| SERVICE TAX
2020-TIOL-1262-CESTAT-DEL
Oriental Sales Corporation Vs CCE
ST - A SCN was issued to assessee pursuant to an intelligence gathered by officers that the assessee was engaged in providing Erection, Commissioning or Installation services to Jaipur Vidhyut Vitran Nigam Limited but were not paying appropriate amount of service tax, nor filing any service tax returns - The adjudicating authority has found as a fact that the service rendered by assessee fell under category of Works Contract Service as the contracts were for service and supply of goods - The nature of service could not, therefore, fall under the category of Erection, Commissioning or Installation Service prior to 1 June 2007 - The Supreme Court in Larsen & Toubro 2015-TIOL-187-SC-ST observed that Works Contract Service was not a taxable service prior to 1 June 2007 - Even after 1 June 2007, service tax could not be levied upon assessee under Works Contract Service because the SCN that was issued to assessee was under Erection, Commissioning or Installation service - This is what has been observed by Tribunal in Jambeshwar Construction Co. 2019-TIOL-2569-CESTAT-DEL - This decision has relied upon an earlier decision of Tribunal in Ashish Ramesh Dasarwar 2017-TIOL-3230-CESTAT-MUM - The impugned order that seeks to recover service tax for the service rendered by assessee under Erection Commissioning or Installation service prior to 1 June 2007 and Works Contract Service after 1 June 2007 cannot, therefore, be sustained: CESTAT
- Appeal allowed: DELHI CESTAT
2020-TIOL-1261-CESTAT-BANG
Nitta Gelatin India Ltd Vs CCE, C & ST
ST - Whether the assessee has rightly availed the abatement of R&D Cess (for intellectual property services) for the services availed from the principal located abroad, under Notfn 17/2004-ST - A SCN was issued proposing to demand service tax on abatement taken on the ground that the holder of intellectual property right(IPR) is the person who has the right to transfer or give any other person right to use such IPR - Accordingly, service tax was demanded for extended period under reverse charge mechanism - The issue of liability under reverse charge mechanism has been considered by Bombay High Court in case of Indian National Shipowners Association 2008-TIOL-633-HC-MUM-ST wherein it has been held that prior to 18/04/2006 when Section 66A was brought on statute, no tax can be demanded under reverse charge mechanism - Accordingly, the impugned order is set aside: CESTAT
- Appeal allowed: BANGALORE CESTAT
2020-TIOL-1260-CESTAT-BANG
Align Builders Vs CCE, C & ST
ST - Appellant is engaged in civil construction along with supply of materials which is classifiable under the category of 'Works Contract Service', which was introduced w.e.f. 01.06.2007 - The main dispute in this appeal is with regard to the method of computation of tax liability - During the period under dispute 16.06.2005 to 31.03.2009, the appellant has received an amount of Rs.19,22,23,312/- for providing 'Construction of Complex Service'; the appellant has calculated their service tax liability after availing abatement from gross receipt @ 67% (for material component) under Notification No. 18/2005-ST read with subsequent Notification no. 1/2006-ST – Alleging that the appellant have not paid/short paid service tax due to erroneous calculation; SCN proposed to demand service tax, denying abatement and seeks to impose penalty etc. – aggrieved by the order passed by the Commissioner, assessee is in appeal.
