it is also noticed that this is not a case where anything was recovered on the alleged personal search - the recovery was effected from the bag for which it is settled law that compliance with section 50 of the NDPS Act is not required: Supreme Court

Non-production of the seized material - The appellant has not been able to demonstrate in the facts of this case any facts which could be likened to the facts stated in paragraphs 10 and 11 of the judgment in the case of Jitendra [ (2004) 10 SCC 562 ] - at least nothing was urged by the Counsel for the appellant on these lines - in the facts of this case, no doubt the contraband article weighed 6 kg 300 gms - a perusal of the judgment of the Trial Court does not appear to suggest the appellant had taken the contention regarding non-production of the contraband before the trial Court - this contention as such is not seen as taken before the High Court - this is a case where the sample was produced - there is no argument relating to the tampering with the seal - it is further noticed that in the deposition of the investigating officer (PW7), he has stated as follows: “The case property is Exhibit P1, sample is Exhibit P2, sample seal is Exhibit P3 and the bag in which the case property was recovered from the possession of the accused present in the Court is Exhibit P4” - in the facts of this case, this Court has no hesitation to reject the contention of the appellant: Supreme Court

Whether the conviction of the appellant made by two courts requires interference on the ground that independent witnesses were not associated with the investigation, seizure and recovery - This Court has noticed the evidence which is referred to by the appellant to criticize the impugned judgment on this score - two courts have reposed confidence in the deposition of the prosecution witnesses - in the light of what the Investigation Officer [PW7] has stated, when examined, this Court does not think that a case has been made for overturning the verdict of guilt returned against the appellant: Supreme Court

In the circumstances, though there appears to be doubt created about whether the DSP was present, upon being called by PW7, having regard to the testimony of the DSP in the other case, in view of the fact that the contraband articles were in fact recovered upon search of the bag, and bearing in mind the view taken by this Court in Baljinder Singh (supra), no merit found in the argument of the appellant: Supreme Court

Lastly, the counsel for the appellant made a fervent plea in this case that should his contentions not be found acceptable, the Court may direct that appellant may not suffer further incarceration in the State of Haryana but may consider her being housed in a jail in the State of Madhya Pradesh where she would have access to her family members - this is a matter which this Court leaves upon to the appellant to seek appropriate relief - subject to the same, the appeal stands dismissed - since the appellant is on bail, her bail bond shall stand cancelled : SUPREME COURT [para 21, 24, 30, 31, 32, 33, 34, 35]

- Criminal Appeal dismissed: SUPREME COURT OF INDIA

2020-TIOL-675-HC-MAD-CUS

P Pandithurai Vs JCC

Cus - Writ petition is filed seeking a direction to the respondent/the Joint Commissioner of Customs (Adjudication) to provisionally release the gold, which had been seized on 22.10.2019 u/s 110A of the Customs Act, 1962, pending disposal of the adjudication process.

Held: The adjudicating authorities should be permitted to exercise their discretion in manner known to law - While exercising their discretion, they may also examine the statements made by the petitioner - Naturally, they would have to provide an opportunity to the petitioner of being heard - Bench is of the firm opinion that when the adjudicating authority is empowered even to reject provisional release of goods, unless such orders are passed by the adjudicating authority, this Court should not interfere with such process - respondent/Adjudicating Authority has to take a decision to provisionally release the goods - The Adjudicating Authority may complete the adjudicating process on or before 30.04.2020 and may give an opportunity of personal hearing to the petitioner, if he so desires - Petition dismissed: High Court [para 12 to 14]

- Petition dismissed: MADRAS HIGH COURT

2020-TIOL-673-HC-DEL-NDPS

Paramjit Singh Gulati Vs DRI

NARCOTICS , Drugs and Psychotropic Substances Act, 1985 [NDPS Act] - The applicant, in custody since 20.7.2012, for the alleged commission of the offences punishable under sections 29, 28 r/w sections 23 & 29 and section 22 r/w section 29 & 25A r/w section 29 of the NDPS Act with which he has been charged on 5.11.2014, seeks the grant of bail in terms of section 439 of the Cr.P.C., 1973.

