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SERVICE TAX
2020-TIOL-1649-HC-MAD-ST
Vijayaraja And Company Vs CCE
ST - The assessee-company filed the present petition to challenge an SCN issued to the assessee, proposing to raise duty demand with interest - The assessee assailed the explanation in Notification No.1/2006-ST, claiming the same to be ultra vires of the provisions of the Finance Act 1994.
Held - The present petition emanates from an SCN - As the assessee touched upon certain factual aspects of the case, it is appropriate to rely on the verdict of the Supreme Court in Commissioner of Service Tax & Ors. Vs Bhayana Builders Private Limited & Ors. which is squarely applicable onto the facts of the present case - Hence the matter is remanded back to the appropriate adjudicating authority - The assessee is at liberty to raise objections to the SCN: HC
- Case remanded: MADRAS HIGH COURT
2020-TIOL-1456-CESTAT-MUM
Cosmos Clearing Agencies Vs CCE
ST - The assessee is engaged in providing taxable services under category of "Clearing and Forwarding Agency" - During the disputed period, assessee had entered into the agreement with M/s. Hindustan Unilever Ltd. (HUL) for warehousing the goods on their behalf - The case of department is that though the assessee had discharged the service tax liability in respect of commission/remuneration received from M/s. HUL and reflected such particulars in the ST-3 returns, but did not pay the service tax on reimbursement amount received from such principal on certain expenditure incurred on account of freight, rent, handling and halting charges - It is an undisputed fact on record that over and above the amount agreed upon towards service charges, the assessee did not obtain any monetary benefit for providing any taxable service and that the amount of reimbursement towards the expenses received by assessee towards different charges was not in connection with provision of service under taxable category of C&F Agent service - Thus, such reimbursable amount should not be included in the gross value for the payment of service tax - The constitutional validity of Rule 6 ibid, to the extent it includes reimbursement of expenses in the value of taxable service was challenged before Delhi High Court in case of Intercontinental Consultants and Technocrafts Pvt. Ltd. wherein it is held that Rule 5(1) ibid runs contrary to the provisions of Section 67 ibid and accordingly, declared such Rule as ultra vires - As a corporate entity, the said principal has paid service tax under reverse charge mechanism in terms of Rule 2 (1) (d) of STR, 1994 - In this context, CBEC has clarified that if service tax due on transportation of a consignment has been paid or is payable by a person liable to pay service tax (recipient of service), then service tax should not be charged for the same amount from any other person, to avoid double taxation - Hence, amount reimbursed by M/s. HUL to the assessee as per the contractual norms should not be included in the gross value for determination of the service tax liability: CESTAT
- Appeal allowed: MUMBAI CESTAT
CENTRAL EXCISE
2020-TIOL-1459-CESTAT-KOL
Hindustan National Glass & Industries Ltd Vs CCGST & CE
CX - This is the second round of litigation before the Tribunal - The adjudicating authority instead of appreciating the ‘modus operandi' of assessee's business and brushing aside all the documentary evidences on record has re-confirmed the demand - On appeal, the Commissioner(A) without going into the merits of case has rejected the appeal for alleged non compliance of mandatory pre-deposit - The Commissioner (A) while rejecting the appeal for non-compliance of pre-deposit under section 35F has also upheld the O-I-O without going into the merits of the case - Further, the Commissioner (A) was of the opinion that the assessee was again required to comply with the provisions of section 35F though it may be the second round of litigation before him - In this regard, the High Court of Delhi in case of Super Tyres Pvt.Ltd. 2005-TIOL-228-HC-DEL-CX have held that once the assessee has made compliance of provisions of section 35F of CEA, 1944, it would be appropriate for authorities concerned to hear the appeal without pre-deposit condition as assessee had already complied with provisions of section 35F and that should be the adequate amount of compliance with provisions of section 35F - Matter is remanded to the lower appellate authority to decide the appeal on merits without insisting on any further pre-deposit: CESTAT
- Matter remanded: KOLKATA CESTAT
CUSTOMS 2020-TIOL-1653-HC-KERALA-CUS Raghavan Palakkal Vs CC
Cus - Petitioner, who has purchased and imported a Toyota Land Cruiser vehicle from Sultanate of Oman, seeks to direct the respondents to calculate customs duty payable to the petitioner's vehicle covered by Exts.P1 to P3 in accordance with Ext.P5 Circular, within such time as may be fixed by this Court - 1st respondent demanded customs duty of Rs.36,28,397/- treating the vehicle as a new one which allegation the petitioner disagrees with.
