2020-TIOL-NEWS-144, Dated: Thursday, June 18, 2020

2020-TIOL-882-CESTAT-CHD

Wave Beverages Pvt Ltd Vs CCE & ST

ST - Appellants are engaged in the distribution and sale of non alcoholic beverages under the brand name of The Coca Cola Company (TCCC) - As per the agreement, the appellants are required to take steps for advertising, marketing and promoting the sale of beverages – Show Cause Notices were issued to the appellants alleging that while undertaking the sale promotion programme for the beverages, the concentrate owned by TCCC/CCIPL was also getting marketed as the same was linked to the promotion of brand name and thus the appellants were promoting the sale of concentrate of CCIPL for which they were receiving the remuneration from them in form of marketing and advertising support – inasmuch as the appellants were providing Business Auxiliary Services (BAS) of "promotion or marketing of goods produced or provided by or belonging to the client" to CCIPL and which is chargeable to service tax – SCNs issued and demand confirmed by Commissioner, hence appeal to CESTAT.

Held: If the arguments of the Authorized Representative were to be accepted then in every case, sale promotion activities undertaken by the manufacturer of finished product, shall amount to sale promotion of the raw material, and the service so rendered to the raw material supplier will be taxable as Business Auxiliary Service in this category - This is neither the intention nor the rationale of the scheme of taxable category defined as "Business Auxiliary Service" - By stating that the goods, namely concentrate was transferred for use by M/s Coca Cola India Pvt Ltd to the Appellant for consideration, a fact not in dispute, the sale of the goods in terms of Central Excise Act, 1944 has occurred - The imposition of restrictions or conditions in respect of the usage and consumption of the concentrate, by the seller cannot alter that position – No merit in the impugned orders, hence the same are set aside and appeals are allowed: CESTAT [para 4.4, 4.6, 4.8, 5.1]

- Appeals allowed: CHANDIGARH CESTAT

2020-TIOL-881-CESTAT-CHD

Interglobe Aviation Ltd Vs CST

ST - The assessee is in appeal gainst confirmation of demand of service tax and denial of Cenvat credit and imposition of penalties thereon - The first issue relates to demand of service tax on charges made for excess baggage carried by passengers in the regular flights - Said issue has been decided by the Tribunal in case of Kingfisher Airlines Ltd and the same has been approved by the Apex Court - Relying on the aforesaid decision, no service tax can be demanded on the said charges and the demand on said count is set aside - Revenue is seeking to deny Cenvat credit availed for setting up of business activities - The assessee has already disclosed and debited the amount inadmissible to them, and for the balance amount, they have relied on the decisions of Vamona Developers Pvt. Ltd 2015-TIOL-2705-CESTAT-MUM , Beico industries Pvt Ltd 2014-TIOL-2817-CESTAT-AHM , Larsen & Toubro Ltd 2017-TIOL-1775-CESTAT-MUM and City Centre Mall Nashik Pvt Ltd 2017-TIOL-4322-CESTAT-MUM - Relying on Beico industries Pvt Ltd , the appeal is also allowed on this count also - The third issue in dispute relates to service tax on reimbursement of certain expenses - The impugned order does not deny that the amount paid by assessee is in the nature of reimbursement - The perusal of contract also shows that only excess insurance charges have to be reimbursed on actual basis - In view of the decision of Delhi High Court in case of Intercontinental Consultants & Technocrats Pvt. Ltd. 2012-TIOL-966-HC-DEL-ST and affirmed by Apex Court, no demand in respect of such reimbursements can be made - Consequently, this demand of service tax is also set aside - Since, all the demands have been set aside, no penalties can be imposed: CESTAT

