Ashok Kumar Vs CCGST & CE

GST - Allegation is circular trading by claiming Input Tax Credit on the materials never purchased and passing on such Input Tax Credit to companies to whom they never sold any goods - Apprehending the arrest on accusation of having committed a non-bailable offence in terms of Section 132(1)(b) and (c) read with Section 132(5) of the CGST Act, 2017 ), applicants are seeking directions under Section 438 of the Criminal Procedure Code, that in the event of their arrest they shall be released on bail – Allegation is that applicant's firm after availing the ITC of Rs.53.50 crores without any actual receipt of goods has also passed on the said ITC of Rs.53.50 crores to six firms, out of which five firms, namely M/s. Chandan Enterprises, M/s. Sheela Sales Private Limited, M/s. Chandan Sagar Sales Pvt. Ltd. M/s. Chandan Sagar Constructions Pvt. Ltd and M/s. Structeco Infrastructure Pvt. Ltd are closely held entities of M/s. Sheela Sales Corporation, inasmuch as proprietor or partner or a Director are common and are related to each other - Investigation also revealed that, above referred five firms have availed and passed on the said credit of Rs.63.50 crores to 360 other firms located in various parts of the country - applicant no.1 in his statement dated 9th December, 2019 and 20th January, 2020 admitted that none of his firms had received goods from M/s. Bajrang Traders on which invoices they have availed ITC of Rs.53.63 crores; and that none of his firms has made payment to M/s. Jai Bajrang Traders - During the course of investigation, seven summonses were issued to applicant no.1 and four to applicant no.2; however, applicant no.1 responded only to two summons dated 25th November, 2019 and 17th January, 2020 and Applicant no.2 did not respond to the summons at all - Applicants have furnished written submissions on 5th August, 2020 and for the first time contended that applicants are in possession of all relevant invoices (running into 2000 pages) and transport bills which the applicants are ready and willing to submit to the respondent no.1 and, therefore, till these bills are verified, applicants be granted protection from arrest - M/s. Jai Bajrang Traders, have filed FIR against the applicants with police at Gyanpur, Uttar Pradesh on 29th January, 2020 alleging therein that the present applicants have taken charge of their firm and forged the invoices in their favour.

Held: Facts emerging on perusal of file notings and statements of applicant no.1 recorded in response to summons issued under Section 70 of the CGST Act, prima-facie suggest, applicants' complicity/involvement in availing fake input tax credit without movement of goods on forged invoices Rs.63.50 crores in breach of provisions of Section 16 of CGST Act, which is cognizable offence under Section under Section 132(1)(b)(c) read with Section 132(5) of the CGST Act - applicants have failed to produce unique E-way bill number (EBN) particulars, transporter's details, proof of receipt of goods either by himself or his agent or warehouse keeper and payment proof either by himself or by agent or otherwise - Applicant no.1 in his statement recorded on 9th December, 2019 and 20th January, 2020 admitted, that neither his firm has received goods from M/s. Jai Bajrang Traders nor, has made any payment to M/s. Jai Bajrang Traders - In terms of Section 136 of the CGST Act, disclosure in the statement is "relevant" for proving any offence under the said Act - It may also be stated that, applicants have not retracted the statements - Under these circumstances, contention of respondents that, fraudulent ITC claim of Rs.63.53 crores is a matter of grave concern and requires thorough investigation for which applicants' presence is absolutely necessary - applicants instead cooperating with the ongoing investigation by submitting relevant documents and making themselves available for recording the statements, filed an anticipatory bail application before the District and Sessions Court, Thane and thereafter before this Court - Upon reading the provisions contained in Chapter-XIX, it may be stated that scheme of the Act, does not make provisions of Section 122 to 138 applicable, subject to "assessment". Both the Chapters, i.e. Chapter-XIX and Chapter-XII are distinct and application of the provisions thereunder are distinct and not subject to each other - If argument of applicants is accepted, it will turn the provisions of the prosecution nugatory - submissions made on 5 th August by the applicants for the first time are prima-facie an afterthought because respondents had afforded sufficient opportunities - invoice and transport bills produced at the eleventh hour, is nothing but an attempt to prolong the proceedings, so that interim pre-arrest protection granted by this Court would continue to operate till the bills are verified – respondent has submitted that many of the vehicle numbers are bogus and further also found that vehicle's registration date is latter then the lorry receipt dates - though the officers under the CGST Act, cannot seek custody of the arrested persons for completing the investigation, respondent's contention that applicant's detention in custody is necessary to prevent him from causing the evidence of the offence to disappear or tampering such evidence is well founded - respondent has correctly placed reliance on Section 41 of the Criminal Procedure Code in support of his argument - In view of the facts of the case and in the larger interest of the public and the State, in serious cases like this, Bench is not inclined to exercise discretion under Section 439 of the Criminal Procedure Code in favour of applicant no.1 – So far as applicant no.2 is concerned, material on record indicates and suggest that, applicant no.2 is wife of applicant no.1, is a housewife, and is a dormant and sleeping partner and she is not participating in the day-to-day business of the firm - Having regard to these facts, custody of the applicant will not further the case/investigation of the respondent and, therefore, pre-arrest bail is granted to the applicant no.2 – Pre-arrest bail of applicant no.2 is granted, subject to conditions viz. that in the event of her arrest, she shall be released on bail on furnishing bond in the sum of Rs.50,000/- with one or more sureties in the like amount - prayer of applicant no.1 for continuing interim relief for a period of 8 weeks is rejected: High Court [para 10, 11, 12, 13, 17 to 21]

