Shailendra Swarup Vs Enforcement Directorate

FERA - In the relevant period, one M/s Modi Xerox Ltd. (MXL), made remittances abroad through its banker - The RBI issued a letter stating that M/s MXL had not submitted Exchange Control copy of the custom bills of Entry/Postal Wrappers as evidence of import of goods into India - The ED wrote to M/s MXL seeking invoices & purchase orders - M/s MXL provided some of the records, but some of the old records could not be traced - Meanwhile M/s MXL amalgamated & merged into M/s Xerox Modicorp Ltd. (M/s XMC) - Subsequently, an SCN was issued by the ED to M/s MXL and its Directors, one of whom is the appellant - The SCN proposed initiating adjudicating proceedings u/s 51 of the FERA r/w Sections 3,4 and 49 of FEMA - Date of hearing was fixed and notice was sent in this regard - The appellant replied to the SCN, stating to be a part-time, non-executive director of M/s MXL and that he was never in the company's employment and had no executive role in its functioning - He also stated that to never have been in charge of or responsible for the conduct of the company - The relevant authorities at the ED heard the appellant and the other directors and then proceeded to impose penalty on the appellant for contravening provisions of Section 8(3), 8(4) and 68 of FERA 1973 - The appellant's appeal against such order was dismissed by the Appellate Tribunal for Foreign Exchange and then by the High Court, which nonetheless stayed the imposition of penalty.

Held - Where the Deputy Director at the ED decided to hold adjudication proceedings u/s 51 of the FERA, any reply submitted in response to notice must statutorily be considered u/s 51 - Such reply cannot be ignored or rejected based on an erroneous assumption that such reply was furnished in an afterthought - What is said by a person who is called for personal hearing even though given in the form of written representation dated 29.10.2003 required to be considered by the adjudicating officer otherwise the personal hearing shall become an empty formality and meaningless - Hence the High Court erred in discarding the reply submitted by the appellant - The affidavit of the Company Secretary is also uncontradicted, wherein it is stated that the appellant was only a part time director in M/s MXL and was not in charge of day to day business - Such affidavit was available before adjudicating authority and the High Court erred in holding that such information was not put forth before the adjudicating authority or the appellate tribunal - Such pleas of the appellant were erroneously rejected by the High Court, as nothing was put on record on behalf of the ED to disprove such pleas - Moreover, it is seen that the Adjudicating officer did not consider the pleas of the appellant or even hold them to be untenable - Hence the penalty has been imposed without returning a finding that it was the appellant who was liable for contravention of the provisions of Section 8(3), 8(4) and Section 68 of the FERA - Hence such order is unsustainable - The wordings of Section 68 of the FERA nowhere provide that all directors, irrespective of their role and responsibilities, would be guilty of contravention - When a person is proceeded with for committing an offence and is to be punished, necessary ingredients of the offence as required by Section 68 should be present - Even though the FERA 1973 does not contemplate filing of a written complaint but in proceedings as contemplated by Section 51, the person, who has to be proceeded with has to be informed of the contravention for which penalty proceedings are initiated. The expression "after giving that person a reasonable opportunity for making a representation in the matter" as occurring in Section 51 itself contemplate due communication of the allegations of contravention and unless allegations contains complete ingredients of offence within the meaning of Section 68, it cannot be said that a reasonable opportunity for making a representation in the matter has been given to the person, who is to be proceeded with - Hence, for imposing a penalty under Section 50, the adjudicating officer is required to hold an enquiry after giving the person a reasonable opportunity for making a representation in the matter - Thus the judgments of the High Court, the Appellate Tribunal and adjudicating authority merit being set aside: SC

- Appeal allowed: SUPREME COURT OF INDIA

2020-TIOL-1245-HC-MAD-CT

Mohan Mushroom Farms Vs Asstt Commissioner

In writ, the High Court finds that an identical issue was resolved in the case of Commissioner of Commercial Taxes, Chennai vs. The Ramco Cements Ltd. In keeping with the findings rendered therein, the authorities concerned are directed to dispose off the assessee's application in four weeks' time.

