| SERVICE TAX
2020-TIOL-1364-CESTAT-BANG
New Mangalore Port Trust Vs CCE & ST
ST - The issue arises is, whether the appellant is liable to pay Service Tax under the Head "Franchise Services" on their activity of granting licence to third party-crane operators for providing their crane (wheel mounted) in the Port area for providing services of loading and unloading with the help of crane - Further, an admitted fact is that the licensee/crane operators are not raising any invoice for their services in the name of the appellant Port Trust and hence by no stretch of imagination, they are franchisee of the appellant Port Trust - Further, granting of such license by appellant is by way of statutory activity under the Major Port Trust Act, and such license fee is not assessable to Service Tax - The appellant relies on the ruling of Tribunal in case of Vishakhapatnam Port Trust 2019-TIOL-2231-CESTAT-HYD , where it was held that license fee and Royalty received by Port Trust towards licensing others to perform certain functions within port area is not liable to Service Tax under the Head "Franchise Services" - Similar view have also been taken by bench of this Tribunal in Cochin Port Trust 2010-TIOL-1762-CESTAT-BANG which have been further affirmed by High court - The issue is no longer res integra in view of said decisions and the same has been decided in favour of assessee by Hon'ble Kerala High Court in the case of Cochin Port Trust - Accordingly, the impugned order is set aside: CESTAT
- Appeal allowed: BANGALORE CESTAT
2020-TIOL-1363-CESTAT-BANG
Sri Kumaraswamy Mineral Exports Vs CCE, C & ST
ST - Karnataka High Court in the case of ADECCO Flexione Workforce Solutions Ltd. - 2011-TIOL-635-HC-KAR-ST has categorically held that when service tax and interest for delayed payments is made before the issue of SCN, the authorities shall not serve any notice under sub-section (1) of Section 73 of Finance Act, 1994 In view of the above, the obvious conclusion is that in the first place, the SCN itself was unnecessary and duty and interest having paid voluntarily, the Revenue cannot allege suppression or fraud and, therefore, the penalty cannot be sustained for which reason the impugned order is set aside - Appeal allowed: CESTAT [para 4, 5]
- Appeal allowed: BANGALORE CESTAT
2020-TIOL-1362-CESTAT-MUM
Frame Movie Pvt Ltd Vs CGST & CE
ST - The assessee is engaged in providing 'Business Auxiliary Service' and entered into an agreement with Shandaar UK Ltd., a company incorporated in U.K. - They sought refund of accumulated Cenvat credit for the period from October 2014 to September 2015 in terms of Rule 5 of CCR, 2004 r/w Notfn 27/2012-C.E. (N.T.) - Same was rejected on the ground that the services provided by assessee are not to be considered as 'export of service' - CBEC vide Guidance Note dated 20th June 2012, had laid the conditions which are to be satisfied for a service to be designated as export of service - The service provided by assessee satisfies all the conditions and hence, is an export of service - The assessee is situated in taxable territory, the recipient of service is located outside India, the service provided by assessee does not fall under negative list, the place of provision of service as per Rule 3 of POPS Rules, 2012 is outside India, the payment has been received by assessee in convertible foreign exchange and the assessee and service recipient are separate legal entities - However, for removal of doubt, it is pertinent that the service provided by assessee must at the same time also not qualify as intermediary service - The service provided by assessee has been provided on its own account and therefore, does not qualify as intermediary service - The Advance Ruling in case of M/s Godaddy India Web Services Pvt. Ltd. - 2016-TIOL-08-ARA-ST also aids the case of assessee, wherein it was held that 'support services' from vendors used for providing main service to the service receiver are not intermediary services - In respect of services that the Adjudicating Authority had held to have no nexus with the output service, it is found that the services were availed for right to use certain footage in the film, which were brought from an online vendor database and to enable the assessee to undertake production work - Therefore, such services were in relation to output service provided by assessee and therefore, are input services as per CCR, 2004 - In respect of credit availed on the basis of three invoices amounting to Rs. 60,578/- which were not issued in favour of assessee, it is found that as such invoices were not issued in favour of assessee, it is not open to them to avail credit on the basis of such invoices - Therefore, the credit availed to the extent of Rs. 60,578/- is denied: CESTAT
- Appeal partly allowed: MUMBAI CESTAT
CENTRAL EXCISE
2020-TIOL-1521-HC-MAD-CX Ramco Cements Ltd Vs CESTAT
CX - The present appeal was filed against findings of the Tribunal in CENVAT credit claimed by the assessee - The assessee claimed that the Tribunal was working on an erroneous interpretation of the definition of "Input Service" as defined under Rule 2(1) of the CCR 2004 - The assessee was also aggrieved with the orders of the Tribunal in remanding the matter back to the lower authorities, more so where additional evidence had been put forth by the assessee.
