SERVICE TAX

ST - The assessee was engaged in evacuation of ash pond for Durgapur Projects Ltd. Purba Medinipur Zilla Parishad, Rites Ltd. for railway and McNally Bharat for Sagardigi Projects - The period of dispute as per the SCN related to Financial Year 2007-08 to 2009-2010 - The classification of service in respect of SCN was "Cleaning Service" under section 65(24b) of FA, 1994 - The activity of excavation and transportation of fly ash from the pond, for channeling the slurry water-flow cannot be termed as "cleaning activity" in terms of Section 65 (24B) of Finance Act - The assessee is not clearing the fly ash with the objective of cleaning the pond or free the pond from contamination - Fly ash is being excavated and transported to the specified areas as per the contract - Fly ash is a saleable good, which is further used in manufacture of bricks and hence it is not waste, which is being removed from the pond - It has specific utility and capable of being sold in the market - The issue is covered by the decision of this Bench in case of M/s. Calcutta Industrial Supply Corporation - In the case of Purba Medinipur Zilla Parishad which relates "evacuation of ash pond" and it's transportation, this bench has already decided the issue in the case of same assessee vide Purba Medinipur Zilla - In the case of Mackintosh Burn Ltd. the principal contractor had paid service tax which is within the knowledge of department as early as March' 2007 - Regarding the liability as a sub contractor in respect of three contracts is concerned, substance found in the submission advanced by assessee - It cannot be urged that there was any wilful suppression of facts with an intention to evade payment of duty as is the requirement of Section 73(1) of the Act - There were conflicting decisions of Tribunal in this regard and it is for this reason that the matter had been referred to a Larger Bench of the Tribunal, which came to a conclusion in May' 2019 - The assessee mentioned that the three SCNs for the same issue as well for the same period is liable to be set aside on the ground of limitation alone - The assessee had referred to Nizam sugar Factory 2006-TIOL-56-SC-CX stating there was no suppression of facts with an intention to evade duty - The Commissioner has erred in confirming the demand and invoking the provision of 73(1) of FA, 1994 as well as in imposing penalty u/s. 78 and u/s. 76 of FA, 1994 - The impugned order cannot be sustained and the same is set aside: CESTAT

- Appeal allowed: KOLKATA CESTAT

ST - Appellants are engaged in the manufacture of excisable goods at their factory at Thane - During the relevant period, i.e. 2011-12 and 2013-14, they have availed CENVAT Credit on the invoices issued by their Head Office being registered as an 'Input Service Distributors' (ISD) - Alleging that the appellant is also engaged in the activity of trading of goods and common input services have been used in the manufacture of excisable goods as well as in the trading activity, show-cause notices were issued during the relevant period to the appellant's Thane unit for recovery of 5%/6% of the profit margin of traded goods in accordance with Rule 6(3)(i) of the CENVAT Credit Rules, 2004, as the appellant failed to maintain separate accounts - demands confirmed, hence appeals.

Held: At their Thane unit, the appellant had taken credit on the basis of the ISD invoices issued by their Head Office which includes credit on common input services attributable to trading activity undertaken from their depots situated all over India; and also the credit availed on input services used in the manufacturing activity and distributed among all the three manufacturing unit including the Thane unit - In these circumstances, directing the Thane unit to reverse the proportionate credit attributable to trading activity of other two units would be incorrect and cannot be sustained in law - Appellant's Thane unit would be required to reverse the CENVAT Credit availed on common input services relatable to trading activity availed by them at their Thane unit on the invoices issued by their Head Office - To ascertain the quantum of CENVAT Credit availed at Thane unit and attributable to the trading activity, the matter is remanded to the adjudicating authority - Since the issue relates to interpretation of law, therefore, penalty cannot be sustained – Appeals disposed of: CESTAT [para 5, 6]

- Appeals disposed of: MUMBAI CESTAT

CENTRAL EXCISE

CX - Appellant is a registered dealer who has issued Cenvatable invoices on which M/s Kothi Steel Ltd. had availed the Cenvat Credit - Case of the department is that the appellant has issued bogus invoice and no goods were sold under those invoices - For this offence, a penalty under Rule 15 of Cenvat Credit Rules, 2004 and Rule 26 of Central Excise Rule, 2002 were imposed on the ground that the appellant alongwith Mohammad Firdos Kothi, Managing Director of M/s Kothi Steel Ltd. were involved in devising a well orchestrated plan to defraud the Government - appeal before CESTAT.

