2020-TIOL-NEWS-087, Dated: Monday, April 13, 2020

ST - 'Construction of Commercial or Industrial Complex Service' and 'Construction of Residential Complex Service' - After extending cum-tax value benefit, Service Tax liability was re-determined as Rs. 39,80,678/- - The appellant had already paid Rs. 36,39,526/- much before the issuance of Show Cause Notice and the remaining Rs. 3,41,152/- was paid along with interest - appellant had also paid penalty of Rs. 10,000/- and also 25% of the reduced penalty - Revenue was aggrieved with the penalty imposition of Rs.3,41,152/- and, therefore, filed appeal before Commissioner(A) who enhanced the penalty to Rs. 39,80,678/- and allowed the benefit of 25% penalty benefit if paid within thirty days - aggrieved with this enhancement of penalty, appellant is before the CESTAT - Appellant submitted that the demand cannot sustain as per the decision of the Tribunal in the case of M/s. Real Value Promoters Pvt. Ltd. - 2018-TIOL-2867-CESTAT-MAD , however, they concede that they have not filed any appeal against the confirmation of demand on merits against the order passed by the Original Authority - nonetheless, appellant sought setting aside of penalties.

Held: Taking note of the fact that the issue presently stands covered in favour of the appellant and also that the appellant has paid up major portion of the Service Tax liability before issuance of the SCN and later paid up the balance amount, Bench is of the considered opinion that the benefit of Section 80 of the Finance Act, 1994 can be extended to the appellant - Penalties imposed u/ss 77 and 78 are set aside without disturbing confirmation of Service Tax demand or interest thereon - appeal is allowed in above terms: CESTAT [para 6 to 8]

ST - During the course of audit, various documents were verified and it was noticed that as per balance sheet the appellant has to pay service tax under reverse charge mechanism on Legal Consultancy Services and Security Services - appellant replied that the tax had been paid by the service providers themselves - however, SCN was issued to demand service tax to the tune of Rs.2,17,70,048/- Adjudicating Authority confirm the demand of Rs. 36,17,013/- alongwith interest and various penalties were imposed against the said order - appeal before CESTAT.

Held: Appellant was never asked to provide copy of invoices to verify whether the service provider has paid any service or not - without co-relation/verification huge demand has been confirmed against the appellant and which shows negligence on the part of Audit team - impugned order is set aside and matter is remanded back to the Adjudicating Authority to co-relate the amount of service tax paid by the appellant as well as paid by the service provider and thereafter to compute the correct demand, if any, payable by appellant: CESTAT [para 6 to 8]

CX - The question which falls for consideration is whether the appellant is entitled to cash refund of cesses in respect of which they had a balance in CENVAT credit account which they could not utilise on 01.07.2017 - As far as the CENVAT credit on account of excise duty of service tax is concerned, the provisions of CGST allow them to carry forward the same as input tax credit under the CGST - However, the CGST Act, 2017 does not allow them to carry forward the cesses as input tax credit - The appellant's case is that as a result they will be losing the credit balance and, therefore, the same must be paid to them in cash.

Held: There is no provision in the CENVAT Credit Rules, 2004 or the Central Excise Act, 1944 to allow cash refund of cesses lying in balance in the CENVAT Credit account on the ground that appellant was not able to use the same - Identical issue was before the Larger Bench of the High Court of Bombay in the case of Gouri Plasticulture Pvt Ltd VS CCE Indore - 2019-TIOL-1248-HC-MUM-CX-LB; that the order of the Supreme Court in the case of Slovak India cannot be read as a declaration of law under Article 141 of the Constitution of India - appeal filed by the appellant cannot be allowed and the impugned order is correct and calls for no interference - impugned order is upheld and the appeal is rejected: CESTAT

CX - CENVAT credit has been denied on various steel items namely channel, sheets etc. on the ground that these are neither inputs nor capital goods in terms of Rule 2(k) or 2(a) of Cenvat Credit Rules, 2004.