Held: Even if the recoveries in relation to 25.5 gms of Ephedrine Hydrochloride; and 24.5 gms of Psedoephedrine Hydrochloride and 215 gms of Ketamine demonstrated to be Ephedrine Hydrochloride, may not be falling within any specified commercial quantity to attract the bar of section 37 of the NDPS Act, it cannot be overlooked that the statement of the landlord Shri Jaspal Singh PW-32 of the godown situated at Khasra No.755/2/1, Village Mundka, New Delhi prima facie indicates that he identifies the petitioner as being the person to whom he had given the basement on rent and that the person named Chhotu stated to be claimed by the petitioner to be the person in possession of the basement, was stated by Shri Jaspal Singh in his testimony dated 12.4.2019 as being the person who used to work for the petitioner and PW-32 has also testified to seizure of the sum of Rs.3 - 3.50 lakhs from the drawer of the table on which he stated the petitioner used to sit and has testified also to the recovery of a polythene packet containing white powder from the same and thus, the contention at this stage on behalf of the petitioner that the documents in relation to lease of the property were executed between one Neetu Vats d/o Shri Anoop Singh with one Paramjit Singh s/o Shri Gurjit Singh, presently does not aid the petitioner, inasmuch as, the documents in the email in relation to the shipment effected in the name of M/s. Sagar Impex, a fictitious firm are from the email ID of the petitioner and apart from the same, the statement under section 67 of the NDPS Act, made by the petitioner is self inculpatory and presently has to be accepted to be correct - in the circumstances, inasmuch as, the recovery of Ketamine is of a commercial quantity allegedly attempted to be exported by the petitioner in association of the co-accused persons with also commercial quantity of Ketamine dissolved in solutions of rose water and liquid glucose having been allegedly recovered from the premises i.e. godown at Khasra No.755/2/1, Village Mundka, New Delhi which was testified by the landlord to have been rented out to the petitioner herein, presently, it cannot be concluded that the petitioner is not guilty of the commission of any offence punishable under the NDPS Act, in relation to which the charges had been framed against him, vide order dated 5.11.2014, with additional charges having also been framed against the petitioner subsequently - in the circumstances, there is no merit in the prayer made by the applicant vide the present application seeking release on bail despite the factum that the petitioner is in custody since 20.7.2012 - the application is thus, declined: HIGH COURT [para 28, 29, 30]

- Application rejected: DELHI HIGH COURT

2020-TIOL-671-HC-MAD-CUS

Sri Muni Pachaiyappan Textiles Pvt Ltd Vs CC

Cus - Non-fulfilment of export obligation; payment of Customs duty on goods imported under EPCG scheme - petitioner had forgone an amount of Rs.8,47,888/- at the time of import of the capital goods under the aforesaid scheme/notification - Settlement Commission granted substantial relief to the petitioner by accepting the liability of the petitioner to Rs.5,47,567/- and reduced the interest payable on the aforesaid amount at 15% from the date of import - petitioner is aggrieved with this order - incidentally, by a communication dated 28.04.2006, the office of the 3rd respondent also communicated to the petitioner that the amount of interest payable by the petitioner works of Rs.7,05,998/- and therefore, called upon the petitioner to pay the aforesaid amount within 15 days from the date of the said letter.

Held: Petitioner had imported capital goods under the EPCG scheme - Notification 28/97-Cus dated 01.04.1997 contemplates that in the event an importer fails to fulfil the condition he should pay not only the customs duty foregone but also interest at 24% per annum - The Settlement Commission has exercised the discretion vested with it and has reduced the interest at 15% - The amount of interest that has been quantified to be paid by the petitioner is Rs.7,05,998/- which is less than the customs duty of Rs.8,47,888/- that was payable by the petitioner - In fact, the above notification was amended by Notification No.46/2013-Cus dated 26.09.2013 and which mandates that the amount of interest paid by the importer shall not exceed the amount of duty - no reasons exist to interfere with the impugned order - moreover, the order of Settlement Commission is final and conclusive in terms of Section 127J of the Customs Act, 1962 and in terms of s. 127H(2) of the Customs Act, 1962, an immunity granted shall stand withdrawn if such person fails to pay any sum specified in the order of the Settlement Commission within the specified time - there is no merit in the present writ petition, hence same is dismissed: High Court [para 18 to 22]

- Petition dismissed: MADRAS HIGH COURT

2020-TIOL-670-HC-DEL-CUS

Multitex Filtration Engineers Ltd Vs UoI

Cus - Petitioner is aggrieved by the rejection of its claim of refund of Terminal Excise Duty ('TED').

