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SERVICE TAX
2020-TIOL-1404-CESTAT-DEL
Cummins Technologies India Pvt Ltd Vs CC, CE & ST
ST - Condition No. 3(f)(ii) under Notification No. 40/2012-ST provides for the unit in a SEZ claiming exemption by way of refund, to have paid the amount indicated in the invoice/ bill or as the case may be, challan, including the service tax payable, to the person liable to pay the said tax or the amount of service tax payable under reverse charge, as the case may be, under the provisions of the said Act - Authorities below have erred in misconstruing the condition - Admittedly, appellant have paid the service tax under reverse charge and produced the challan; they have rightly discharged the service tax as recipient of service in terms of 2nd proviso to Rule 7 of the Point of Taxation Rules - There is no such essential condition of payment of amount to the service provider - Accordingly, the appeal is allowed with consequential benefits - Adjudicating Authority is directed to grant the refund of Rs.11,23,911/- within a period of 45 days from the receipt of this order alongwith interest as per rules: CESTAT [para 15 to 17]
- Appeal allowed: DELHI CESTAT
2020-TIOL-1403-CESTAT-KOL
Acclaris Business Solutions Pvt Ltd Vs Commissioner of CGST & CE
ST - Refund - Rule 5 of CCR, 2004 - Lower authority has allowed refund of Rs.4,73,929/- and rejected the balance refund of Rs.3,47,183/- - While arriving at the total turnover, they have taken the aggregate of the value of export invoices for which payment has been received (Rs.6,79,78,169/-) and the value of export invoices for which payment has not been received in the relevant period (Rs.4,62,61,441/-), i.e. total Rs.11,42,39,610/- in the denominator, whereas, in the numerator, they have considered Rs.6,79,78,169/- i.e. the value of export services as above.
Held: In the view of the Bench, in both the numerator and denominator, the amount of export turnover have to be considered i.e. Rs.6,79,78,169/- when there is no domestic services rendered by the assessee appellant inasmuch as the "value of all other services" would be 'NIL' in the given case - There is no reason to consider in the aggregate of the value of export turnover, payment of which has been received and those for which payment has not been received, since not required in the prescribed formula above - When the value of export services has been considered for which payment has been received, in that case, the refund is automatically allowed to that extent and, therefore, there is no further need to add the value for which payment has not been received since not required as per the formula - If at all, the contention of the lower authority is accepted, the assessee will never be allowed refund of the "Cenvat credit amount availed in the relevant period" inasmuch as the refund in the subsequent period would be allowed by considering the 'net Cenvat Credit' availed in that period - That is neither the intention of the law nor prescribed in the formula above - refund claim of Rs.3,47,183/- which has been rejected, is admissible - appeal allowed with consequential relief: CESTAT [para 8, 9]
- Appeal allowed: KOLKATA CESTAT
CENTRAL EXCISE
2020-TIOL-1407-CESTAT-DEL
Rajasthan Prime Steel Processing Center Pvt Ltd Vs CCE & ST
CX - The assessee is engaged in manufacture of automobile parts and clearing the same on payment of duty - They entered into an agreement with Honda Cars India Limited for supply of automobile parts - For manufacture of certain parts, pressing was also required - As assessee was not having pressing facility in their premises, they sent the semi-finished goods to M/s. Honda for job work - The issue emerges is that whether the assessee is liable to pay duty on the scrap, which have been generated at the end of job worker - Admittedly, the job worker has paid duty on the scrap, which is generated during course of job work - As duty has already been paid on the said scrap, therefore, no duty is payable by the assessee - Moreover, similar issue has been dealt by Tribunal in case of National Engineering Industries Ltd. , wherein this Tribunal held that waste and scrap generated by job worker while processing the goods sent by the principal manufacturer, the Principal manufacturer is not liable to pay duty on such waste and scrap - The High Court of Bombay in case of Rocket Engineering Corporation Ltd. 2006-TIOL-442-HC-MUM-CX has also held that the principal manufacturer is not required to pay duty thereon - Therefore, as the scrap generated at the end of job worker has already suffered duty in job worker's end therefore, the assessee is not required to pay duty thereon - The impugned order is set aside: CESTAT