- Writ petitions disposed of: MADRAS HIGH COURT

SERVICE TAX

2020-TIOL-1091-CESTAT-DEL

Reliance Courier Vs CCE

ST - Appeal was filed in the Registry on 27 November, 2018 with various defects including non-submission of proof regarding mandatory pre-deposit - In spite of the fact that the notice was served on the Appellant on 12 March, 2019, none appeared on behalf of the Appellant to press the appeal - From the record, Bench finds that this appeal was filed not only beyond the statutory period of limitation without filing Condoning of Delay application, but also the mandatory requirement of pre-deposit was not satisfied – Moreover, the order that has been impugned is the order passed by Commissioner(A) dismissing the appeal on the ground of limitation inasmuch as the appeal was filed before Commissioner(A) with a delay of 219 days – since the Commissioner (Appeals) could not have condoned the delay beyond the period of 30 days, the present appeal also deserves to be dismissed: CESTAT [para 2, 3]

- Appeal dismissed: DELHI CESTAT

2020-TIOL-1090-CESTAT-DEL

Navyuvak Safai Samiti Vs CCE & ST

ST - Appellant is a small Cooperative Society constituted by the village based unemployed youth, being males and females belonging to the backward community - Appellant is executing work relating to sweeping of roads and buildings, cleaning of bathrooms & toilets, collection of waste, lifting of dead bodies of animals etc. - Services provided by the Appellant are sanitation jobs, through collective manual labour of the members of the Appellant's Society on daily wage basis - Society was advised by the service receiver company that their services are liable to service tax and as such, they obtained registration and started paying service tax w.e.f. September, 2012 - SCN dated 21.04.2014 was issued pursuant to the inquiry made for the tax for the preceding period, on the basis of the data provided by the appellant - The demand was raised for the period October, 2008 to September, 2012, amounting to Rs.7,95,749/-, invoking the extended period of limitation – demand was confirmed and penalties were imposed along with interest – appeal filed.

Held: It is found that the appellant has taken suo moto registration after being pointed out by the service receiver - It is only after they suo moto complied, it was found that they have not deposited the tax for earlier period though it was payable. Further, the admitted facts is that the appellants were under the belief that they are not liable for tax nor they were so advised by the service receiver, M/s. Hindustan Zinc Ltd. nor they have been approached by the Department about their liability to pay tax in the earlier point of time - It is also admitted fact that they have not charged the service tax from the service receiver, nor they have collected the same with any bills - On being asked by the Department, they have approached Hindustan Zinc Ltd. and deposited the tax substantially - In this view of the matter, Bench holds that there is no case of any suppression or mis-statement of facts or contravention of any of the provisions of the Act or Rules made out against the appellant – So also, neither the extended period of limitation is available to the Revenue nor imposition of penalty under Section 78 is justified - Appeal is allowed with consequential benefit: CESTAT [para 12]

- Appeal allowed: DELHI CESTAT

CENTRAL EXCISE

2020-TIOL-1089-CESTAT-DEL

Prism Johnson Ltd Vs CCGST, CE & C

CX - "Waste and Scrap" of Capital goods sold/cleared during the period 01.04.2012 to 26.09.2013 - Issue is regarding short payment of excise duty at the time of removal of the alleged capital goods, as waste and scrap on the transaction value in terms of Rule 3(5A) of CCR - It is the contention of the Department that during the relevant period Rule 3(5A) of CCR has been amended by issue of Notification 03/2013-CE NT dated 1/03/2013 [prescribing payment of amount equal to Cenvat Credit taken on such capital goods as reduced by the percentage points calculated by straight line method @2.5 % for each quarter of a year] which was further amended by Notification dated 27/09/2013 which restored the previous position as prevalent under Rule of 1944, and erstwhile Credit Rules i.e. payment of amount equal to the duty leviable on transaction value upon removal of capital goods as waste and scrap - As per Revenue, the Notification dated 27/09/2013 has not been given retrospective effect and is thus required to be applied prospectively – demand confirmed and penalty imposed, therefore, appeal to CESTAT.

Held: The trade had represented before the Government regarding the amendment dated 17/03/2012 which continued till 26/09/2013 (that is disputed period) - The perusal of the history of Rule 3(5A) indicates that barring the period 17/03/2012 to 26/09/2013, the provision existed for reversal of credit on the transaction value - As the amendment was made to mitigate the hardships caused to the trade, this is a beneficial piece of legislation and thus required to be given a retrospective effect, as held in the cases of Indian Tobacco Association, Adani Power, Steel Authority of India, and MS Steel – Bench also finds that the issue involved is interpretation of provisions of Rule 3(5A) and, therefore, the Ministry had to clarify the issue subsequently by issuance of amended notification - Under the circumstances, there were widespread confusions in the trade regarding modality to be adopted for the reversal of the credit - Even if it is assumed that the appellant has removed capital goods, although the same is being contested, the extended period of limitation is not available to the Department as held in a catena of decisions of this tribunal and higher appellate authority fora - It is also on record that the issue has cropped up after the departmental audit of the records of the appellant and there has been evidence of series of communications on the issue of reversal of Cenvat Credit between the department and the appellant as it is evident from the various letters exchanged between them on 23.09.2013, 22.01.2014, 12.02.2014, 19.05.2014, 09.12.2014, 29.12.2014, 06.02.2015, 09.04.2015, 11.05.2015. 09.10.2015 and 20.11.2015 - extended period of limitation for raising the demand is, therefore, not available with the department - impugned order is thus not sustainable, both on merits and limitation, therefore, same is set aside and appeal is allowed with consequential relief: CESTAT [para 8, 9, 11, 12, 14]