Held - The assessee lost opportunities before three authorities, namely the AO, the Commr.(A) and the CESTAT, all of whom are fact finding authorities and could have allowed the evidence brought on record by the assessee to examine its claim for CENVAT credit - Hence instead of answering the questions raised by the assessee at this stage, without there beig any findings on merits by the authorities, it is appropriate to remand the matter to the Commr.(A), subject to the assessee depositing a sum of Rs 50000/- before the Department, whereupon the appeal would restored before the Commr.(A) for reconsideration on merits: HC
- Case remanded: MADRAS HIGH COURT
2020-TIOL-1361-CESTAT-HYD
Arani Agro Oil Industries Ltd Vs CC, CE & ST
CX - The assessee is engaged in processing refined edible oils like palmolein oil and refined palm oil - One of their final products is RBD Palm Stearin which they manufacture from refined palm oil - They were earlier clearing this product classifying it under CETH 1511 9090 and claiming the benefit of exemption notfn 03/2006- CE - CBEC had issued Circular 81/2002-CUS regarding classification of the product - It was clarified that fractions of palm oil having the presence of triglycerides of fatty acids would merit classification under Chapter 15 and products which are free from fatty acids would be classifiable under Chapter 38 - As the assessee's product did not contain triglycerides they classified their product under CTH 1511 - Thereafter w.e.f. 28.02.2005 a specific entry has been made for Palm Stearin under Chapter 38 - Even after the introduction of this specific entry in the Tariff, assessee continued to classify the product under Chapter 15 placing reliance on some previous orders of Tribunal - The issue reached finality at the hands of Apex Court in JOCIL Ltd 2010-TIOL-116-SC-CUS and it has been held that Palm Stearin is classifiable under CTH 3823 and not under CTH 1511 - The Apex Court also held that CBEC Circular of 2002 would be of no relevance as the Tariff has been changed subsequently with introduction of 8 digit classification w.e.f. 28.02.2005 - Following the judgment of Apex Court, CBEC issued Circular No. 32/2011 withdrawing its earlier circular of 2002 - In view of the settled decision, the demands have been raised by revenue in SCN and confirmed by impugned order invoking extended period of limitation - Thus, following the said judgment of Apex Court, it is held that the assessee's product is classifiable under CTH 3823 and not under CTH 1511 as claimed by assessee - Consequently, the exemption notification claimed by assessee is also not applicable as the relevant entry pertains to only goods falling under Chapter Heading 1507 to 1515 - Clearly the assessee's product falling under CTH 3823 is not covered - There is no evidence of fraud, collusion, wilful misstatement or suppression of facts or violation of the Act or Rules with intention to evade payment of duty - All that can be said against the assessee is that they made a wrong claim of classification based on their own arguments, although, consequent upon the decision of Apex Court, the assessee's classification is not correct - The entire demand is based on the information provided by assessee in their ER-1 returns - Making a wrong claim of classification, per se, is neither fraud nor collusion nor wilful misstatement nor suppression of any facts - It is just a wrong claim - If the claim is wrong in the ER-1 returns, it was open for the revenue to have raised demand by issuing a SCN immediately - Therefore, there is no ground for invoking extended period of limitation: CESTAT
- Appeal allowed: HYDERABAD CESTAT
2020-TIOL-1360-CESTAT-HYD
Farmax India Ltd Vs CC, CE & ST
CX - The assessee manufactures coconut oil, tooth paste, soaps and detergents - The Officers of Central Excise, on receiving intelligence that the assessee was not properly discharging central excise duty and not maintaining books of accounts properly, searched the factory premises of assessee and found some discrepancies - The SCN was also proposed to be issued to Shri Y.V.L.N. Prasad, Accountant; Shri K.B. Prasanth Reddy, Executive Director; Shri Malla Reddy, Executive Director and Shri M. Srinivasa Reddy, Chairman & Managing director of assessee to explain why personal penalties under rule 26 of CER, 2002 should not be imposed upon them, however, the SCN was not issued to any of the aforesaid individuals but was only issued to the assessee - Out of the four items of demand, three have already been paid by assessee and they are not disputing those demands - The fourth demand is only on the ground that the invoices were not issued in the name of assessee - After recording that it was indeed a merger of company as per the order of High Court as per which the assets and liabilities of merged company were transferred to the transferee company i.e. the assessee and after recording that CENVAT Credit cannot be denied to them, the First appellate authority sought to deny it only on the ground that the assessee should have approached the authorities to obtain permission for availing the CENVAT Credit, in terms of the proviso to Rule 9(2) of CCR 2004 - The name of consignee is clearly given in the invoice and the consignee could have availed the CENVAT Credit - All assets and liabilities of consignee have, by virtue of the order of the merger issued by High court, been transferred to the assessee - Therefore, there is no reason or requirement for assessee to again approach the Asst. Commissioner or Dy. Commissioner to take permission to take credit of the goods which have been received - As far as the imposition of penalties under section 11AC upon assessee is concerned, Tribunal do not find any element necessary to invoke either the extended period of limitation for demanding under section 11A or imposing penalty under Section 11AC - The basis of entire demand is ER-1 returns and the invoices produced by assessee themselves except to the extent of shortage noticed during physical verification of stock - The duty involved in such shortage is Rs. 6,647/- only and it is submitted that it is on account of damage caused by the rats - No reason found to impose any penalty on account of this shortage - Therefore, all penalties are set aside: CESTAT