Held:

++ Merely on the assumption that since the supplies made is under ICB, they are not eligible for refund of TED is an erroneous assumption - Petitioner has demonstrated that there can be several supplies which may qualify to be supplies under ICB, yet not be eligible for excise duty exemption on account of the fact that they are not eligible for customs duty exemption - Even though the supplies made by the petitioner fall under ICB, it does not ipso facto mean that they are not supplies under the excise notification - Ergo, since the supplies do not qualify as ab initio exempted supplies, the impugned circular dated 15th March, 2013 could not be invoked by the Respondents so as to deny the refunds - The rejection has no legal or sound reasoning and is not in consonance with the FTP, and is liable to be set aside: High Court [para 13]

++ By virtue of the notification No. 4 dated 18th April, 2013 , a condition was incorporated stipulating that categories of supplies which are exempt ab initio would not be eligible to receive refund of TED - In the present case, the supplies were made during the period from 15th December, 2009 to 10th February, 2011 and thus during the relevant period, there was no such condition in the FTP - It also needs to be noted that the aforenoted notification is substantive and not clarificatory and, therefore, cannot be applied retrospectively - Thus, even in this situation, the petitioner is entitled to refund of TED under para 8.3 (c) of the FTP as the exemption was not availed by the petitioner and it opted to pay the excise duty: High Court [para 14]

++ Impugned circular No. 11/2015-20 dated 23rd July, 2018 has no application to the case of the petitioner and it is lawfully entitled to refund of TED in terms of para 8.3 (c) read with para 8.4.4. (iv) of the FTP: High Court [para 16]

++ Impugned orders/letters denying refund of TED are quashed - The respondents are directed to process petitioner's claim for TED refund in respect of the applications and release the amounts which they are entitled to in respect of the supplies made hereunder within a period of eight weeks from today - Writ petition is allowed: High Court [para 18, 19]

- Petition allowed: DELHI HIGH COURT

2020-TIOL-669-HC-MAD-CUS

Axles India Ltd Vs Customs & Central Excise Settlement Commission

Cus - DEEC - 159/90-Cus & 204/92-Cus - At the time of obtaining respective advance licences, the petitioner had executed bonds and had undertaken to pay interest at 24% in the event of failure to fulfil the export obligation undertaken under the respective advance licence issued to the petitioner - It appears that the petitioner had difficulties in meeting the export obligation undertaken under the respective advance licence and, therefore, failed to discharge the export obligation undertaken - The petitioner was issued with a show cause notice calling upon them to pay Customs duty of Rs..48,18,110/-, later requantified as Rs.39,25,511/- - petitioner thereafter approached the Settlement Commission on 9.6.2003 to settle the dispute under section 127B of the Customs Act, 1962 and admitted liability of Rs. 39,25,511/- apprehending collateral proceedings by the authorities to impose penalty interest and prosecution - amount of admitted duty liability was paid on 27.5.2005 - Settlement Commission has passed the impugned final order No.15/2004-Customs dated 29.4.2004 and has allowed the application subject to the petitioner paying a simple interest at 10% of the amount of duty within a period of 15 days from the date of receipt of the order and subject to aforesaid payment, the petitioner was granted immunity from penalty under section 127H(1) of the Customs Act, 1962 - aggrieved, petitioner is before the High Court - Petitioner submits that the Settlement Commission erred in imposing interest as interest was not in contemplation of the notifications under which the goods were cleared without payment of Customs duty; that the respondents cannot enforce interest liability on the petitioner on the strength of the bond executed by the petitioner for the grant of the respective Advance Licence under the Duty Entitlement Exemption Scheme of the Export and Import Policy, 1992-97 read with relevant Handbook of Procedure issued for the aforesaid purpose.

Held: This issue has already been decided in Rexnord Electronics and Controls Limited = 2008-TIOL-35-SC-CUS , wherein the Supreme Court has answered the issue against the petitioner - Since the revenue has not come forward with the challenge to the impugned order of the 1st Respondent Settlement Commission, Bench is not inclined to upset the order which has partly come in favour of the petitioner - The stand of the petitioner is one of an avarice - Having enjoyed duty free exemption, it cannot ask for waiver of interest - In fact, it would have been ideal for the petitioner to withdraw the present writ petition particularly in the light of the decision of the Supreme Court cited above instead of risking the benefit which has inured to it from the impugned order of the 1st respondent Settlement Commission - If the decision of the Supreme Court in Rex Nord Electronics and Control Ltd (supra) had been available before the 1st respondent Settlement Commission had passed the impugned order, the petitioner would not have got any relief which itself is a substantial relief - Since the petitioner had wrongly assumed that it could challenge the impugned order of the 1st respondent Settlement Commission perhaps under a mistaken notion, Bench is not inclined deny and dilute the benefit which was conferred to the petitioner under impugned order of the 1st respondent Settlement Commission - Petitioner is, therefore, directed to pay interest within a period of 30 days from date of receipt of copy of this order failing which the 2nd respondent will be entitled to proceed under Section 127H of the Customs Act, 1962 as if no immunity was granted - Petition disposed of: High Court [para 26 to 32]