- Appeal allowed: CHANDIGARH CESTAT

CX - The assessee is manufacturing various iron and steel products of Alloy Steel as well as Non Alloy Steel - They have galvanization facility too - They manufacture goods on their own behalf and also undertake job-work for others - There are various issues which have been placed before the bench for consideration - As regards to shortages found in physical verification of stocks, Tribunal agrees with the reasoning adopted by Commissioner - In fact the rusted wire rods found during the course of stock taking and recorded in the panchnama have arisen out of the stock of wire rods recorded in the production records maintained by assessee and hence they continue to be part of stock available with them - It is not the case of department that this rusted stock have been accounted elsewhere in the production records as old and rusted wire rods in coil form/ scarp - Hence, the submissions made by revenue are rejected on this account - As regards to lesser production of steel ingots shown on account of per MT electricity consumption, no reason found to differ with the findings and conclusions drawn by commissioner especially after noting the fact that SCN itself acknowledges that there is huge variation in consumption of power per MT of Ingots produced on day to day basis - Revenue has in its appeal not controverted the said finding of facts with any concrete evidence - Hence this issue also needs to be decided upholding the findings recorded by Commissioner in impugned order - As regards to difference found in production recorded in RG-1 register and the private records, Commissioner has carefully analyzed and compared the production data in statutory returns/ records and the private records of assessee - After comparing all the records and returns, he finds that production declared by assessee in ER- 1 returns is higher than the production recorded in the private records - Nothing has been put forth in the appeal by revenue that above findings and discussions are incorrect in any way - Hence, the issue on this account is answered in favour of assessee - With regard to irregular credit on zinc ingots, no reason found to differ with the findings recorded by Commissioner - It may also be pointed out that admissibility of CENVAT Credit is linked to the fact of receipt of duty paid inputs within the factory under the cover of duty paying document - The demand for denial of Cenvat Credit is sought to be made on the basis of consumption, which is contrary to the scheme of Cenvat Credit Rules - Once there is no dispute about the actual receipt of duty paid inputs under the cover of duty paying documents, the Cenvat Credit cannot be denied subsequently by referring to consumption of the same - Hence, no merit found in the submissions made in revenue appeal on this account - The impugned order is upheld: CESTAT

CX - The issue involved in this case is, whether affixing name, logo and particulars of the buyers such as FCI and State Governments on Hessian Bags/Sacks to comply with the requirement of Jute Control Orders would be treated as affixing of brand name within the meaning of Notfn 12/2011-CE and Notfn 30/2011-CE - Both sides agree that the dispute involved in all the present appeals stands decided by Supreme Court in case of RDB Textiles Ltd. 2018-TIOL-59-SC-CX - The Apex Court had examined the wordings of Notification as it stood during the disputed period and decided that the printing of the name, logo and other particulars of buyer, like FCI and State Governments, were made by the manufacturers to comply with the requirements of Jute Control Order - The Supreme Court further held that the markings on jute bags were under compulsion of law and meant for identification, monitoring and control by Government Agencies and such markings cannot be considered as brand name - Accordingly, the Apex Court held that the benefit of Notfn 30/2004-CE will be available during the disputed period - Since the issue has already been decided by the Apex Court, by respectfully following the same, the impugned order is set aside: CESTAT

Cus - Two lady passengers, the writ petitioners herein, while passing through the green channel having arrived at NSCBI Airport, Kolkata, refused to show their passports and refused to subject themselves to the procedures as laid down in customs Act inside the "customs airport" has lead to an inquiry by the customs authorities - A separate issue that some unknown police officers entered the international arrival hall of NSCBI Airport, Kolkata and assisted the writ petitioners to exit the gate of customs and such incident was informed to the jurisdictional police station by the Assistant Commissioner of Customs by filing a complaint on 22nd March, 2019 - The customs authorities are free to inquire into the two contested and irreconcilable version for any violation of the customs Act by the writ petitioners effecting loss of government revenue that occurred on the night of 15th / 16th March, 2019, but to the extent which occurred inside the "Customs Airport" as defined in section 2 of the Customs Act - Section 108 of the Customs Act clearly mandates that proceedings under section 108 is quasi judicial in nature - The person issuing summons has to satisfy qualitative ingredients as prescribed in Section 108 of the Customs Act - In this case, the Additional Commissioner, AIU NSCBI Airport, Kolkata who has issued the summons dated 26th March, 2019 to the petitioners is not the inquiry officer and he has not formed any opinion regarding attendance of the petitioners and he has only directed the petitioners to appear before another Additional Commissioner (Airport Administration) Customs, who is also not the inquiry officer - When a statute provides that the power under Section 108 of the Customs Act must be exercised in a certain manner, then such power has to be wielded in the same manner and none other - For the above reasons the summons dated 26th March 2019 issued to the petitioners are quashed and set aside - Writ Petition being Nos. W.P. 7865 (W) of 2019 and W.P. 7489 (W) of 2019 are disposed of: High Court [para 13, 14, 15]