- Applications disposed of: BOMBAY HIGH COURT

2020-TIOL-1386-HC-KERALA-GST

CB Electricals Vs GST Council

GST - TRAN-1 - Assessees herein, who are the identical appellants and writ petitioners, now admit that they uploaded FORM GST TRAN 1; that they sought input tax credit relatable to the Excise Duty paid insofar as the stock retained with them which they purchased from the manufacturers directly - However, insofar as the local purchases made paying Value Added Tax, there was no form uploaded nor was it included in the FORM GST TRAN 1 filed before the Authorities - The appellants/petitioners submit that they filed the earlier Writ Petitions on the mistaken belief that for Excise Duty and Value Added Tax, there should be different FORM GST TRAN-1 filed under the Central Goods and Services Tax Act and the Kerala Goods and Services Tax Act - It was hence, they filed Writ Petitions seeking a relief for consideration under the aforesaid Circular No.39/13/2018-GST dated 03.04.2018 - Now the assessees realise their folly in having not included the Value Added Tax component for which they have a valid claim for input tax, along with FORM GST TRAN 1, which showed their Excise Duty component for the purpose of input tax credit.

Held: Bench is of the opinion that the issue has to be considered first by the learned Single Judge; that the Writ Petition Nos. 9081/2018 and 9067/2018 = 2018-TIOL-2781-HC-KERALA-GST can be permitted to be withdrawn - Writ Appeals are disposed of by recording the prayer for withdrawal and permission of the Bench to do so, with the reservation that it would be without prejudice to their contentions in the later writ petition, as raised to allow the input tax claim on the stock where tax has been paid under the VAT Act - Writ appeals disposed of: High Court [para 6]

- Appeals disposed of : KERALA HIGH COURT

2020-TIOL-1385-HC-KERALA-GST

Hydrolic Corporation Kerala Vs ASTO

GST - Petitioner is aggrieved by the notice issued u/s 129 of the Act - Bench observes that the detention of the vehicle and the goods was on the finding that the goods on inspection were found to be different from those that were covered by the invoice and transportation documents, therefore, Bench is of the prima facie view that the detention cannot be said to be unjustified - Petition is disposed by directing the 1st respondent to permit the petitioner to clear the goods and the vehicle on furnishing a bank guarantee for the amount demanded in Ext.P4 - adjudication of the dispute u/s 130 to be completed within a period of one month: High Court [para 2]

- Petition disposed of: KERALA HIGH COURT

2020-TIOL-1384-HC-KERALA-GST

MS Steel And Pipes Vs ASTO

GST - On the allegation that there was a discrepancy in the e-way bill that accompanied the transportation of the goods, the consignment of goods transported were detained u/s 129 of the Act– On perusal of Ext.P4, Bench notices that the reason for detention was that, while the consignment was supported by an invoice which contained the details of the goods transported as also the tax paid in respect of the goods, there was no mention of the tax amounts separately in the e-way bill that accompanied the goods - Petitioner points out that there is no requirement under the Act and Rules for mentioning the tax amount separately in the e-way bill in FORM GST EWB-01 that the petitioner was obliged to use to cover the transportation in question.