- Petition disposed of: MADRAS HIGH COURT

2020-TIOL-668-HC-MAD-CUS

Do Best Infoway Vs CC

Cus - Tribunal had, in Revenue appeal, remanded the case back to the adjudicating authority - appellant is in appeal before the High Court arguing that the Commissioner(A) had rightly passed in the order in their favour and, therefore, the remand was un-necessary.

Held: Tribunal has powers to pass such orders on pending appeal before it, "as it thinks fit" and, therefore, the power to remand the case back to the Adjudicating Authority is included within the amplitude of powers conferred upon the Tribunal by the Statute - Assessee obviously cannot insist upon the withdrawal of the Appeal as per the litigation policy - It does not confer any right on the opposite party to insist upon the withdrawal of the appeal in accordance with such litigation policy - appeals dismissed: High Court [para 7]

- Appeals dismissed: MADRAS HIGH COURT

2020-TIOL-667-HC-DEL-CUS

Its My Name Pvt Ltd Vs DGFT

Cus - Petitioner submits that they were never supplied with the copy of the order placing the petitioner company in the Denied Entities List (DEL); that in any case, the said order having been passed without issuing any Show Cause Notice to the petitioner or granting an opportunity of hearing to the petitioner, is in violation of principle of natural justice; that the Show Cause Notice dated 27.06.2019 is completely vague and in spite of repeated request of the petitioner to supply the complete documents giving details of the allegations against the petitioner, the same has not been supplied by the respondent.

Held: Show Cause Notice merely states that DRI has informed that the petitioner Firm is "suspected to be misusing the Advance Authorisation" and no details of the allegations against the petitioner have been given in the SCN - Insofar as the order placing the petitioner on DEL is concerned, the same is stated to have been passed on 26.06.2019, that is even prior to the issuance of the Show Cause Notice - In terms of Rule 9(2) of the Foreign Trade (Regulation) Rules, 1993, the same was clearly premature and not permissible as on that date proceedings of cancellation of the license of the petitioner had not been initiated in accordance with Rule 10 of the Rules - Proviso to Section 9(4) of The Foreign Trade (Development and Regulations) Act, 1992 mandates grant of reasonable opportunity to the licensee of being heard before suspending the license - It is further not denied that not only the purported order dated 26.06.2019 has not been served on the petitioner but infact, in accordance with Clause D(1) of the guidelines, it should have also stated that an appeal against the refusal of the license shall lie under Section 15 of the Act - Impugned Order dated 26.06.2019, placing the petitioner on DEL is, therefore, clearly in breach of not only the Act, the Rules but also the Guidelines - purported order dated 26.06.2019 placing the petitioner on DEL is set aside and so also is the SCN dated 27.06.2019 - Petition is allowed: High Court [para 6, 7, 9, 11, 12, 13, 15]

- Petition allowed: DELHI HIGH COURT

2020-TIOL-515-CESTAT-MUM

Lalit Jain Vs CC

Cus - Appeal was dismissed by the Commissioner(A) for non-compliance with the direction of pre-deposit of Rs.3 lakhs within a period of three weeks as ordered in terms of s.129E of the Customs Act - in appeal, Tribunal vide order dated 08.04.2014 directed them to deposit the amount of Rs.6,62,676/-, which they complied with on 02.06.2014 - inasmuch as since the Commissioner(A) had not decided the appeal on merit, it is requested that the matter may be remanded to the Commissioner(A).

Held: Following the principles laid down by the Supreme Court in Smithkline Beecham Co. Healthcare Ltd. - 2003-TIOL-58-SC-CX and Gujarat High Court in Hitarth Corporation, Bench remands the matter to the Commissioner (Appeals) for deciding the case on merit - appeals allowed by way of remand: CESTAT [para 4]

- Matter remanded: MUMBAI CESTAT