Cus - It is also well settled that a mechanical approach cannot be followed while issuing summons as has been done in the present case - Section 108 being a provision which restricts the liberty of a person under investigation, must be followed in strict compliance and not in a mechanical manner - Further, Section 108 (4) clearly mandates that proceedings under this Section are judicial in nature and, therefore, no question arises of issuance of summons as an administrative act thereby obviating the need to comply with the strict drill of Section 108 - In any case it is an established principle of law that issuance of Summons is a quasi-judicial act by itself and, therefore, it would be wholly erroneous to contend that the entire process of summoning is a mere administrative act - It is also an established principle of law that in matters and proceedings that are quasi-judicial in nature, subordinate authority cannot act as per dictation of their superiors, unlike what has been sought to be done illegally in the present case. [para 8]

Cus - It is an established principle of law that error in exercise of jurisdiction is ground enough and by which intervention of the High Court can be sought - Since in the present case it is a submission of the petitioner that the pre-conditions of Section 108 have not been satisfied, summons has been issued in contravention of the express drill prescribed therein, the very action of the respondent customs is wholly without jurisdiction - The illegal assumption of jurisdiction is also hit large by the fact that parallel investigation which is sought to be initiated contrary to express provision of Section 108 of the Customs Act and also in contravention of Article 20(3) of the Constitution of India: High Court [para 8]

Cus - The issue involved in this appeal is regarding 'order of loading' in transaction value, the impugned order confirming the percentage of enhancement to the transaction value, as ordered by the Deputy Commissioner of Customs - The miscellaneous application praying for admission of additional evidence whereby the assessee have filed copy of certificate of Chartered Accountant confirming the deductive value derived from the re-sale price of imported goods, computed value certificate issued by supplier/ Lutron USA in support of export at arm's length price - These documents are based on the record and go to root of the matter and the same are admitted - Thus, the miscellaneous application stands allowed - The assessee is not the sole importer and the goods have also been imported by other distributor/ seller with respect to some of the goods namely Authorised Stocking Distributors (ASD) - Further, most of the goods imported by assessee like RF products and on made to order products as well as non RF products only imported by assessee are not imported by ASD and others -As the ASD do not import 'RF products' as well as the 'made to order products', but some products are imported both by the assessee and the ASD, but are not comparable - Such imports constitute a significant part of total imports made by assessee - Such imports are in the range of 16 to 51% during the period 2013-14 to 2017-18 or an average of 36% of the total imports made by assessee - The quantity imported by assessee is more than 200 times than the quantity imported by the ASD - The ASD placed order for import usually when they have sales order in hand and do not undertake stocking of the products - Whereas the assessee irrespective of the sales orders in hand, they imports in bulk and stocks, and maintains an inventory - Thus they incur much higher selling and distribution cost - Thus, there is no reasonable basis for enhancement of 77% in the transaction value as per the impugned order - The proposition of Revenue that the import price of ASD are comparable to that of the assessee is a vague, in view of the heavy difference in the quantity imported of identical goods - Thus, the assessee and the ASD cannot be treated as comparable at commercial level - There is no public price list of Lutrons US, for made to order or customs products and thus value of such products is not comparable in absence of import by ASD of such products - Admittedly, it is evident on the face of record that deductive value was available before the Court below which have not been rejected by a speaking order, thus, violating the provisions of Rule 3 (3) of the Valuation Rules - Accordingly, as the deductive value for calculation have not been rebutted by Revenue, the same has to be followed for calculation of any adjustment in transaction value in terms of Rule 3(3) of Valuation Rules - Application of Rule 4 by the Court below is not justified - Accordingly, appeal allowed by way of remand to re-determine the adjustment, if any, in the transaction value on the basis of deductive value and computed value - Till the order is passed by the Deputy Commissioner, SVB pursuant to remand, the loading shall be restricted to 15% of the invoice value: CESTAT