- Appeal allowed: DELHI CESTAT
2020-TIOL-1406-CESTAT-AHM
Yashasvi Yarns Ltd Vs CCE & ST
CX - The assessee, prior to December, 2007 was availing exemption under Notfn 29/2004-CE - From December onwards, they started availing exemption under notfn 30/2004-CE according to which there is nil rate of duty - On the date of start availing the notfn 30/2004-CE, assessee had Cenvat Credit accumulated balance in their Cenvat Account, which department proposed to reverse - Out of the said balance of Rs. 71,66,739/-, assessee utilized the Cenvat Credit of Rs. 41,228/- - The adjudicating authority has ordered for reversal of accumulated credit on the ground that the assessee was availing the exemption notfn 30/2004-CE, therefore, required to reverse the credit in terms of Rule 11(3)(ii) - Such condition for reversal is only in respect of exemption notification, which is absolute exemption, whereas notfn 30/2004-CE contained condition of non availment of Cenvat Credit in respect of input, input service and capital goods, therefore the exemption is not absolute exemption - Hence, as per rule 11 of Cenvat Credit is not required to be reversed - On the identical issue, Tribunal in case of M/s. Patodia Filaments Pvt. Ltd. 2019-TIOL-1696-CESTAT-AHM considered the issue - It can be seen from the said decision of Tribunal being involved identical issue, the Cenvat Credit was held to be admissible and the same was not required to be reversed - Following the ratio of the said Judgment, the impugned order is set aside: CESTAT
- Appeal allowed: AHMEDABAD CESTAT
2020-TIOL-1405-CESTAT-KOL
Byrnihat Ispat Pvt Ltd Vs CCE & ST
CX - Assessee is having two units - Unit – I commenced commercial production in 2001 and is engaged in manufacture of MS Ingots, whereas Unit – II commenced commercial production in 2004 and is engaged in manufacture of MS Rods - Both the units are located at the same compound in Byrnihat, Meghalaya but hold separate Central Excise Registration since their inception - The allegation was that both the Units resorted to paper clearances for fraudulently availing the benefit of Notfn 32/1999- CE resulting in erroneous grant of refund to Unit – I and Unit – II recoverable under the proviso to Section 11A r/w Section 11D of CEA, 1944 along with interest and penalty including personal penalty upon its Director under Rule 26 of Central Excise Rules for the alleged omissions and commissions - The adjudicating authority has himself accepted that the buyers of finished goods from Unit – II were non-existent and that no duty incidence could be passed on to such non-existent buyers while dropping invocation of Section 11D and thereby, ruling out the question of any double benefit being claimed - The refund sanctioning authority has caused necessary verification and satisfied itself as to the existence of factory, commencement of commercial production therefrom and the eligibility of assessee to refund while sanctioning the refund under the said notification - It is now settled by the decision of Guwahati High Court in the Amalgamated Plantations Private Limited 2016-TIOL-3388-HC-GUW-CX that refunds processed under Notfn 32/99 are also covered by Section 11B of the Act - When such refund orders were not reviewed or appealed against under Section 35E(2) of the Act, and therefore, attained finality, no parallel proceedings for recovery of such alleged erroneous refund under Section 11A of the Act was maintainable as something which could not be done directly cannot be permitted indirectly either - This legal question had also fallen for consideration before the Madras High Court in Eveready Industries India case 2016-TIOL-676-HC-MAD-CX and was answered in favour of assessee and against the revenue - The adjudicating authority has clearly passed a non-speaking order by not specifically dealing with this averment of assessee - Given that production is not disputed and neither was any shortage detected on physical verification or any allegation of clandestine clearance, the charge of paper clearance