- Appeal allowed: BANGALORE CESTAT
2020-TIOL-1359-CESTAT-BANG
Maieco Resins & Chemicals Vs CCT & CE
CX - The assessee, a SSI unit is engaged in manufacture of chemicals such as acrylic resins and construction chemicals and are clearing their products on payment of central excise duty after crossing SSI limit of Rs.150 lakhs and also availing the facilities of CENVAT credit as per CCR, 2004 - Initially during the disputed period, assessee have availed the credit and paid the duty through CENVAT credit which was in violation of Rule 8(3A) of CCR - Subsequently, the Department realized this fact and thereafter the Superintendent of Central Excise vide his letter directed the assessee to pay the amount in cash along with interest and on the direction of Department, assessee paid the same and thereafter took the recredit in CENVAT credit account - Further, both the authorities have wrongly held that assessee have taken credit on the basis of challan which is not a valid document to take CENVAT credit as per Rule 9 of CCR - The Tribunal in case of Total Environment Woodwork P. Ltd. on identical facts has held that once it is proved that the assessee has paid the duty twice once through CENVAT credit and again in cash along with interest, then the assessee is well within his right to take the recredit of the same - In view of this, the impugned order denying the recredit is not sustainable in law and therefore the impugned order is set aside: CESTAT
- Appeal allowed: BANGALORE CESTAT
CUSTOMS
2020-TIOL-148-SC-NDPS-LB
Rizwan Khan Vs State Of Chhattisgarh
NDPS - Appellant no.1 has been convicted for the offence under Section 20(b)(ii)(B) of Narcotic Drugs & Psychotropic Substances Act, 1985 and sentenced to undergo five years rigorous imprisonment and fine of Rs.25,000/- - appeal filed against the order of the High Court of Chhattisgarh.
Held:
+ It has been established and proved that the samples which were seized and sealed were sent to the FSL. There seems to be some clerical error in numbering of sample in memorandum of Superintendent of Police and the same was mentioned as ‘A1'. However, it has been established and proved that the samples which were seized and sealed from Rizwan were sent to the FSL. [para 9.2]
+ Insofar as the submission on behalf of the accused that as PW4 – J.K. Sen who recorded the FIR, he himself was the investigating officer and therefore the trial is vitiated is concerned, initially counsel appearing on behalf of the accused made the above submission relying upon the decision of this Court in the case of Mohan Lal (2018-TIOL-381-SC-NDPS) - However, in view of the recent decision of this Court in the case of Mukesh Singh (2020-TIOL-144-SC-NDPS-CB) overruling the decision of this Court in the case of Mohan Lal (supra), counsel appearing for the accused has not pressed the above ground. Even otherwise, it is required to be noted that in the present case the aforesaid issue does not arise as after the FIR was recorded by Shri J.K. Sen, PW4, thereafter the case was investigated by Ashish Shukla, PW5. Therefore, on facts, both the complainant and the investigating officer were different. [para 10]
+ It is required to be noted that in the present case the appellant and the other accused persons were found on the spot with the contraband articles in the vehicle. To prove the case under the NDPS Act, the ownership of the vehicle is not required to be established and proved. It is enough to establish and prove that the contraband articles were found from the accused from the vehicle purchased by the accused. Ownership of the vehicle is immaterial. What is required to be established and proved is the recovery of the contraband articles and the commission of an offence under the NDPS Act. Therefore, merely because of the ownership of the vehicle is not established and proved and/or the vehicle is not recovered subsequently, trial is not vitiated, while the prosecution has been successful in proving and establishing the recovery of the contraband articles from the accused on the spot. [para 11]
+ Considering the object and purpose of the enactment of the NDPS Act and the fact that the sentence provided under the Act for the offence in question is rigorous imprisonment for a term which may extend to 10 years and with fine which may extend to one lakh rupees and the Court has imposed sentence of five years rigorous imprisonment only, the prayer to take a lenient view is rejected as the Special Court itself has taken a lenient view. [para 12]
+ Both the courts below have rightly convicted the accused for the offence under Section 20(b)(ii)(B) of the NDPS Act - Bench is in complete agreement with the findings recorded by the Special Court and confirmed by the High Court and the conviction recorded by both the courts below. Bench sees no reason to interfere with the conviction of the accused for the offence under Section 20(b)(ii)(B) of the NDPS Act.