Held: In the present case, the appellant has neither taken the credit, nor utilized the credit, whereas he has only issued a Cenvatable invoice to some other company M/s Kothi Steel Ltd., therefore, the Rule 15 of CCR, 2004 is not applicable in the present case - Penalty imposed u/r 15 by the lower authorities is illegal and incorrect - insofar as imposition of penalty u/r 26 is concerned, the Punjab & Haryana High Court in the case of Vee Kay Enterprise - 2011-TIOL-174-HC-P&H-CX held that penalty under Rule 26(2) is imposable on the person who has issued the invoices without supply of goods - In view of above settled position, ?Bench is of the view that the penalty under Rule 26 was rightly imposed - appeal partly allowed: CESTAT [par 4, 4.1, 5]

- Appeal partly allowed: AHMEDABAD CESTAT

2020-TIOL-602-CESTAT-DEL

Northern Coalfields Ltd Vs CGST, C & CE

CX - The assessee is engaged in business of mining and selling coal at mines located in Madhya Pradesh and Uttar Pradesh - In the State of Madhya Pradesh, the mines are situated at Singrauli which is at a distance of 350 kms. from the nearest city Jabalpur - In the State of Uttar Pradesh, the mines are situated at Sonbhadra which is at a distance of 250 kms. from the nearest city Varanasi - In the coal mine projects, assessee had been availing facility of Cenvat Credit under CCR, 2004 - A SCN was issued to assessee - It is an admitted fact that the residential colony is provided by factory and it is situated within the premises owned by assessee and close to the mining area and offices - The residential colony has been built by assessee for the benefit of its employees/workers and has been maintained by assessee - It is necessary for assessee to maintain the residential colony close to the mines area for better business results - Therefore, the services, so provided, do have a nexus with the business undertaken by assessee - At this stage, it would be necessary to refer to the decision of Tribunal rendered in assessee's own case in Northern Coalfield Limited 2017-TIOL-2311-CESTAT-DEL - The contention of revenue is that in the said case, assessee had reversed the credit taken for security service provided at the residential colony on its own even before the issuance of SCN and therefore, it is not open to assessee to now contend in these proceedings relating to a subsequent year, that the assessee is entitled to claim Cenvat Credit - A perusal of said decision indicates that the period involved in the said appeal was from March, 2011 to March, 2012 and April, 2012 to June, 2012 - In said decision, it has been clearly stated that assessee on its own had reversed the credit and not disputed it even before the issuance of SCN - The only issue that was raised by assessee was with regard to the imposition of penalty and that was decided in favour of assessee - It cannot, therefore, be urged by Department that the assessee cannot take a stand, in proceedings relating to a subsequent year, that Cenvat Credit on security services had been correctly availed by it - The aforesaid decision cannot, therefore, come to the aid of the Department - As regards to hiring of bus for transportation of staff between office and residence, it is not in dispute that the bus is being utilized for the purpose of transporting the employees from the residence to the factory and from factory to the residence - This is in connection with the business activity of assessee and therefore, there is no good reason to deny Cenvat Credit on such input service - The demand made under this head cannot be sustained and is, accordingly, set aside - In this view of the matter, it is not necessary to examine the contention raised by assessee that the extended period of limitation in regard to the first SCN could not have been invoked - Thus, it is not possible to sustain the order passed by Commissioner (A) - The same is, accordingly, set aside: CESTAT

- Appeal allowed: DELHI CESTAT