Held: The question arising in this writ petition is whether bringing of a vehicle by the petitioner under Ext.P1 can be termed as import of a vehicle and even if it cannot be strictly termed as import, is the petitioner eligible to import the said vehicle paying customs duty and availing depreciation benefits in respect of the vehicle? - The issues are mixed questions of law and facts - The Customs Act provides for an appellate mechanism to decide such issues - The petitioner has not availed the same - Therefore, it is only just and proper that the petitioner is relegated to appellate remedy available under the Customs Act at the first instance - Writ petition is disposed of permitting the petitioner to prefer an appeal against Ext.P4 before the Commissioner (Appeals) u/s 128 of the Customs Act, within a period of two weeks, along with a petition to condone the delay - If the petitioner files an appeal along with a petition for condoning the delay, the Commissioner (Appeals) shall condone the delay treating that the petitioner has been bona fide prosecuting his case before this Court - After condoning the delay, the Commissioner (Appeals) shall consider the appeal on merits and decide the appeal finally after giving an opportunity of personal hearing to the petitioner - No coercive steps against the petitioner shall be taken pursuant to Ext.P4 till the issue is decided by the Commissioner (Appeals), if the petitioner prefers appeal: High Court [para 7]
- Petition disposed of: KERALA HIGH COURT
2020-TIOL-1652-HC-KERALA-CUS
Cochin Air Cargo Clearing House Vs CC
Cus - Petitioner is seeking a direction to the respondent to implement Ext.P7 final order of the CESTAT - Counsel for respondent informed that, being aggrieved by Ext.P7 order of the Tribunal, the respondent intends to file a statutory appeal against the said order before a Division Bench of this Court; that the respondent has a period of six months to prefer an appeal before this Court against Ext.P7 order of the Appellate Tribunal, and it is only if they are unsuccessful in the appeal so filed that they would be legally obliged to implement the directions in Ext.P7 order of the Tribunal - When the matter was taken up today, counsel for the respondent was absent and hence this court was inclined to adjourn the matter to next week so as to ascertain whether the respondent had in fact filed the statutory appeal - On being told that the interim prayer was in fact the final relief sought for in the writ petition and could not be granted at the interim stage of the writ proceedings, the petitioner prayed for a disposal of the writ petition itself - Petitioner submitted that the mere fact that the respondent is contemplating the filing of an appeal against Ext.P7 order cannot be a reason for not issuing directions for the implementation of Ext.P7 order.
Held: Petitioner ignores the statutory scheme under the Customs Act that permits a person aggrieved by an order of the Appellate Tribunal, to prefer an appeal before a Division Bench of this Court within a period of six months from the date of receipt of the order of the Appellate Tribunal - It is trite that the appellate remedy being a statutorily conferred one, no litigant can be deprived of the statutorily permitted period for availing the appellate remedy, through coercive steps that effectively curtail the said period - Just as an assessee, who suffers an order of assessment cannot be compelled to fast track an appellate remedy through coercive steps initiated against him before the expiry of the statutory period available to him for approaching the appellate authority, the respondent herein cannot be compelled to implement Ext.P7 order when the statutorily granted time for filing an appeal against the said order is not over - The right of the petitioner to insist on the respondent's complying with Ext.P7 order will arise only in the event of the respondents not filing an appeal within the statutory period provided for the same or if an appeal, when preferred within the said time, is dismissed by the appellate authority - Prudence would dictate, therefore, that this court refrain from issuing peremptory directions at the said stage of the proceedings by following the well settled principles informing the exercise of writ jurisdiction, one of which is that the courts should not issue writs that are futile in nature - prayers in the writ petition are premature and, therefore, petition is dismissed: High Court [para 3, 4]
- Petition dismissed: KERALA HIGH COURT
2020-TIOL-1646-HC-MUM-CUS
Samyak Jewels Pvt Ltd Vs UoI
Cus - Challenge made in this writ petition is to the communication dated 19th April, 2018 of the Directorate of Revenue Intelligence to the Branch Manager, IndusInd Bank, Sangam Complex, Ground Floor, Off Mirza Ismail Road requesting the bank authority not to allow any debit transaction including ATM withdrawal and internet banking from the account of the petitioner - By letter dated 19th April, 2018, the bank authorities were requested by respondent No.2 to provide upto date account statement of the said account, further requesting not to allow any debit transaction including ATM withdrawal and internet banking from the said account - It was mentioned that the information was sought for under Section 108 of the Customs Act, 1962 (Customs Act) - Petitioner contends that such freezing of bank account was without any notice to the petitioner.