- Appeal dismissed: SUPREME COURT OF INDIA
2020-TIOL-1358-CESTAT-MUM
EIH Associated Hotels Ltd Vs CC
Cus - The assessee had imported two golf carts with accessories under licence issued under SFIS availing exemption of Customs Notfn 92/2004-Cus. by debiting the said SFIS scrip - In terms of FTP 2004-2009 as amended in RE-2006, utilization of duty credit earned under SFIS was not permitted for payment of duty on vehicles even if such vehicles were freely importable under ITC (HS) - A SCN was issued to assessee proposing confiscation of goods under Section 111(d) and 111(o), recovery of duty foregone along with interest and imposition of penalty under Section 112 of Customs Act, 1962 - When the original authority confirmed the demand and confiscated the goods with a redemption fine, assessee filed the appeal before Commissioner (A) who set aside the order passed by adjudicating authority and directed the same to decide the case afresh as per DGFT guidelines - In spite of this specific direction, the original authority had still not followed the guidelines and clarifications issued by DGFT and had wrongly come to the conclusion that the DGFT guidelines and the clarifications are not binding on the Customs authorities - The original authority confirmed the demand against the assessee on the same ground and the Commissioner (A) also affirmed the order of the original authority by holding that the guidelines and the clarifications of the DGFT are not binding on the Customs authorities - Since the department had not challenged the said order, the original authority as well as the appellate authority cannot go beyond the direction issued by the Commissioner (A) - The DGFT has clarified by issuing various clarifications to the effect that golf carts do not come under restricted category of vehicles, which is stated in Foreign Trade Policy - The licensing authority i.e. DGFT, has not taken any action against assessee for wrongly availing the benefit under SFIS nor did they take any steps against the assessee - Hence, the Customs authorities cannot refuse exemption to the assessee - The impugned order is set aside: CESTAT
- Appeal allowed: MUMBAI CESTAT
2020-TIOL-1357-CESTAT-MUM
Hindustan Petroleum Corporation Ltd Vs CCE
Cus - The short issue involved for determination is, whether the assessee is entitled to refund of customs duty paid during September, 2004 to April, 2005 - The assessee had imported commercial butane (Liquefied Petroleum Gas) classifying it under Chapter heading 2711.1300 of CTA, 1975 on payment of applicable BCD of 10% - Two amended notifications of the basic notfn 21/02-Cus were in force during the period namely, Notfn 82/04-Cus and 11/05- Cus - In both amending exemption notfns 82/04-Cus and 11/05-Cus, concessional rate of duty + Nil rate of duty as the case may be prescribed to be applicable only to Liquefied Petroleum Gases falling under Chapter 2811.1900 - There was no mention of Chapter heading 2711.1300 as declared by assessee while importing commercial butane (Liquefied Petroleum Gas) - Applying the principles of strict interpretation, the exemption notification cannot be made applicable to the clearances of commercial butane (Liquefied Petroleum Gas) during the said period - Besides, Tribunal also agree with the contention of Revenue that in absence of successfully challenging the assessment order, correcting the classification of commercial butane to that of Liquefied Petroleum Gases by filing necessary appeal before higher forum, the methodology followed by filing the refund claim is contrary to the principles of law laid down by Supreme Court in Priya Blue Industries' case 2004-TIOL-78-SC-CUS , which has been recently upheld in ITC case 2019-TIOL-418-SC-CUS-LB - Tribunal is concerned with the period prior to 2.5.2005 where under the notfns did not contain all the three chapter sub-headings like Entry No. 75E of Notfn 37/2005 Cus., both notfns 82/2004 Cus and 11/2005 Cus. mentioned the Chapter sub-heading 27111900 only and the description of goods as Liquefied Petroleum Gas only - Besides, the principle of interpretation of an exemption notification is now well settled by Supreme Court in Dilip Kumar & Company's case 2018-TIOL-302-SC-CUS-CB ; it needs to be construed strictly - In these circumstances, Tribunal do not find relevance of said judgment of Tribunal in deciding the present dispute - Impugned order rejecting the refund claim is sustained and the appeal being devoid of merit, accordingly rejected: CESTAT
- Appeal rejected: MUMBAI CESTAT
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