of the produced goods cannot sustain in vaccum - The contentions of assessee that the movement of goods was intercepted at Byrnihat Check Gate duly manned by the Sales Tax Official has been brushed aside for having not been relied upon in the Notice - However, the adjudicating authority should have enquired in the said matter before discarding the contentions as the certificates issued by the Superintendent of Taxes, Byrnihat Check Gate duly supports the movement - Moreover, the question of any interception at the sales tax check gate does not arise in respect of supplies from Unit I to Unit II located within the same compound in Byrnihat itself - The impugned Order cannot be sustained and is accordingly set aside on multiple grounds: CESTAT
- Appeals allowed: KOLKATA CESTAT
CUSTOMS
2020-TIOL-1572-HC-DEL-CUS
Agilent Technologies India Pvt Ltd Vs UoI
Cus - Petition is filed seeking a direction to the respondent no.2 to issue instructions to jurisdictional customs officers to expeditiously finalize provisional assessment in respect of all goods imported by the Petitioner at different customs locations i.e. Delhi, Bengaluru, Chennai and Hyderabad pending since May 2012 - Petitioner further prays for quashing of the Letter dated 17th January, 2020 issued by the Respondent No. 5, whereby a request was made to Respondent No. 3 to appoint a common adjudicating authority in accordance with paragraph 9.2 of the Circular No. 5/2016-Cus dated 09.02.2016 to adjudicate the present matter and till then, keep the adjudication proceedings in abeyance - Petitioner also seeks a direction to the respondents to expeditiously adjudicate SCN dated 10 th July, 2018 in a time-bound manner - Counsel for respondent nos. 2, 3, 4 & 5 states that they have received confirmation from D.C. SVB, New Delhi to the effect that no notice from other customs locations have been issued to the petitioner and accordingly adjudication proceedings shall be commenced and completed forthwith after affording a reasonable opportunity of personal hearing to the petitioner.
Held: Keeping in view the fact that since only one show cause notice has been issued to the petitioner by Delhi Customs, Court is of the view that the procedure prescribed under paragraph 9.2 of the Circular dated 09th February, 2016 is not applicable to the present case - Consequently, the letter dated 17th January, 2020 issued by respondent no.5 is quashed and the respondent no.2 is directed to expeditiously adjudicate the Show Cause notice dated 10th July, 2018 preferably within a period of six months, in accordance with law - Writ petition stands disposed of: High Court [para 4, 5]
- Petition disposed of: DELHI HIGH COURT
2020-TIOL-1571-HC-AHM-CUS
Sundeep Mahendrakumar Sanghavi Vs UoI
Cus - Any person can be arrested for any offence under the Customs Act, 1962, by the Customs Officer, if such officer has reasons to believe that such person has committed an offence punishable under Section 132 or Section 133 or Section 135 or Section 135A or Section 136 of the Customs Act, 1962, and in such circumstances, the Customs Officer is not obliged to follow the dictum of the Supreme Court as laid in the case of Lalitha Kumari (supra): High Court
Cus - When any person is arrested by an officer of the Customs, in exercise of his powers under Section 104 of the Customs Act, 1962, the officer effecting the arrest is not obliged in law to comply with the provisions of Sections 154 to 157 of the Code of Criminal Procedure, 1973 - The officer of the Customs, after arresting such person, has to inform that person of the grounds for such arrest, and the person arrested will have to be taken to a Magistrate without unnecessary delay - However, the provisions of Sections 154 to 157 of the Code will have no application at that point of time: High Court
Cus - The Customs/DRI Officers are not the Police Officers and, therefore, are not obliged in law to register FIR against the person arrested in respect of an offence under Sections 133 to 135 of the Customs Act, 1962: High Court
Cus - A DRI Officer is a 'proper officer' for the purposes of the Customs Act, 1962 - As the Customs/DRI Officers are not the Police Officers, the statements made to them are not inadmissible under Section 25 of the Evidence Act: High Court