Held: Power of detention u/s 129 is to be exercised only in cases where the transportation of goods is seen to be in contravention of the provisions of the Act and Rules and not simply because a document relevant for assessment does not contain details of tax payment - As per the statutory provisions applicable to the instant case, a person transporting goods is obliged to carry only the documents enumerated in Rule 138(A) of GST Rules, during the course of transportation - The said documents are (i) the invoice or bill of supply or delivery challan, as the case may be and (ii) the copy of e-way bill in physical form or e-way bill Number in electronic form etc. - A reading of the said Rule clearly indicates that the e-way bill has to be in FORM GST EWB-01, and in that format, there is no field wherein the transporter is required to indicate the tax amount payable in respect of the goods transported - If the statutorily prescribed form does not contain a field for entering the details of the tax payable in the e-way bill, then the non-mentioning of the tax amount cannot be seen as an act in contravention of the rules - In the instant case, it is not in dispute that the transpiration was covered by a valid tax invoice, which clearly showed the tax collected in respect of the goods and an e-way bill in the prescribed format in FORM GST EWB-01 - Since there was no contravention by the petitioner of any provision of the Act or Rule for the purposes of Section 129, the detention in the instant case cannot be said to be justified - Petition allowed by quashing Ext.P4 series of detention notices and directing the respondents to release the goods forthwith to the petitioner: High Court [para 4]

- Petition allowed: KERALA HIGH COURT

2020-TIOL-1383-HC-AHM-GST

Namaskar Enterprise Vs CGST

GST - Subject matter of challenge in this writ application is the order of provisional attachment of Bank Account of the writ applicant maintained with the State Bank of India - Applicant mentions that he was informed by the State Bank of India as regards the attachment of his bank account on 2-8-2019.

Held: A perusal of the Sub-Section-2 of Section 83 makes it abundantly clear that the provisional attachment would cease to have effect after the expiry of a period of one year from the date of the order made under Sub-Section-1 - Although no specific date has been mentioned in the impugned order of provisional attachment of the bank account, yet having regard to the statement made by the counsel that the attachment came into force from 2-8-2019, Bench takes it that the order of provisional attachment has come to an end - In such circumstances, no further adjudication is necessary as regards the other contentions raised in the writ application - Bench directs the State Bank of India i.e. the respondent No.3 to take notice of this order and permit the writ applicant to operate his Bank Account forthwith - Writ application succeeds and is hereby allowed: High Court [para 5, 6]

- Application allowed: GUJARAT HIGH COURT

2020-TIOL-1382-HC-PATNA-GST

Shiv Kishor Construction Pvt Ltd Vs UoI

GST - Impugned order dated 2nd of March, 2020 is passed by the Deputy Commissioner of State Tax, Patna Central Circle, Bihar, Patna who issued a notice asking the petitioner to show cause by a particular date - However, for unexplained reasons and circumstances, without any prior intimation or knowledge, the matter was preponed and without affording any opportunity of hearing, decided, holding the view of the revenue - The order does entail civil and pecuniary consequences, causing prejudice to the petitioner - On all fours, principles of natural justice stand violated - On this short ground alone, the impugned order dated 02.03.2020 and the consequential DRC-07 order dated 04.03.2020 passed by the Deputy Commissioner of State Tax, Patna Central Circle, Bihar, Patna are quashed and set aside with the matter remanded back to the authority for consideration afresh: High Court

- Matter remanded: PATNA HIGH COURT

2020-TIOL-1378-HC-MAD-GST

2020-TIOL-1377-HC-MAD-GST

2020-TIOL-43-NAA-GST

Director General Of Anti-Profiteering Vs Eldeco Infrastructure And Properties Ltd

GST - Anti-Profiteering - s.171 of the CGST Act, 2017 - DGAP had conducted an investigation into an allegation of profiteering by the respondent inasmuch as that it had not passed on the benefit of additional ITC to the applicant as well as 124 other house and plot buyers who had purchased them in the project ‘Eldeco County' - DGAO had in its report dated 28.11.2018 concluded that the respondent had denied the benefit of ITC to the aforesaid buyers amounting to Rs.41,82,198/- pertaining to the period July 2017 to 31st August 2018 and had thus indulged in profiteering and violation of the provisions of s.171 of the Act - Authority had after consideration of this report of DGAP had issued notice dated 07.12.2018 to the respondent to show cause as to why the said report should be accepted and his liability be fixed - after hearing the parties the Authority vide its order dated 24.05.2019 [2019-TIOL-34-NAA-GST] determined the profiteered amount as Rs.41,82,198/- and also held the respondent as having violated s.171 of the Act - Respondent was also issued notice dated 27.05.2019 asking him to explain as to why penalty mentioned in s.122 r/w rule 133(3)(d) of the Rules should not be imposed - respondent submitted that they had immediately accepted the amount which had been determined by the Authority and it was paid to all the eligible buyers along with interest of 18% totalling Rs.59,57,306/- and proof of payment was also submitted and which depicted their bonafide intentions to comply with the provisions of s.171 of the Act; that the applicant had also received the benefit of Rs.3,44,455/- vide cheque dated 05.02.2019; that, therefore, no penalty is imposable on them.

