2020-TIOL-NEWS-076, Dated: Tuesday, March 31, 2020

ST - The assessee-company is a telecom major dealing in SIM cards and recharge coupons of BSNL - During the relevant period, the Revenue issued SCNs proposing to raise duty demand - The assessee claimed that telecom services were separately classified and so the service provided by it could not be brought under the general classification - Hence the present writ.

Held - It is seen that the assessee is required to file necessary objections to the SCNs and when the same is done, the Revenue would consider the same and pass appropriate orders after giving personal hearing - Hence the assessee is directed to file its objections to the SCNs & necessary orders be passed within four weeks thereof: HC

ST - CENVAT Credit availed by the Appellant for providing the output service of 'renting of immovable property' has been held to be inadmissible and an order for recovery has been made in terms of rule 14 of CCR - penalty and interest has also been imposed, hence appeal to CESTAT.

Held: Commissioner has denied CENVAT Credit to the appellant for the reason that the activity of construction of the building is independent from the activity of renting out the premises and as the inputs, input services and capital goods on which CENVAT Credit has been availed by the appellant had been used for construction of the immovable property on which no service tax was leviable - In view of the decisions of the High Courts in the cases of Dymos India Automotive - 2018-TIOL-1947-HC-MAD-ST , Navaratna S.G. Highway Prop. Private Limited - 2012-TIOL-1245-CESTAT-AHM and Vodafone Mobile Services Ltd. vs. - 2018-TIOL-2409-HC-DEL-ST there is no manner of doubt that CENVAT Credit availed by the appellant on inputs, inputs services and capital goods service used for construction of the Mall, which was ultimately let out could not have been denied to the appellant - The findings to the contrary recorded by the Commissioner cannot be sustained and are, accordingly, set aside: CESTAT [para 15, 20]

ST - Whether the amendment made with effect from 1 April, 2011 in the definition of "input service" will be applicable to the facts of the present case since the period of dispute in the second show cause notice is from 1 April, 2011 to 31 March, 2012.

Held: The second show cause notice dated 16 April, 2013 makes no mention of the amendment made in the definition of 'input service', much less mentioning that the 'input services' have been received by the appellant after 1 April, 2011 - In reply to the show cause notice, the appellant stated that in view of the clarification dated 29 April, 2011 issued by CBEC, 'input services' received prior to 1 April, 2011 were admissible for CENVAT Credit; that the 'input services' in question were received by the appellant before 1 April, 2011 - Commissioner has not examined this aspect and has merely observed that in view of the amendment made in the definition of 'input service' with effect from 1 April, 2011, the appellant would not be entitled to avail CENVAT Credit - in view of the clarification, CENVAT Credit could not have been denied to the appellant - impugned order set aside and appeal allowed: CESTAT [para 22 to 25]

CX - Cenvat credit availed on services of Catering-facility management, Travelling, Construction services, Insurance, Corporate services-Travel Management - contention of Revenue is that credit of Rs. 18,28,990/- is not admissible as the same are used primarily for personal use or consumption of any employee - appellant submits that as per their calculation the total demand in respect of five impugned services should be restricted to Rs. 1,88,415/- - appellant also submitted that in case of these five services, the reversal of Cenvat credit has been done on the proportionate basis and the same is required to be given effect.

Held: Computation of Cenvat credit in respect of five services, which is disputed need to be re-quantified by the adjudicating authority on the basis of available documents, hence matter is remanded to the adjudicating authority to re-compute the demand after hearing the appellant, within three months: CESTAT [para 4]