Cus - A Police Officer, making an investigation of an offence, representing the State, files a report under Section 173 of the Code, becomes the complainant, whereas, the prosecuting agency under the special Acts files a complaint as a complainant, i.e. under Section 137 of the Customs Act: High Court
Cus - The power to arrest a person by a Customs Officer is statutory in character and should not be interfered with - Section 108 of the Act does not contemplate any Magisterial intervention - The statements recorded under Section 108 of the Customs Act are distinct and different from the statements recorded by the Police Officers during the course of investigation under the Code: High Court
Cus - The expression 'any person' in Section 104 of the Customs Act includes a person who is suspected or believed to be concerned in the smuggling of goods - However, a person arrested by a Customs Officer because he is found to be in possession of smuggled goods or on suspicion that he is concerned in smuggling goods is not, when called upon by the Customs Officer to make a statement or to produce a document or thing, a person is accused of an offence within the meaning of Article 20(3) of the Constitution of India - Where a Customs Officer arrests a person and informs that person of the grounds of his arrest, for the purposes of holding an inquiry into the infringement of the provisions of the Customs Act which he has reason to believe has taken place, there is no formal accusation of an offence - The accusation could be said to have been made when a complaint is lodged by an officer competent in that behalf before the Magistrate - The arrest and detention are only for the purpose of holding effective inquiry under Sections 107 and 108 of the Customs Act with a view to adjudging confiscation of dutiable or prohibited goods and imposing penalty: High Court
Cus - The main thrust of the decision in the case of Om Prakash (2011-TIOL-95-SC-CX-LB) to ascertain whether the offence was bailable or non-bailable, was on the point that the offence being non-cognizable, it had to be bailable - In other words, Om Prakash (supra) deals with the question, "whether the offences under the Customs Act, 1962, and the Central Excise Act, 1944, are bailable or not ?" - At the time when the decision in Om Prakash (supra) was rendered, an offence under the Customs Act was not cognizable - So also, the categorization of cases which are non-bailable and cases which are bailable was not there before the amendment of Section 104 by Act No.23 of 2012 and Act No.17 of 2013 respectively: High Court
Cus - Notification dated 7th July 1997 issued by the Central Board of Central Excise makes it clear that all the officers of the Directorate of Revenue Intelligence are appointed as the officers of the Customs - Under the Notification dated 7th March 2002, the officers of the DRI have been given the jurisdiction over the whole of India - In such circumstances, the submissions of the writ-applicant as regards the territorial jurisdiction of the DRI office at Vapi to summon the writ-applicant under Section 108 of the Customs Act, 1962, pales into insignificance: High Court
Cus - Although the allegations of harassment at the end of the DRI officials at Vapi are not substantiated by any credible material on record, yet there should not be any unnecessary harassment to a person summoned for the purpose of interrogation under Section 108 of the Customs Act, 1962: High Court
- Petition disposed of: GUJARAT HIGH COURT
2020-TIOL-1567-HC-MUM-CUS
Mangalnath Developers Vs UoI
Cus - Petitioners seek a direction to the respondents to give effect to the order-in-appeal dated 29.11.2019 and to allow clearance of the imported watch covered by bill of entry dated 02.01.2019 on payment of duty on the declared value.
Held: [para 19 to 22, 23.5, 24 to 27, 29.1, 30 to 34]
+ Short point for consideration is whether respondent No.3 is justified in not releasing the imported watch of the petitioner in terms of the order-in-appeal dated 29.11.2019 and insisting on provisional release of the same subject to the conditions mentioned in the letter dated 04.02.2020.
+ When the petitioners themselves sought for provisional release of the imported watch and the same having been granted by the respondents subject to fulfillment of the conditions mentioned in the letter dated 04.02.2020, whether it is open to the petitioners to seek the relief as is being sought in the present proceeding?