Held: It is apparent from perusal of s.122(1)(i) that the violation of the provisions of s.171(1) of the Act, 2017 is not covered under it as it does not provide for imposing penalty for not passing on the benefits of tax reduction and ITC; that it only provides for imposition of penalty for not issuing an invoice or for issuing an incorrect or false invoice in respect of any supply of goods/services; that the proviso covers situations envisaged in s.51 and 52 of the Act; that since the profiteered amount is not a tax imposed under the CGST Act, 2017, the above penalty cannot be imposed for violation of the anti-profiteering provisions made u/s 171 of the Act - Further, insofar as imposition of penalty in terms of s.171(3A) of the Act, 2017 is concerned, which provision has been added by s.112 of the Finance Act, 2019 for imposition of penalty for violation of the provisions of s.171(1) of the Act and effective from 01.01.2020, since no penalty provisions were in existence between the period 01.07.2017 to 31.08.2018 when the respondent had violated the provisions of s.171(1), the penalty prescribed u/s 171(3A) cannot be imposed on the respondent - Therefore, notice dated 27.05.2019 issued to respondent for imposition of penalty u/s 122(1)(i) is hereby withdrawn and the present penalty proceedings launched are accordingly dropped: NAA

- Application disposed of: NAA

2020-TIOL-1380-HC-KERALA-VAT

2020-TIOL-1379-HC-MAD-VAT

SERVICE TAX

2020-TIOL-1240-CESTAT-BANG

SAP Labs India Pvt Ltd Vs CST

ST - The first issue involved is levy of service tax on leased circuit service/telecommunication service received by assessee from abroad viz. from M/s. AT&T, USA through their data link/leased circuit which have been subjected to service tax under Business Support Services - The issue is covered in favour of assessee by the ruling of Coordinate Bench of Tribunal in case of TCS E-Serve Ltd. 2013-TIOL-2361-CESTAT-MUM wherein it has been held that unless the service provider is telegraph authority under Section 4(1) of the Indian Telegraph Act, 1885, service tax is not leviable - Accordingly, this issue is decided in favour of assessee - The other issue in this appeal is regarding cenvat credit on outdoor catering service availed by assessee - The admitted fact is that the assessee has availed CENVAT credit on input service of outdoor catering and it appeared to Revenue that the said service has got no nexus with the output service and accordingly such credit is not available under Rule 2(l) of CENVAT Credit Rules - Appreciating that the input service in question of outdoor catering is essential for rendering the output service so as to enable the employees of assessee to work efficiently and be available for providing the service as and when required and following the precedent ruling in case of Stanzen Toyotetsu India (P) Ltd. 2011-TIOL-866-HC-KAR-ST , it is held that the assessee is entitled for the credit - Impugned order set aside: CESTAT

- Appeal allowed: BANGALORE CESTAT

2020-TIOL-1239-CESTAT-HYD

Lotus Construction Company Vs CC, CE & ST

ST - The issue in the cross appeals filed by assessee and the Revenue, Revenue is seeking enhancement of penalty under section 78 as in the O-I-O, the Commissioner has imposed 25% penalty which was subsequently enhanced by way of corrigendum to 100% of tax amount in dispute - The assessee has filed appeal challenging that the penalty under section 78 is not imposable, there being reasonable cause and there being no case of deliberate defiance of law - The assessee was registered with the department; they have been filing returns regularly and further maintaining proper books of accounts in the ordinary course of business - As regards the transaction in dispute, the receipts are through banking channels properly recorded in the books of accounts and further the assessee had deposited the tax along with interest before the issuance of SCN - WCS was highly litigated and lot of interpretation issues were there - Taking pragmatic view of the matter, there is no contumacious conduct on the part of assessee and accordingly, the penalty under section 78 & section 77 is set aside: CESTAT

- Assessee's appeal allowed: HYDERABAD CESTAT

2020-TIOL-1238-CESTAT-ALL

Vanadana Enterprises Vs CCE & ST

ST - Appellant was engaged by M/s Northern Coal Fields Ltd. for movement of coal within the mine premises in terms of the contract entered into between the two – Revenue alleged that the activity falls under the category of ‘Cargo Handling Services' and tax is payable thereon; demand confirmed with penalty etc. – even in denovo proceedings, the demand was confirmed – appeal to CESTAT.