- Appeal allowed: DELHI CESTAT

2020-TIOL-1088-CESTAT-DEL

Larsen & Toubro Ltd Vs CCGST, CE & C

CX - Notification 15/2010-CE - Eligibility certificate was received from the Ministry of Renewal Energy on 20th September 2011 - As the supplies had commenced in the meantime from 4th August, 2011, the appellant cleared the goods till 21st September, 2011 on payment of applicable duty – later, refund claim was filed but the same was rejected on the ground that the exemption certificate was required to be furnished before or at the time of clearance - Commissioner (Appeals) upheld the eligibility of the appellant for refund, however, he has upheld the rejection on the ground that it is not evident whether the appellant has not passed on the credit to the buyer of the goods, whether the appellant has passed on the incidence of duty to the buyer of the goods and further the appellant availed the Cenvat Credit or not – assessee has, therefore, filed appeal before Tribunal.

Held: From the annexure to the balance sheet, on the asset side under the head expenses/other manufacturing, construction and operating expenses, an amount of Rs. 337,164,059/- is booked – Further, from the notes forming parts of the account, under note 'M' as regards the other manufacturing expenses etc., an amount of Rs. 236,552,925/- is shown as 'other rates and taxes' - Appellant states that this amount includes the amount claimed by the appellant as refund – Further, the appellant have filed an affidavit dated on 8th January, 2019 sworn by Shri Rakesh Kumar Yadav, Accounts Manager of the appellant company who has stated among others that the appellant company never collected Excise duty from their principal or buyer - Separate commercial invoices were raised on the buyer company and accounts were adjusted accordingly; that these facts are evident from their books of account and their balance sheet as on 31 March, 2012 - The appellant have further produced a certificate dated 8th December, 2013, issued by Solarfield Energy Private Limited wherein it is confirmed that they have collectively paid the said commercial invoice without making any payment towards excise duty – Bench is of the view that the appellant have made a prima facie case that they have not passed on the incidence of duty to the buyer of the goods - appeals are, therefore, allowed by way of remand to the Original Adjudicating Authority, with a direction to cross verify the certificate issued by the buyer of the goods, issued from their jurisdictional Central Excise Authority/ GST Authority and, accordingly, pass a reasoned order in accordance with law; grant interest if found entitled and complete the entire exercise within a period of four months: CESTAT [para 8, 11]

- Matter remanded: DELHI CESTAT

2020-TIOL-1087-CESTAT-KOL

Himadri Chemicals & Industries Ltd Vs CGST & CE

CX - The assessee, a 100% EOU is engaged in manufacture of carbonized pitch - In the process of said manufacture, assessee obtains Naphthalene and H.C. Oil as 'by-products' - During the month of September 2011, they cleared goods (by- products) to its own DTA unit by availing exemption provided under Notfn 23/2003-CE r/w para 6.8(g) of FTP-2009-2014, which has been disputed by Central Excise Department - The clearance of goods (by-products) during the impugned period cannot be said to be in the course of exit from EOU scheme as per para 6.18 of FTP - In so far as the contention raised by revenue is concerned that clearance of by-product to DTA under para 6.8(g) is not covered in exemption Notfn 23/2003, assessee referred to the amendment made in aforesaid Notification vide Notfn 46/2004-CE whereby clause (g) of para 6.8 of FTP has been specifically inserted to provide the exemption benefit for clearance of by-products to DTA units - Neither the Commissioner in his impugned order has considered the amended version of notification as was applicable during the impugned period nor he made any finding that the clearance of by-product to DTA was not covered for exemption purpose - The assessee is duly entitled to avail the exemption benefit under Notfn 23/2003 - Moreover, the case of assessee is also strong on limitation - The Commissioner in impugned order has recorded the fact of disclosures made in ER-2 return filed for September 2011, disclosing the clearance of by-products by claiming exemption - Therefore, following the decision in Emcure Pharmaceuticals Ltd, having a direct application in the case in hand, it is held that since adequate disclosures were duly made in the ER-2 returns, there cannot be any case of suppression and therefore, the SCN issued in April 2016 for raising demand of duty on DTA clearances made by assessee in September 2011 is wholly barred by limitation of time - The impugned order cannot be sustained and is thus set aside: CESTAT