+ Respondent No.3 noted that as against the declared value of the imported watch at Rs.42,32,845.00, online price of such brand of watches ranged from Rs.2,09,02,328.00 to Rs.2,69,82,814.00. A view was taken that since the price of the watch available on websites is much higher than the declared price, the transaction in question involved an abnormal discount or abnormal reduction from the ordinary competitive pricing. Therefore, it was held that the declared value of the imported watch was liable to be rejected under Rule 12 of the Customs Valuation Rules, 2007 and the same was required to be determined by proceeding sequentially in accordance with Rules 4 to 9 of the said Rules. After considering those Rules it was found that Rules 4 to 8 were not applicable as the value of the imported watch could not be determined in accordance with the said Rules. Therefore Rule 9 was applied whereafter value of the imported watch was re-determined at Rs.1,00,49,150.00 after rejecting the declared value.
+ When the petitioners preferred appeal before the Commissioner of Customs (Appeals), by the order-in-appeal dated 29.11.2019 the appellate authority set aside the order-in-assessment and directed that the bill of entry should be assessed at the invoice price and the appeal was allowed.
+ Bench does not find presence of any departmental representative in the appeal hearing though appellants i.e., the petitioners were duly represented. It does not appear that any objection or written submission were filed on behalf of the respondents before the appellate authority.
+ From the affidavit of the respondents, it is seen that the order-in appeal dated 29.11.2019 was received by the respondents on 18.12.2019. Committee of Commissioners took the decision on 05.03.2020 that the Customs Department should file appeal against the order-in-appeal before CESTAT whereafter the appeal along with stay application were filed on 09.06.2020 before CESTAT, Mumbai Bench. Be that as it may, since the Customs Department has preferred appeal before the CESTAT, Bench refrains from expressing any opinion on merit.
+ However, the moot point to be noted is that the period of limitation of three months commences from the date on which the order sought to be appealed against is communicated and not from the date of decision of the Committee of Commissioners. [Ganesh Benzoplast Limited Vs. Union of India, decided on 02.09.2020 = 2020-TIOL-1520-HC-MUM-CUS , relied upon]
+ It is evident that in the present case the limitation period of three months which commenced on 18.12.2019 had expired on 18.03.2020 though under sub-section (5) of section 129-A of the Customs Act, the limitation period is extendable if sufficient cause is shown.
+ To avail relaxation in terms of the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020, the limitation period must expire within the period from 20.03.2020 to 29.06.2020. Insofar the instant case is concerned, Bench has already noted that the period of limitation had expired on 18.03.2020. Therefore, reliance placed by the respondents on the 2020 Ordinance is misplaced and the said ordinance can be of no assistance to the respondents.
+ This is not to say that the Customs Department is remedy-less. As already discussed above, sub-section (5) of Section 129-A provides for extension of the limitation period if sufficient cause is shown. Customs Department would also be entitled to the benefit of the order dated 23.03.2020 passed by the Supreme Court in Suo Motu Writ Petition (Civil) No.3 of 2020. Above analysis has been made only to highlight the lackadaisical approach of the respondents. Respondents have not shown any urgency at all in the matter. Nothing has been placed on record to show that respondents had moved or attempted to move CESTAT for even a notice, not to speak of stay. + Principles of judicial discipline require that orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. If this healthy rule is not followed, the result will be undue harassment to the assessees and chaos in administration of tax laws.
+ Besides, such non-implementation or non-compliance of appellate order strikes at the very root of administrative discipline and may have the effect of severely undermining the efficacy of the appeal remedy provided to a litigant under the statute. Had the respondents shown some urgency in the matter, the Court under Article 226 of the Constitution of India may have considered the request of the respondents for further time but in the present factual context, such request is unacceptable.