Held: Vide the first order, Tribunal upheld the revenue's stand that the activity would fall under the head Cargo Handling Service, however, the matter was remanded with specific directions to find out as to whether on same activity the recipient M/s Northern Coal Fields Ltd. has already discharged tax liability and in which case no duty confirmation against the appellant would arise - However, the adjudicating authority instead of following the said directions of the Tribunal went against the same and confirmed the demand by observing that tax payment by the Northern Coal Filed Ltd. by treating the same activity as GTA Services is of no relevance - Said findings of the Commissioner are outside the directions of the Tribunal, with which he was bound - as regards limitation, Bench notes that except for the fact that appellant had not disclosed the said activity to the revenue, no evidence reflecting upon any malafide on the part of the appellant stands produced by revenue - disputed issue was the subject matter of various assessee's similarly situated, who entered into contract with M/s Northern or Southern or Central Coal Fields and the identical activities were subject matter of litigation before the various levels – in some of the cases, Tribunal held that said activity cannot be considered to be Cargo Handling Service and the same would get covered by GTA Services – the demand is, therefore, time barred and even though a part of the demand may fall within limitation but in view of the fact that M/s Northern Coal field has already discharged duty liability, the demand even within the limitation period would not be sustainable - appeal allowed with consequential relief: CESTAT [para 4 to 6]

- Appeal allowed: ALLAHABAD CESTAT

CENTRAL EXCISE

2020-TIOL-137-SC-CX-LB

CCE, C & ST Vs Cera Boards And Doors

CX - Valuation - Section 4 of the CEA, 1944 - Adjudicating Authorities as well as CESTAT are guilty of '(i) Failure to find out, in cases covered by Section 4(1) as it stood prior to 01.07.2000, whether there were sales in the course of wholesale trade, satisfying the 3 conditions prescribed therein, falling under clause (a) of sub­section (1) or whether the sales in question fell under clause (b) of sub­section (1) of Section 4; (ii) Failure to find out, in cases covered by Section 4(1) as it stands amended by Act 10 of 2000 with effect from 01.07.2000, whether the sales in question fell under clause (a) or clause (b) of sub­section (1) of Section 4; (iii)  Failure to find out, in the event of the sales in question falling under clause (b) of sub­section (1) of Section 4 (before or after the amendment), whether the valuation had to be done only in accordance with the Rules (1975 Rules or the 2000 Rules, as the case may be), and (iv)  Failure to find out, in cases covered by Section 4(1)(b), the specific rule that is applicable among the 1975 or 2000 Rules, as there are different rules covering different contingencies, both in the 1975 Rules and in the 2000 Rules - Guidelines issued - orders of remand passed by the Tribunal, though for completely different reasons, were justified - Hence the appeals are liable to be disposed of, confirming the orders of remand passed by CESTAT, with a clarification on the legal issues so that the Adjudicating Authorities know how to proceed: Supreme Court Larger Bench

Facts:

Investigation that followed the searches revealed that the assessee [M/s. CERA Boards and Doors] had undervalued the goods manufactured by them and cleared the goods from their factory, resulting in the evasion of Central Excise duty to the tune of Rs.4,29,01,384/- during the period from 01.12.1998 to 05.12.2002. But, the adjudicating authority confirmed the demand only to the extent of Rs.79,21,663/-

By Final Order Nos. 245­253/2009 dated 24.03.2009, the CESTAT (i) rejected all the five appeals filed by the five dealers challenging the orders of confiscation of the seized goods with the option for redemption and (ii) allowed the three appeals filed respectively by the assessee, its Managing Partner and its Manager, challenging the demand for differential duty, interest, and penalty and remanded the matter for re­quantification of duty in light of the findings given. The appeal filed by the Revenue also followed the fate of the three appeals filed by the assessee, its Managing Partner and its Manager.

The findings recorded and the reasons therefor, by CESTAT, are ­

+ That there was overwhelming evidence to show under­invoicing; '

+ That in light of the statements made by depot officials as well as dealers, the finding of the Adjudicating Authority that 30% of the actual value alone was mentioned in the invoice cannot be interfered with; '

+ That as per Section 4(1)(a), as it stood before 01.07.2000, duty was payable on the normal price, namely the price at which such goods were ordinarily sold in the course of wholesale trade; and hence the Commissioner was obliged to find out what the normal price in the course of wholesale trade was for the clearances made prior to 01.07.2000;'

+ That in respect of the sales made prior to 01.07.2000, the adjudicating authority should adopt the normal pricing method;'

+ That for the clearances made after 01.07.2000, the transaction value had to be determined in respect of each transaction and the differential duty confined only to the evidence available on record;'

+ That the stand of the Revenue that 70% should be added to the invoice value uniformly in respect of all clearances, could not be accepted and, that therefore, the matter required re­adjudication.'