- Appeal allowed: KOLKATA CESTAT

CUSTOMS

2020-TIOL-1086-CESTAT-KOL

CC Vs Al Burhan International

Cus - The assessee has imported a consignment of 440 kerosene water pumps - They were yet to file a bill of entry to clear the consignment - The importer claims that after receipt of goods they received the import documents wherein they found that the consignment consists of 200 portable power generators, which they had not ordered - They approached the Import Noting Section and requested for amendment in the IGM to include 200 pcs. Of portable power generators - Sensing that the importer might have fraudulent intention, the Import Noting Section did not permit amendment to the IGM - Accordingly, SIB proposed for confiscation of the goods under Section 111(d) of Customs Ac, 1962 and imposition of penalty under Section 112(a) of Customs Act, 1962 - The redemption fine and penalty on re export of goods is not imposable under Sections 125 and 112 of Customs Act, 1962 when supplier confessed mistake and agreed to bear expenses for export due to wrong shipment by foreign supplier and no mala fide on part of assessee as has been held in case of Regal Impex 2015-TIOL-2494-CESTAT-DEL - The Tribunal in this case has held that when goods found other than what was ordered and on persuasion of the importers the overseas supplier admitted that goods are wrongly shipped, the charges of mis-declaration on the importers is not sustainable - Hence, applying the ratio of the above judgement when the respondent is not claiming the goods due to wrong supply is not liable to penalty under any circumstance and accordingly, the order imposing penalty on the respondent is liable to be set aside - The departmental appeal has been preferred on the grounds that goods were not confiscated under Section 111(d) and 111(f) and 119 of Customs Act, 1962 - Against the O-I-O, assessee had also preferred an appeal, which was allowed vide O-I-A, setting aside the order of adjudicating authority - Hence, the appeal filed by department is not maintainable and is rejected - No reason found to interfere with the impugned order and the same is sustained: CESTAT

- Appeal dismissed: KOLKATA CESTAT

2020-TIOL-1085-CESTAT-KOL

CC Vs Zenith Enterprises

Cus - All these appeals have been filed by Revenue against impugned order passed by first appellate authority remanding the matter to the original authority with a direction to decide the question of jurisdiction of DRI and thereafter, decide the matter on merit after granting an opportunity of personal hearing and following the principles of natural justice - It is true that the question as to whether the Officers of DRI, can issue SCN for the period prior to 08.04.2011, has been the subject matter of orders passed by the various High Courts - In the case of Mangali Impex Ltd. , the High Court of Delhi, has held that the Officers of DRI had no such power, while the High Court of Bombay had, on the other hand, held that the Officers of DRI had such power - The view taken by Tribunal in several cases was that since the matter pertaining to Mangali Impex Ltd. is pending before Apex Court, the matter should be remanded to the lower appellate authority - This view has been over ruled by High Court of Delhi - The same ratio applies to the judgement of Single Bench of Calcutta High Court in case of Navneet Kumar , which decision has been stayed by Division Bench - Therefore, without waiting for the final decision by Supreme Court in case of Mangali Impex Ltd ., the matter has to be decided on merits either by the adjudicating/appellate authority or by the Tribunal - The impugned order passed by first appellate authority remanding the matter to the lower authority is not correct and is set aside and the matter has to be examined on merits by the first appellate authority as well as on the question of jurisdiction of DRI Officer to issue SCN following the judgement of High Court of Delhi in the case of Arif Khichi: CESTAT

- Revenue's appeal allowed: KOLKATA CESTAT

TII

TP - Once payments made for 'license to use brand name' stands approved by competent authority, then TPO is not permitted to disallow expenses on basis of 'benefit test': ITAT

I-T - Payment of distribution fee to Cable and DTH operators cannot be termed as 'Royalty': ITAT

I-T - Services which are technical in nature, can be said to be FTS and can be subjected to provisions of Sec 195 only when it has made available technical knowledge to recipient of services in India: ITAT

TIOL CORPLAWS

Arbitration and Conciliation - Rights of plaintiffs can be decided in arbitration and suits in court are not maintainable: HC

Arbitration & Conciliation - Appeal against Awards u/s 34 pending before Rajasthan HC, can come in way of Decree Holder enforcing Award before Delhi Court: HC

SEBI - Request for transfer of various Writ Petitions pending in different HC on same matter to Bombay HC can be allowed considering that Regulatory Authorities are located in Bombay and no objection to consolidation is made: SC