Held: Facts of the case are not in dispute that all the items in question has been used by the appellant for fabrication of capital goods which are inputs for the appellant, therefore, they are entitled for CENVAT credit in terms of rule 2(k) of CCR, 2004 - same view taken by Tribunal in the appellant's own case, order dated 27.01.2020 - impugned orders set aside and appeals allowed with consequential relief: CESTAT [para 5, 6]

CUSTOMS

2020-TIOL-796-HC-MAD-CUS

Leo Prime Company Pvt Ltd Vs UoI

FTDR - The petitioner-company manufactures high precision component used in various automobiles sectors and they also manufacture and supply machined and turned ferrous and non ferrous components to automobiles, electricals and electronics (Sub Assemblies to banking automation) Hydraulics, Medical, Power and aerospace sectors - It imported capital goods under the EPCG scheme and claimed to have completed and fulfilled the export obligations as per the license granted to import such machinery - As the petitioner needed machinery to increase the production, it approached the DGFT seeking sanction for further licenses - The DGFT issued EPCG license and permitted import after due verification - On account of financial stringency the petitioner was unable to complete the export orders and so was unable to fulfil the export obligations within the stipulated period - The petitioner approached the DGFT to extend the EPCG license period to enable meeting of export obligations - Representation was filed u/s 9(2) of the Foreign Trade (Development and Regulation) Act, 1992 in this regard but the same was rejected - Hence this writ petition.

Held - The petitioner claimed to not have been granted opportunity of personal hearing despite the same being mandated by the provisions of Section 9(4) - The petitioner also claimed that the Foreign Trade Development Officer was not the competent officer to pass the subject order - Hence the subject order is quashed and the DGFT authorities are directed to issue SCN to the petitioner in respect of the representation filed by it - Opportunity of personal hearing is to be offered as well, whereupon a reasoned order be passed on merits: HC

- Writ petition allowed: MADRAS HIGH COURT

2020-TIOL-572-CESTAT-DEL

Habib Uz Zaman Vs CC

Cus - Commissioner (A) has dismissed the appeals as barred by limitation by observing that the same stands filed after a period of 94 days and he has no power to condone the delay; that the appellant had not also deposited the requisite pre-deposit of 7.5% - appeal to CESTAT.

Held: Order impugned before the Commissioner (Appeals) was passed on 22.03.2018; received by the appellants on 24.03.2018 and the appeals were filed on 23.05.2018, but the same were returned by the registry on the ground that they were were not accompanied with the evidence of pre-deposit - Thereafter, the appeals were again filed on 27.06.2018 and were accepted by the office of Commissioner (Appeals) even though they were not accompanied with the pre-deposit particulars - In such a scenario, the initial date of filing of the appeal has to be taken as the relevant date - Inasmuch as the appeals were originally filed within the period of limitation, the same could not have been dismissed by Commissioner (Appeals) as barred by limitation - moreover, the appellant has now made a pre-deposit of 10% of the penalties imposed, hence the order of Commissioner(A) dismissing the appeal is not sustainable: CESTAT [para 2]

Cus - Penalty imposed of Rs.50,000/- on each of the appellants in terms of s.112(a) of the Customs Act - As the import of the cigarettes without the mention of MRP was in violation of the provisions of the legal Metrology Act, 2009, the officers entertained a view that the same was with an intention to smuggle the cigarettes without payment of duty and by illegally entering into India.

Held: Adjudicating authority has concluded that the present two appellants were the mastermind of the import of the cigarettes and were the actual owners of the imported goods based upon the statements of various persons recorded during the investigation - The bill of lading revealed the consignee as M/s. Ankit Enterprises and there was no name of the appellants either in the bill of lading or in the invoices issued by the foreign exporters - It is only during the recording of the statements, the co-noticee impleaded the present appellants - It is well settled law that the statements of the co-noticee cannot be adopted as a legal evidence to penalize the accused unless the same are corroborated in material particulars by independent evidence - adjudicating authorities reasoning that the appellants have not given any reason as to why deponents have named them cannot be appreciated as negative onus cannot be cast upon the appellants to disprove the statements of the co-noticee - entire case of the revenue is based upon the statements of the other persons, who have not been even offered for cross-examination - appellants statements are ex-culpatory and there is no evidence produced by the revenue to show that the same are false statements - imposition of penalty u/s 112(a) is unjustified - same is set aside and appeals are allowed with consequential relief: CESTAT [para 9 to 12]

- Appeals allowed: DELHI CESTAT

2020-TIOL-571-CESTAT-BANG

SR Enterprises Vs CC

Cus - 'Multifunction devices and printers' - Imports are in violation of the provisions requiring authorization for import of 'old and used' goods -The economic advantage of import even in the absence of license mandated for restricted goods must be neutralized with reference to the market price of goods that are imported against such license - It is the negation of this windfall that is the intent of determining the quantum of redemption fine - It is, therefore, necessary for the adjudicating authority to decide upon the redemption fine and penalty in accordance with the above principles on the impugned goods that are mandatorily to be offered for redemption u/s 125 of Customs Act, 1962 after confiscation - The adjudicating authority is required to complete the process of re-adjudication within a period of two weeks: CESTAT [para 13]

- Matter remanded: BANGALORE CESTAT