Therefore, the Revenue has come up with this batch of nine appeals, Civil Appeal Nos. 7240­7248 of 2009. Against similar orders passed by CESTAT in other case, appeals have been filed by Revenue and are numbered as 8615­8620 of 2009; 2236­2253 of 2011; 3227­3230 of 2011; 3231­3233/2011; 6564­6567/2011 and 9988­9991 of 2011.

Observations of Larger Bench of Supreme Court:

++ Common thread is that the assessees in these cases allegedly undervalued the goods, sold them for a much higher price than what was reflected in the invoices and thereby they evaded the excise duty actually payable. Though the assessees uniformly denied the said allegation, the CESTAT has recorded a categorical finding in all the cases that there was undervaluation and evasion of excise duty. The said finding has not been challenged by the assessees and hence it has attained finality. Therefore, what arises for adjudication is only the manner of determining the value of the goods removed by the assessees for sale to or through dealers. [para 77]

++ Entire dispute now revolves around the question of valuation of excisable goods, for the purposes of charging of duty. But for finding an answer to the said question, it is necessary for us to take note of the period of assessment. In some of these cases, the period of assessment was both prior to and after 01.07.2000 and in other cases, the period was after 01.07.2000. According to the respondents, the method of determination of value before 01.07.2000 was different from the method of valuation after 01.07.2000, since Section 4 of the Central Excise Act, 1944 was amended with effect from 01.07.2000 under Act 10 of 2000. [para 78]

++ After the amendment under Act 10 of 2000, the normal pricing method was gone, as the focus shifted from sale in the course of wholesale trade. [para 80]

++ While clause (a) of sub­section (1) of Section 4, as it stood before amendment, laid emphasis on normal price, clause (a) of sub­section (1) of Section 4, as it stands after amendment, speaks about transaction value . [para 87]

++ But the Adjudicating Authorities as well as CESTAT are also guilty of failure to do something in these batches of cases. They are -'(i) Failure to find out, in cases covered by Section 4(1) as it stood prior to 01.07.2000, whether there were sales in the course of wholesale trade, satisfying the 3 conditions prescribed therein, falling under clause (a) of sub­section (1) or whether the sales in question fell under clause (b) of sub­section (1) of Section 4; (ii)  Failure to find out, in cases covered by Section 4(1) as it stands amended by Act 10 of 2000 with effect from 01.07.2000, whether the sales in question fell under clause (a) or clause (b) of sub­section (1) of Section 4; (iii)  Failure to find out, in the event of the sales in question falling under clause (b) of sub­section (1) of Section 4 (before or after the amendment), whether the valuation had to be done only in accordance with the Rules (1975 Rules or the 2000 Rules, as the case may be), and (iv)  Failure to find out, in cases covered by Section 4(1)(b), the specific rule that is applicable among the 1975 or 2000 Rules, as there are different rules covering different contingencies, both in the 1975 Rules and in the 2000 Rules. [para 97]

++ Since the Adjudicating Authorities as well as the CESTAT failed to make a determination as indicated above, we are of the view that the orders of remand passed by the Tribunal, though for completely different reasons, were justified. Hence the appeals are liable to be disposed of, confirming the orders of remand passed by CESTAT, with a clarification on the legal issues so that the Adjudicating Authorities know how to proceed.

Conclusion: [para 99]

++ In fine, these appeals are disposed of, confirming the impugned orders of CESTAT setting aside the Orders­in­Original passed by the Adjudicating Authorities and remanding the matters back for re­adjudication. However, while carrying out the exercise of re­adjudication, the Adjudicating Authorities should keep in mind the principles enumerated hereunder:

A. Cases where the period of assessment is prior to 01.07.2000

+ First ascertain the price at which such goods are ordinarily sold by the assessee to a buyer who is not related to him, in the course of wholesale trade, at the time and place of removal and also find out whether the price is the sole consideration for the sale. If the Adjudicating Authority is able to find this out, he may take such price as the normal price and treat the case as covered by Section 4(1)(a), applying, wherever permissible, the prescriptions contained in the proviso to clause (a) of sub­section (1) of Section 4. '

+ If the normal price is not ascertainable, either for the reason that the goods are not sold or for any other reason, then he may take it that the case would fall under Section 4(1)(b) and take recourse in such cases, to the Central Excise (Valuation) Rules, 1975. '

+ The phrase "for any other reason" appearing in Section 4(1) (b) would include cases where the price charged in the course of wholesale trade is not discernible or where the same, though discernible, cannot be linked to delivery at 'the time and place of removal or where the price is not the sole consideration for the sale, even though the price charged in the course of wholesale trade for delivery at the time and place of removal are available.