Held: Though in the letter dated 19th April, 2018, it was mentioned that the information was sought for under Section 108 of the Customs Act, a perusal of the said provision would show that it does not provide for attachment of any bank account - On the other hand, Bench finds that Section 110 of the Customs Act deals with seizure of goods, documents and things and Sub-section (5) was inserted in the said provision by the Finance (No.2) Act, 2019 with effect from 1st August, 2019 and the same provides provisional attachment of any bank account for a period not exceeding six months with provision for further extension not exceedings six months - This aspect of the matter was gone into by this court in a recent decision in Writ Petition (St.) Nos.5669 of 2020 and other connected cases, decided on September 22, 2020 - 2020-TIOL-1645-HC-MUM-CUS ] - Following the sane, Bench does not find any good reason to sustain the communication dated 19th April, 2018 as more than two years have elapsed since the bank account was frozen - Sub-section (5) of Section 110 speaks of provisional attachment - Dictionary meaning of provisional is 'arranged or existing for the present, possibly to be changed later'; Black's Law Dictionary, Eight Edition, has defined it as 'temporary or conditional', therefore, the statute has provided a definite time line beyond which the attachment becomes bad in law - Consequently, the impugned communication dated 19th April, 2018 is hereby set aside and quashed - Respondents are directed to allow petitioner to operate its bank account with Indus Ind Bank - Writ petition is accordingly allowed: High Court [para 6 to 10]
- Petition allowed: BOMBAY HIGH COURT
2020-TIOL-1645-HC-MUM-CUS
Boxster Impex Pvt Ltd Vs UoI
Cus - IGST/GST Refund - Grievance has been expressed by the petitioner that since the year 2018 the bank account of the petitioner has been frozen; besides refund claim of IGST has not been entertained for more than one year - That apart, an alert has been put on the IEC of the petitioner as a result of which its business has come to an standstill - However, till date no seizure of any goods belonging to the petitioner has been made nor any show cause notice has been issued to the petitioner - Petitioner wrote letters dated 15th May, 2019, 20th May, 2019, 4th February, 2020 and 12th February, 2020 to the office of respondent No.1 for removal of alert against the IEC of the petitioner - Petitioner also wrote to the office of respondent No.1 on the said dates for unfreezing the bank account of the petitioner as well as to allow refund of GST/ IGST - However, since no decision has been taken, writ petition has been filed seeking the reliefs.