Held: When the impugned order was passed, the law was not settled as regards classification of service, particularly in the case of composite contract involving supply of both labour and material - The law was finally settled in August, 2015 by Supreme Court in the case of L&T Limited - 2015-TIOL-187-SC-ST whereby it was held that in the cases of composite contract involving labour and materials, the same are not taxable under the existing category of services prior to 01.06.2007 - It was further held that the service in such cases is classifiable only under the heads 'Works Contract Service' and tax leviable w.e.f. 01.06.2007 (and not prior to this date) - The flat rate of abatement of 67% for material component under the aforementioned notification is on the basis/ premises that the total material is supplied by the contractor/ service provider - In the facts of the present case, save and except the projects at Kanyakumari of Muthoot Builder, in all other works cement, steel and /or plasticizer have been supplied by the principal/ service receiver - Thus, save and except the Kanyakumari Project of Muthoot Builder–TVM, the appellant cannot get a flat rate of abatement @ 67%, as admittedly the gross consideration does not include 2-3 major materials being cement, steel and plasticizer/water proof compound - In such cases, the appellant shall be entitled to deduction of material component actually supplied by them in execution of the works contract, which is verifiable from their sales tax record/ assessment order -
Issue involved is of interpretation in nature and there was lot of confusion prevailing with respect to taxability of works contract, and law was settled finally in August, 2015, therefore, penalty under Section 76 and 78 are not sustainable and are set aside – However, appellant is not entitled to composition scheme as they have not opted for the same; secondly, they are disputing the addition of material components supplied free by the principal as required under the composition scheme; the details and actual cost of the material thus supplied needs to be arrived at – Appeal is allowed by way of remand: CESTAT [para 6 to 9]
- Matter remanded: BANGALORE CESTAT
2020-TIOL-1259-CESTAT-HYD
Tirumala Engineering Company Vs CCE
ST - On the ground that the appellant had provided taxable services of ‘Manpower Recruitment or supply agency service', SCN was issued for recovery of service tax of Rs.2782/- and Education Cess of Rs.280/- along with interest and penalty - Adjudicating authority extended the benefit of small scale exemption notification 6/2005-ST and reduced the demand to Rs.1348/- (plus EC of Rs.132/-) with interest and penalty - as Commissioner(A) rejected the assessees appeal, they are before CESTAT.
Held: Lower authorities after analysing the scope of work conducted by appellant in the premises of their customers and stated in the relevant work order, arrived at the conclusion that the services rendered by the appellant satisfy the definition of manpower recruitment and supply services as prescribed under Section 65(105(k) of the Finance Act 1994 - authorities below also extended the benefit under Notification No. 6/2005-ST and reduced the demand accordingly - No contrary evidence has been placed by the appellant in their appeal to rebut the finding of the Commissioner (Appeals) - In absence of any contrary evidence, Bench does not find any reason to interfere with the impugned order - appeal being devoid of any merit is dismissed: CESTAT [para 5]
- Appeal dismissed: HYDERABAD CESTAT 2020-TIOL-1255-CESTAT-AHM
Kudrat Corporation Vs CC
ST - The appeal is directed against impugned order whereby the request of assessee for cross examination of witnesses has been rejected during the adjudication proceedings - From the plain reading of section 138 B, particularly, clause (b) of sub section 1 of section 138(b), it is clear that the statement made and signed by person before the Custom Officer can be admitted as evidence when the person who made the statement is examined as a witness in the case before the court and the court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice - In the said section, no exception is provided or any discretion is provided for Adjudicating Authority to allow or not to allow the cross examination - When the assessee have vehemently requested the cross examination of witnesses, the Adjudicating Authority cannot have his own assumption and presumption that whether anything will come out from the process of cross examination - It is up to the defendant that whether the cross examination will help for his defence - The cross examination is a vital part of principles of natural justice - Therefore, the assessee should be allowed cross examination of the witnesses except the SIO - The SIO is part of the investigation and the SCN has relied upon various statements, letters and opinions - Therefore, the cross examination of SIO is unwarranted - The Principal Commissioner being adjudicating authority shall grant cross examination of witnesses as requested by assessee: CESTAT
- Appeal allowed: AHMEDABAD CESTAT
CENTRAL EXCISE
2020-TIOL-1258-CESTAT-CHD
Progressive Fibre Containers Pvt Ltd Vs CCE