+ If the case falls under Section 4(1)(b) and the Adjudicating Authority takes recourse to the method of valuation prescribed in the 1975 Rules, he shall find out which among the relevant rules would apply to the cases on hand before proceeding with the valuation.

B. Cases where the period of assessment is after 01.07.2000

+ First ascertain the "transaction value", with particular reference to the definition of the said expression contained 'in Section 4(3)(d). '

+ Apply the transaction value so ascertained, to cases where 'three conditions, namely (i) the goods are sold for delivery at the time and place of removal, (ii) the assessee and buyer are not related and (iii) the price is the sole 'consideration, are satisfied. This is because such cases will fall under Section 4(1)(a).

+ In cases where one or more of the aforesaid three 'conditions are not satisfied, and also in cases where there is no sale, the Adjudicating Authority should treat the cases as falling under Section 4(1)(b) and hence take recourse to the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. '

+ If a case falls under Section 4(1)(b) and the Adjudicating Authority takes recourse to the method of valuation prescribed in the 2000 Rules, he shall find out which among the relevant rules would apply to the case on hand before proceeding with the valuation.'

Principles applicable in common (both pre and post amendment)

C. The Adjudicating Authority may treat any amount received either in cash or otherwise, over and above the invoice value, as the value of excisable goods even in cases falling under Section 4(1)(a) (after the amendment), as the definition of "transaction value" under Section 4(3)(d) means the price actually paid or payable.

D. The Adjudicating Authority shall keep in mind the fact that 'while the expression "normal price" was not defined in Section 4(1) before amendment, the expression "transaction value" is defined very exhaustively in Section 4(3)(d) and this definition is both inclusive as well as exhaustive. '

E. Wherever there is a finding that a particular dealer/ customer has paid a consideration over and above what is reflected in the invoice, the additional payment made by him together with the invoice value shall be taken to be the transaction value, for all the transactions that the particular dealer/customer had with the assessee. In simple terms, if a dealer/customer has made 10 purchases during the period in question, for a particular value stated in the invoice, the transaction value determined on the basis of material relatable to a few out of those transactions, can be applied to all the transactions of that customer/dealer across the board for that period. However, the same value cannot be applied to the other dealers/ customers. This principle shall be followed in respect of cases arising after the amendment.

F. Since the matters are more than a decade old, the Adjudicating Authorities may conduct hearings, afford adequate opportunities to the parties and pass orders in original as early as possible.

The appeals are disposed of accordingly.

- Appeals disposed of: SUPREME COURT OF INDIA

2020-TIOL-1381-HC-KAR-CX

2020-TIOL-1237-CESTAT-DEL

Ultratech Cement Ltd Vs CCE & ST

CX - CENVAT - Appellant is entitled to Cenvat credit on construction of road from the limestone mine to the factory as the benefit is indirectly received by the appellant by way of transport facility for transporting raw materials for manufacture of dutiable finished products, Limestone admittedly is an essential raw material for manufacture of cement/clinker: CESTAT [para 3]

CX - CENVAT - Tribunal in appellant's own case has held that the appellant is entitled to Cenvat credit on construction service received for construction of residential colony, which is located near or adjacent to the factory premises - As the community hall/auditorium is admittedly located within the residential colony, it forms part of the colony and accordingly it is held that they are entitled for Cenvat credit for construction of the same: CESTAT [para 3]

CX - CENVAT - Travel (of the staff and officers) is an essential part of business and such services have indirect benefit on the manufacture and sale of finished products - Accordingly, the appellant is entitled for Cenvat credit on travel agency service received: CESTAT [para 4]

CX - CENVAT – Security services same have admittedly been received for securing the residential colony which is adjacent to the factory - Admittedly the colony is located at remote location and not served by any gram panchayat/municipality or corporation - Thus the township or colony being on industrial township has to be taken care of by the appellant only - appellant is, therefore, entitled to Cenvat credit on the security agency services: CESTAT [para 5]

- Appeal allowed: DELHI CESTAT

2020-TIOL-1236-CESTAT-MAD

Rane Brake Lining Ltd Vs CGST & CE

CX - The assessee is engaged in manufacture of automobile brake lining - During verification of accounts, it was noticed that assessee have availed credit of service tax paid on outward transportation of goods upto the buyer's premises - The department was of the view that the said credit was ineligible for which SCN was issued for different periods proposing to disallow credit and also for recovery of the same along with interest and for imposing penalties - The issue is with regard to eligibility of credit on outward transportation of goods upto the buyer's premises - On perusal of O-I-O, it is seen that the purchase orders state that one of the terms and conditions for sale is that the goods have to be delivered at the customer's place understanding that the buyer's premise is the place of removal - The assessee have also included the freight charges in assessable value while discharging excise duty - As per the decision in Roofit Industries Ltd. 2015-TIOL-87-SC-CX , the place of removal can only be buyer's premises - The Apex Court in the case of Ultratech Cement Ltd. 2018-TIOL-42-SC-CX has held that credit on outward transportation would be eligible upto the place of removal - In the present case, the place of removal being buyer's premises, as settled in case of M/s.Roofit Industries Ltd. , assessee is eligible for credit - Disallowance of credit is unjustified - The impugned orders are set aside: CESTAT