+ When the order-in-assessment has been set aside by the appellate authority, the original order no longer survives until and unless the order-in-appeal is either stayed or in the ultimate analysis itself is set aside. Therefore, basing upon the order-in-assessment which no longer survives, it is not open to the departmental authorities to grant provisional release of the goods in question that too subject to fulfillment of certain conditions which are clearly beyond the order-in-appeal.
+ In the instant case, admittedly there was no seizure and secondly, assessment of the goods in question was not pending consideration. Assessment was already made by way of the order-in-assessment dated 25.03.2019. It is another matter that even that order-in-assessment has been set aside by the order-in-appeal. Since there is neither any seizure nor pendency of proceeding before the adjudicating authority, question of application of section 110-A does not arise. + In such circumstances, even if any prayer is made by the owner seeking provisional release of the good (imported watch) in question though such provisional release is not contemplated under the law, that cannot be a ground to fasten or compel the owner from accepting the provisional release of the good in question with conditions despite there being an appellate order in favour of the owner. Both the objections raised by the respondents are legally and factually unsustainable and are rejected.
+ Respondent Nos.2 and 3 are directed to release the imported watch of the petitioners forthwith in terms of the order-in appeal dated 29.11.2019.
- Petition allowed : BOMBAY HIGH COURT
2020-TIOL-1408-CESTAT-MUM
Prashant Trading Company Vs CCE
Cus - The assessee has imported consignment of 'float glass' and 'ultra float glass' sourced from Saudi Arabia and China, seeking exemption from duties of customs including anti-dumping duty, otherwise leviable, on the two shipments from China by recourse to notfn 40/2006-Cus - To qualify for exemption, intended to operationalize the 'duty-free import authorization (DFIA)' scheme in FTP notified under FTDR Act, 1992, the assessee procured licenses originally issued to M/s MP Sons and M/s Magna Industries & Exports Ltd entitling import of, inter alia, 'glazing glass' for export of 'leather goods' and endorsed for transferability by DGFT upon fulfilment of prescribed obligation - Consequent upon statements furnished by various manufacturers in industry and the expert opinion obtained from Central Leather Research Institute (CLRI), to the effect that 'glazing glass' is in the form of a solid cylindrical mounted on glazing machines to give required finish for leather, Revenue sought appropriate remedial action by DGFT vide letter dated 26th November 2012, to disqualify the import of 'glass' of any other description by holders of such licences - Based on these developments, SCN came to be issued for initiation of proceedings culminating the impugned order - Demand of duty has been crystalised with reference to the advisory of the Norms Committee in January 2013 permitting only the import of glass of specific dimension and of cylindrical shape as 'glazing glass' and by holding the withdrawal of earlier clarification, permitting import of 'float glass', to be tantamount to the erasure of that clarification - Admittedly, at the time of import, such clarity was not available to the importer - Furthermore, there is no allegation that the importer had stretched the description of 'glazing glass' on its own and it is not denied that the clarification of the Advance Licensing Committee in 2002 could have prompted the importer to seek clearance of 'float glass' against the said licences - The existence of officially communicated clarification that was so specific and valid at the time of import erases the taint of suppression or misrepresentation in declaration for clearing of impugned goods - The decision of High Court of Bombay in re Gaurav Enterprises 2005-TIOL-241-HC-MUM-CUS precludes the scope for invoking extended period in absence of ingredients that are a prerequisite as well as the allegation of misdeclaration merely for having claimed the benefit of an exemption notification - This suffices to set aside the demand under section 28 of Customs Act, 1962 and penalty imposed under section 114A of Customs Act, 1962 - Imports, if any, made against the impugned licences after issue of clarifications of 2013 are on a footing entirely different from those made before - The impugned order, thus, stands on weak foundations in penalizing past imports - Accordingly, the confiscation as well as imposition of penalties under section 112 and 114AA of Customs Act, 1962 fails - The impugned order is set aside: CESTAT
- Appeals allowed: MUMBAI CESTAT |
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