SERVICE TAX

2020-TIOL-1190-CESTAT-KOL

Flakt India Ltd Vs CST

ST - The assessee-company manufactures industrial fans and allied products - It made remittances abroad for availing certain services for use in manufacture - SCN was issued to the assessee, proposing to raise demand under reverse charge, in respect of such foreign remittances - The demands were raised under headings such as Intellectual Property Services & Management Consultancy Services and Goods & Transport Agency service - Interest was demanded and penalty was imposed as well - On adjudication, a portion of the duty demand was dropped, considering the actual foreign remittances during the relevant period - The penalty was upheld - Hence the present cross appeals.

Held - Regarding the service tax demand on import of services received from outside India, it is the contention of the assessee that the SCN was issued based on the figures available in the audited Financial Statements which are prepared on accrual basis of accounting - It is well settled legal position as held by the Supreme Court in Indian National Ship Owners Association that the service tax liability will arise for foreign remittances made for import of services for the period 18.4.2006 onwards - In the instant case, since the period in dispute is 01.01.2003 to 31.12.2006, the demand would be restricted to import of taxable service for the period from 18.04.2006 to 31.12.2006 only - Hence the adjudicating authority is directed to re-compute the final service tax liability: CESTAT

Held - Regarding the demand raised under GTA service for the period January 2005 to December 2006, the assessee claimed to have paid the relevant amount of service tax in adjudicating proceedings, after claiming the prescribed abatement of 75% - The Commr. upheld the entitlement to abatement - The Revenue put forth no evidence to doubt the correctness of the said certificates provided by the transporters - Regarding the grounds of limitation, service tax payable under reverse charge on import of services from outside India as well on Goods Transport services would be available as credit and hence, revenue neutral - Hence no suppression of facts with intent to evade payment of duty can be attributed to the assessee so as to warrant imposing penalty: CESTAT

- Assessee's appeal partly allowed: KOLKATA CESTAT

2020-TIOL-1189-CESTAT-KOL

Raj Chakraborty Productions Vs CCGST

ST - The assessee has filed the appeal against communication of Deputy Commissioner (Tech) whereby it was communicated that the Commissioner has withdrawn the facility for allowing payment of outstanding Service Tax by installments, as allowed by earlier order dated 10.04.2018 issued by Assistant Commissioner (Tech) with the approval of Commissioner - The assessee by letters dated 17.01.2017 and 04.01.2018 requested the Commissioner for payment of arrears in installments, which is backed by the Board Circular 996/3/2015-CX - In the said Circular, the Commissioner had allowed the payment of outstanding dues in 21 installments as communicated by letter dated 10th April 2018 - The assessee failed to pay only one installment for the month of June 2018 within the stipulated period - In fact, the installment for the month of June was paid in the next month on 13.07.2018 alongwith the installment of July 2018 - Therefore, the impugned Order dated 17.07.2018 was issued - It seems that the payment of installments of June and July 2018 as communicated by the assessee by letter dated 13.07.2018 may not be noticed while passing the order dated 17.08.2018 - The order aspect of this case is that the assessee by letter dated 20.08.2018 informed the department that they have paid Rs.49,00,000/- vide two challans for the balance amount - It shows that the interest of Revenue has been suitably safeguarded - The impugned order dated 17.07.2018 for withdrawal of facility to pay service tax in installments cannot be sustained - The assessee is allowed to pay outstanding Service Tax demand of the balance amount, as per earlier Order dated 10.04.2018: CESTAT