- Appeals allowed: CHENNAI CESTAT

CUSTOMS

2020-TIOL-1235-CESTAT-AHM

Sunland Alloys Vs CC

Cus - The assessee have imported Aluminium Scrap and the price declared in Bill of Entry is as per the invoice of foreign supplier - The department did not accept the declared value and reassessed the Bill of Entry by enhancing the declared value - The Assessing Authority reassessed the Bill of Entries by enhancing value not on the basis of any material evidence which show that the assessee have misdeclared the value even no Contemporaneous Import Data was relied upon - The sole reason for enhancement of value is on the basis of DGOV Guideline - The DGOV guideline is not above the statute, the adjudicating authority has not followed the Customs Valuation Rules whereby, he was supposed to first reject the declared value and subsequently he was supposed to apply rules sequentially and only thereafter, the value can be enhanced that too on the basis of evidence - In absolutely identical case of assessee themselves, this tribunal has allowed the appeal vide Final Order dated 01.10.2019 - In the said case also, the value was enhanced on the basis of same DGOV guideline and the Tribunal has categorically rejected such methodology of the valuation and allowed the appeals filed by assessee by passing detailed order - As regard the issue on which the Commissioner (A) rejected the appeal is that once the assessee have accepted the enhancement of value at the time of reassessment of Bill of Entry, they are not falling under category of aggrieved person in terms of Section 128 (1) of Customs Act, 1962 - On this direct issue, the Supreme Court in case of Century Metal Recycling Pvt. Ltd. 2019-TIOL-215-SC-CUS-LB considering the fact that the assessee had given the consent letter before the assessing authority, rejected the enhancement of value - As per the Apex Court judgment, even though the assessee gave consent letter but if the assessing authority has not followed the principle of valuation as laid down under the Act and Custom Valuation Rules, the assessment will not sustain, therefore, merely because the assessee had given a consent letter, the assessing authority cannot be absolved from not doing the process of reassessment as required under law therefore, the enhancement of the value is not legal and proper hence, is rejected - Accordingly, the impugned orders are set aside: CESTAT

- Appeals allowed: AHMEDABAD CESTAT

2020-TIOL-1234-CESTAT-ALL

Nishant Enterprises Vs CC

Cus - The assessee had imported consignment of Mobile Adopter, Mobile Charging Connector, Mobile Chipper Cover Plastic, Mobile Batteries and Memory Card Reader - On first check examination, discrepancy was noticed in the quantity reflected in invoice and the Bill of Entry and the factual quantity of goods found in the consignment - On further investigation, the exchange of E-mail between the assessee and foreign supplier was taken into consideration which reflected the rate of Mobile Charging Connector to be 0.34 Dollar per dozen whereas the invoice enclosed with the Bill of Entry reflected the same to be 0.34 Dollars per Twelve Dozens (GROSS) - It appeared to revenue that there was gross undervaluation and proceedings were initiated - The exchange of E-mail, the content of which has not been denied by assessee establishes that there was undervaluation in respect of Mobile Charging Connector and Memory Card Reader - Therefore, no interference is required with the finding of lower authorities in respect of the same - However, in respect of the other items, revenue has enhanced the value on the basis of data available in respect of similar goods imported during the relevant period - No evidence established by revenue that said data was applicable to the imported goods and in respect of the goods such as Mobile Adopter, Mobile Zipper Cover Plastic and Mobile Batteries, revenue could not establish that the price reflected in the invoice is not actual price paid by assessee to the foreign supplier - Relying on the ruling of Supreme Court in case of Sanjivani Non-ferrous Trading Pvt. Ltd. , Tribunal restore the value declared by the importer in respect of Mobile Adopter, Mobile Zipper Cover Plastic and Mobile Battery - As a result, the confiscation of Mobile Adopter, Mobile Zipper Cover Plastic and Mobile Battery is set aside and accordingly, the redemption fine is reduced to Rs.2.50 lakhs and penalty imposed under Section 14A to Rs.1 lakh: CESTAT

- Appeal partly allowed: ALLAHABAD CESTAT