CX - SSI Exemption - Clubbing of units - During the course of visit, the machinery for manufacture of finished goods was found installed in the premises of JPPL - Moreover, some stocks of finished goods were also lying there and it is not denied by the Revenue that these two units are not separate units - Both the units are located at a distance of 5 KM. from each other and having manufacturing infrastructure separately installed in their premises - Merely because both the units are owned by the family members, same cannot be the reason for clubbing the clearances - Moreover, it was not alleged in the show cause notice that JPPL is a dummy unit - Further, the directors of both the units are not common and initially PPI was a proprietorship concern and JPPL is a private limited company - The private limited company is distinct from an individual, therefore, it cannot be said both are same units - The other ground for clubbing the clearances is that there are some financial transactions between each unit - the financial transactions are monies given on loan and which is repaid along with interest, therefore, it cannot be said that there was flow of funds between the both units and these types of transactions cannot be the reason for clubbing the clearances - Moreover, another allegation is that both units are managed by the family members or one person, however, the same cannot be the reason to club the clearances in view of the Tribunal decision in Nova Industries (P) Ltd. - 2015-TIOL-1729-CESTAT-DEL - in view of the above, clearances of both the units cannot be clubbed together and M/s JPPL is entitled for benefit of SSI exemption Notification No. 08/2003-CE dated 01.03.2003 - impugned order is set aside and appeals are allowed with consequential relief: CESTAT [para 7 to 13]
- Appeals allowed: CHANDIGARH CESTAT
2020-TIOL-1257-CESTAT-CHD
OC Crochets Pvt Ltd Vs CCE
CX - The assessee is in appeal against impugned order wherein the product has been classified as lace under Chapter Heading 58.04 of CETA, 1985 - Although CRCL given a report, but, the said report has been challenged by assessee vide its letter on the basis of various case laws and requested to visit their factory to know the manufacturing process as well as the machinery is used, but, the said request has not been accepted - Admittedly, assessee has ask for retest and same has been denied on the flimsy ground, therefore, there is a violation of principle of natural justice as held by Tribunal in case of Punjab Stainless Steel Industries - Further, in the case of Orient Apparels Pvt. Ltd. 2017-TIOL-1591-CESTAT-DEL, Tribunal has examined the issue and after relying on the report of Department of Textile Technology, IIT, Delhi and the Technological Institute of Textile & Sciences, Bhiwani observed that to determine the classification in the case of braid and laces, examination of process of manufacture is required - Admittedly, while determining the classification by CRCL, no process of manufacturing was examined and retest of the samples were denied - Therefore, there is a gross violation of principle of natural justice: CESTAT
- Appeal allowed: CHANDIGARH CESTAT
2020-TIOL-1256-CESTAT-ALL
Kesar Enterprises Ltd Vs CCE
CX - The assessee is engaged in manufacture of sugar and molasses, during the course of manufacture of which bagasse, press-mud and bio-manure were emerging - The proceedings were initiated against them for confirmation of demand in terms of provisions of Rule 6 (3) of Cenvat Credit Rules on the ground that the assessee has availed the Cenvat credit in respect of common Cenvatable inputs and with the introduction of explanation to Rule 6 of Sub-rule (1) of Cenvat Credit Rules, assessee is required to discharge a particular percentage of value of said products, inasmuch as, the same has to be treated as exempted product - The issue is no more res-integra and stands settled by various decisions of Tribunal - One such reference can be made to the decision in case of Bajaj Hindusthan Sugar Ltd. wherein bagasse has been held to be an agricultural waste or residue, so there could be no manufacturing activity - The press mud has also been held to be a waste and not a manufactured product - By following the said decision, the impugned order is set aside: CESTAT
- Appeal allowed: ALLAHABAD CESTAT
CUSTOMS
2020-TIOL-1268-CESTAT-AHM
Vishesh Jain Vs CC
Cus - Principal Commissioner of Customs ordered for provisional release of the imported goods seized, subject to execution of bond of full value of the goods i.e. Rs.3,85,89,279/- supported by bank guarantee of Rs. 1.60 Crore - appeal is filed by the importer against this order along with an application for early hearing - appellant submits that the value of imported goods 'Plain White Papers in Rolls' was enhanced without any basis and show cause notice on the issue is yet to be issued - Moreover, the Principal Commissioner, as against the differential duty amount of Rs. 59,43,370/-, has asked for bank guarantee of Rs. 1.60 Crores, which is very harsh.
Held:
+ Since the goods are perishable and lying seized, the appellant have made out a fit case for early hearing of the appeal and accordingly, the early hearing is allowed.
+ Although the DRI has seized the goods for the reason that goods were undervalued but no documentary evidence is shown for adopting the value as against the declared value; since the case is under investigation, Bench does not want to comment whether enhancement of value is legal or illegal, however, Bench is of the view that terms of bank guarantee fixed by Principal Commissioner at Rs. 1.6 Crore is very excessive as against the total differential duty involved of Rs. 59 Lakh approx.
+ Considering the overall facts and circumstances of the present case, Bench is of the view that ends of justice will be met if the appellant executes bond of 100% value of the goods and bank guarantee for 100% of differential duty amount. Appeal is allowed in above terms. [para 9 to 11] - Appeal disposed of:
AHMEDABAD
CESTAT |