- Appeal disposed of: KOLKATA CESTAT

2020-TIOL-1188-CESTAT-ALL

Kadam Advertising & Marketing Pvt Ltd Vs CCE & ST

ST - The assessee is engaged in providing 'Advertising Agency Services' - On scrutiny of assessee's balance sheet and ST-3 returns, it was found that the amount of 'payments received', as shown in P & L account of the balance sheet was different from the 'taxable value', shown in ST-3 returns - Revenue views that the assessee has mis-declared taxable value in their ST-3 returns, thus, willfully suppressed the material information from the Department with intent to evade the payment of service tax - The SCNs were confirmed by original adjudicating authority - The assessee contested the demands on the ground that they are also engaged in preparation of hoardings and banners according to customer's specifications which cannot be considered to be 'advertisement service' - They also submitted that said hoardings and banners suffered sales tax and as such not liable to Service Tax - They further contested that the Service Tax cannot be levied on unrealized amounts shown as sundry debtors shown in the audited balance sheets - The Commissioner(A) did not find favour with the said contentions and held that the activity of assessee did not amount to sale of time and space and the same would be covered by the definition of advertisement agency - Assessee has brought to notice a subsequent order of Commissioner (A) being Order dated 14.11.2017, wherein the appellate authority has observed that the activity of assessee fall under the activity of "selling of time and space for advertisement", which was not taxable w.e.f. 01.07.2012 - Inasmuch by the subsequent order, Commissioner (A) has held in their favour and inasmuch as the appellate authority has observed that the assessee have not been able to prove their pleas by production of documentary evidences, matter is remanded to the original adjudicating authority for verification of the pleas raised by assessee, after giving them an opportunity to put-forth their case - Assessee would produce all the documentary evidence in support of their various contentions: CESTAT

- Matter remanded: ALLAHABAD CESTAT

CENTRAL EXCISE

2020-TIOL-1191-CESTAT-DEL

HEG Ltd Vs CCGST & CE

CX - Appellant has a captive power plant in their factory premises for generation of electricity, to cater to the requirement of power for manufacturing their finished product - The surplus power produced by the Appellant was sold to the Madhya Pradesh State Electricity Board - In the above background, investigation was conducted by the Department and the Appellant was asked to submit details of the electricity generated, consumed captively and sold outside - The Appellant intimated the Department vide its letter dated 31.05.2011 & 30.11.2015 that they were availing proportionate credit by computing the same on inputs & input services, based on ratio of electricity captively consumed and sold outside - However, SCNs were issued proposing recovery of amount @5%/6% of the value of electricity sold outside the factory in terms of Rule 6(3)(i) of CCR - demand confirmed of 2,60,33,848/- and penalties imposed along with interest, hence assessee is in appeal.

Held:

+ Issue is whether amount of 5%/6% of the value of electricity sold by the Appellant outside the factory is required to be reversed under Rule 6(3)(i) of the Cenvat Credit Rules, 2004.

CX - CENVAT - There being no duty leviable on Electricity, there is no question of the Government issuing any exemption notification - Hence, the same cannot be considered as exempted goods - For electricity, the schedule of Central Excise Tariff does not prescribe any rate of duty of excise - Consequently, question of exempting the same does not arise - Therefore, it is clear that electricity is not 'exempted' goods, hence, the provisions of Rule 6(3) of CCR have no application in the present case - In such circumstances, it cannot even be said that the Appellant is under an obligation to maintain separate accounts, in terms of Rule 6(2) of CCR - Appellant's case is that it has availed Cenvat credit attributable to the portion of electricity consumed captively for manufacture of dutiable products - The said fact of availment of proportionate credit is also corroborated by CA certificates furnished by the appellant: CESTAT [para 12, 13]

CX - CENVAT - Explanation was added to Rule 6(1), vide Notification No. 6/2015-CE(NT) dated 01.03.2015, providing that "for the purposes of this rule, exempted goods or final products as defined in clauses (d) & (h) of rule 2 shall include non-excisable goods cleared for a consideration from the factory" - However, this amendment reinforces the contention of the Appellant that prior to 01.03.2015, non-excisable goods cannot be considered as exempted goods - Also for the period w.e.f. 01.03.2015, even the insertion of this Explanation cannot result in confirmation of demand @5%/6% under Rule 6(3)(i), inasmuch as the condition of proportionate availment of Cenvat credit on inputs and input services attributable to electricity consumed captively in manufacture of dutiable final products, stands satisfied by the Appellant - provisions of Rule 6(3) of CCR, therefore, have no application to the facts of the present case - impugned order is not sustainable, hence Order-in-Original is set aside and appeal stands allowed: CESTAT [para 14, 16]