CUSTOMS

2020-TIOL-518-CESTAT-BANG

Pace India Vs CC

Cus - Appellant imported 5488.5 Kgs of ‘Small Solar Cells' and filed Bill of Entry on 19.6.2017 for home clearance by claiming exemption under notification nos. 24/2005-Cus dated 1.3.2005, 12/2012-CE dated 17.3.2012 and 21/2012-Cus dated 17.3.2012 - on initial examination of the imported cargo by the officers of Customs, they entertained doubt that the imported goods are scrap and waste - therefore, they handed over the investigation to SIIB for further investigation - in the meantime, the appellant imported another consignment measuring 7214 kgs of solar cells - Uneven cut assorted solar cells and filed Bill of Entry on 11.7.2017 for home clearance and claiming exemption from Basic Customs Duty under notification no. 24/2005-Cus - the said import was also subjected to investigation by the SIIB - thereafter, the Revenue issued a SCN dated 3.1.2018 to the appellant with a proposal to declare the imported goods as waste and scrap and to re-classify the same under CTH 3825 6900 by rejecting the classification adopted by the appellant under CTH 8541 4011 and also to confiscate the imported goods absolutely under section 111(d) and (m) of the Customs Act, 1962 [Act] and consequent proposal for imposition of penalty under sections 112 and 114AA of the Act - on appeal, the Commissioner (Appeals) rejected the appeal, hence appeal before CESTAT.

Held: The order of re-export of the goods on payment of redemption fine within 30 days and if not complied with, the goods will be disposed of as per the statutory provisions, is in excess of jurisdiction conferred by the Statute, because the provisions of the Act do not provide for re-export of the imported goods on payment of redemption fine and, therefore, the adjudication order was beyond the statutory provisions of the Customs rules - this proposition was considered by the Division Bench of the Tribunal in the case of HBL Power Systems Ltd. - 2018-TIOL-2833-CESTAT-HYD wherein the Tribunal in identical circumstances has analysed the scope of section 125 of the Act which provides imposition of penalty in lieu of confiscation - the ratio of the above decision of the Tribunal is squarely applicable in the present case - therefore, it is held that the impugned order ordering for re-export of the goods on payment of redemption fine is not sustainable in law and, therefore, this finding of the Commissioner(Appeals) is set aside - as far as classification of the impugned goods is concerned, the appellant has produced before the Bench the Purchase Orders, Bills of Entry and the Packing List as well as the commercial invoices wherein they have clearly mentioned the description of the item as 'small solar cells' (uneven cut solar cells) and there is no mis-declaration on his part because the right classification for the impugned goods is CTH 8541 4011 - further, it is found that the Customs has from the very beginning proceeded on the premises that the broken solar cells fall in the category of waste and scrap and, therefore, they have classified the same under CTH 3825 6900 - further, it is found that out of 13,599.5 kgs of small solar cells imported, it is only 70 kgs. of silicon wafer/solar cells which was found in broken condition - to classify the imported goods on the basis of broken solar cells as scrap/waste is not tenable in law because substantial quantity was not found to be in broken condition - it is found that both the authorities have misread and misconstrued the reports submitted by the Indian Institute of Science, Bangalore, Central Pollution Control Board, Bangalore and Karnataka State Pollution Control Board (KSPCB), Bangalore - further, it is found that both the authorities have wrongly relied upon the statement recorded during the investigation, the copies of which have not been supplied to the appellant, and have come to the conclusion that the appellants have admitted the mis-declaration - as per the settled law, the burden of classification is on the Department and in the present case, the Department has not made any effort to prove the same by any documents except proceeding to classify the impugned goods as waste and scrap solely considering breakage of some of the imported goods and without considering the nature of usage of the said goods - it is also noted that the imported solar cells are precise in nature and, therefore, there is always likelihood of some damage during the process of transit and the present case, only 70 kgs has been damaged out of 13599.5 kgs and even the damaged goods can also be used for various solar applications as per the technical write up produced by the appellant on record - in view of the above, the impugned order is not sustainable in law and, therefore, the same is set aside by allowing the appeal of the appellant and the Customs authorities directed to release the consignments of the appellant within a period of two weeks - appeal is allowed : CESTAT [para 5.1, 5.2, 5.3, 6]

- Appeal allowed: BANGALAORE CESTAT