- Appeal allowed: DELHI CESTAT

2020-TIOL-1187-CESTAT-AHM

SPI Containers Pvt Ltd Vs CCE & ST

CX - As regards the issue of denial of Cenvat credit on the bought out drums on the ground that the said drums has not undergone any manufacturing activity, Bench finds that the appellant have availed credit on bought out drums and at the time of clearance, after the activity of coating and painting, cleared the same on payment of duty – As this is permissible u/r 16 of CER, 2002, the availment of Cenvat credit on bought out drums is admissible - As regards the demand on inspection charges, it is settled law that when inspection is done by third party on the request of buyer, the said charges should not be included in the assessable value - Accordingly, the demand on both these counts is set-aside – penalty on Director is also set aside: CESTAT [para 5, 6]

- Appeal partly allowed: AHMEDABAD CESTAT

2020-TIOL-1186-CESTAT-KOL

Graphite India Ltd Vs CCE & ST

CX - Default in making payment of duty for the month of September 2008 - utilisation of CENVAT credit during the period of default objected and penalty imposed - entire amount of outstanding duty of Rs.57,21,000/- for the month of September, 2008, along with interest of Rs.97,806/- was deposited on 22/11/2008 vide GAR-7 Challan No. 09/08-09, dated 21/11/2008 - appeal before CESTAT.

Held: Issue is no more res integra - Gujarat High Court in the case of Indsur Global Ltd. 2014-TIOL-2115-HC-AHM-CX has held that the condition contained in rule 8(3A) of CER for payment of duty without utilizing CENVAT credit is unconstitutional - there is, therefore, no bar in making use of the accumulated Cenvat Credit in making payment of Central Excise Duty even during the period of default - impugned order is set aside and the appeal is allowed with consequential relief: CESTAT [para 5, 6]

- Appeal allowed: KOLKATA CESTAT

CUSTOMS

2020-TIOL-1185-CESTAT-KOL

Phonex Logistics Pvt Ltd Vs CC

Cus - The assessee is a container Freight Station Operator holding a License under HCCAR, 2009 and carries on business of Container Freight Station providing Customs Cargo Service such as storing and handling of the Custom's Cargo till clearance of the goods by Customs Department - The assessee had set up port like infrastructure for handling of Containerised Cargo - In normal course of business, goods imported at Haldia Port in containers are shifted to the Container Freight Stations of assessee amongst other Container Freight Stations to ease congestion at the port - In the course of enquiry, the fact that the assessee had informed the Assistant Commissioner posted at its CFS as well as LCL was not disputed - Safety of the container was found to be adequately protected - It was not under dispute that the shifting of container was done on the basis of permission granted - The enquiry officer gave a report wherein it was mentioned that the assessee did not report about the incidence in writing to its officers - The other charges as to the security threat and shifting without permission, were not found to be true - It gave a report that the trailer suffered a break down - In the report, it was stated that the assessee failed to bring the container within 6 hours and thus failed to fulfil the obligations cast under Public notice no. 7/2018, which directs the container to be brought within the reasonable time - The enquiry report also does not discuss any evidence on which the finding in the Report is based - The Supreme Court in the case of Sher Bahadur held that mere noting in the report would not in principal satisfy the rule of sufficiency of evidence - There is no finding that there was a breach of provision of Section 33 of the Act - Already the assessee has suffered the punishment in the order for more than 40 days - It stands idle with huge infrastructure - The Adjudicating Authority never disputed the fact that the assessee informed the Competent Authority from time to time about the breakdown of trailer and the movement of the container - The impugned order cannot be sustained and the same is set aside: CESTAT

- Appeal allowed: KOLKATA CESTAT

2020-TIOL-1184-CESTAT-ALL

Cosmos International Vs CC

Cus - The appellant filed the present appeal was filed by the appellants against orders passed by the Revenue, seeking reversal of duty drawback availed by a company, of which the appellants are directors - The duty demand was raised on grounds that the appellants fraudulently obtained BRCs in respect of exported goods by submitting FIRCs and fraudulently obtained against the non realized amount - It was also alleged that the appellants presented FIRCs against which the BRCs were already issued alongwith the said documents before the Bank Authority, gets issued the BRCs for claiming duty draw back - Hence penalties were also imposed on the appellant.

Held - Considering the facts of the case and also appreciating the fact that there is no specific role attributed to the present appellants for claiming wrong duty drawback, the appellants need not be penalised - Appeals allowed with consequential relief: CESTAT

- Assessee's appeals allowed: ALLAHABAD CESTAT