Held: Letter from the office of the Principal Commissioner of Customs to the Branch Manager of IDFC Bank was issued on 1st March, 2019 for freezing of the bank account of the petitioner - This was prior to insertion of sub-section (5) in Section 110 with effect from 1st August, 2019, therefore, it is quite clear that this provision could not have been invoked for freezing the bank account of the petitioner - It is evident that the said provision was inserted in the statute with effect from 1st August, 2019 - Besides, from the tone and tenor of the sub-section it is apparent that it is not a procedural provision per se ; rather it is coercive in nature, though the procedure is also laid down for giving effect to the said provision - Being a coercive provision, there has to be strict compliance to the procedure laid down - In such circumstances and having regard to its very nature, such a provision can only have prospective operation and not retrospective operation - In fact, the Finance Act concerned makes it explicit by making the provision effective from a prospective date i.e. from 1st August, 2019 - As per the proviso to sub-section (5) of Section 110, the Principal Commissioner of Customs or Commissioner of Customs can extend such provisional attachment for a further period not exceeding six months; but he must record reasons for such extension and such extension of period has to be informed to the person whose bank account is provisionally attached before expiry of the period so specified - In the absence of such an order in writing respondents could not have provisionally attached the bank account of the petitioner and continued with such attachment even beyond the permissible extended period - Counsel for the respondents could not show any other provision in the Customs Act which empowers or authorizes the customs department to freeze the bank account of a person other than sub-section (5) of Section 110 - Such attachment of bank account of the petitioner on 1st March, 2019 and its continuation thereafter being in breach of Section 110(5) is therefore, without any authority of law - [para 29, 30, 32, 33]
Cus - Alert has been placed on the IEC of the petitioner on the basis of materials which are presently under investigation of the customs department. For the said reason, refund of IGST/GST dues has also been held up - However, Bench feels that the investigation needs to be expedited and taken to its logical conclusion one way or the other because extreme measures such as placing of alert on IEC and withholding of IGST/GST dues can not be continued for an indefinite period - The same cannot be continued adinfinitum merely on the basis of suspicion, howsoever strong such suspicion may be: High Court [para 35]
Cus - Affiant in the said affidavit has described the petitioner as a hardened criminal with the sole objective of looting government revenue - Bench finds that nothing has been mentioned in the affidavit about any conviction of the petitioner in any criminal case or charge-sheeting of the petitioner in any criminal case nor naming of the petitioner as an accused in any first information report - In the absence of such material, referring to any person as a hardened criminal that too in a sworn affidavit filed before the High Court is not proper - The affiant or for that matter any one swearing affidavit before the court should be careful in making averments which in any event should be restrained: High Court [para 36]
Conclusion: [para 37]
(i) Respondents are directed to unfreeze the bank account of the petitioner with IDFC Bank, Andheri (E) Branch forthwith;
(ii) Respondents are also directed to complete the investigation into the allegations against the petitioner within a period of three months;
(iii) Placing of alert on Import Export Code of the petitioner or claim of refund of IGST/GST would be subject to outcome of such investigation.
- Petitions allowed: BOMBAY HIGH COURT
2020-TIOL-1458-CESTAT-AHM
CC Vs JR Roadlines Pvt Ltd
Cus - The assessee imported Flexi Tank Containers and cleared the same under bill of entries for the period 03/01/2011 to 06/06/2012 - The limited issue to be decided is, whether the Flexi Tank Containers imported by assessee is durable in nature and are eligible for exemption under notfn 104/94-Cus -The contention of the Revenue is that since Flexi Tank Container is admittedly used for one time sea voyage and not repeatedly used, it cannot be considered as durable and consequently, the same will not be eligible for exemption under the said notification - The containers once imported and then re- exported after fitting in steel containers and duly filled with liquid cargo itself shows that this entire process is possible only if the container is durable - The said facts are not in dispute even by Revenue - The Revenue's contention is only that the same is not reused and has no repeated use - The Tribunal in a number of judgments held that merely because the container has no repeated use but if the container is durable, the durability of container cannot been negated only for the reason that the same has no repeated use and the benefit of exemption notification has been extended - Apart from the issue of durability, the Adjudicating Authority has also taken a ground for denying the exemption that re-export of Flexi Tank Containers was not done by assessee but by the exporters of liquid cargo and also on the ground that exporters to whom the assessee has sold the Flexi Tank Containers have claimed drawback by factoring in process of Flexi Tank Containers in the exports - This allegation was not raised in SCN - In view of the settled law, any finding given by Adjudicating Authority on the issue which was not raised in SCN has no meaning and the same will stand nullified - In the notification there is no condition that the imported durable container should be re-exported by the importer themselves and also there is no condition regarding the availment of drawback or otherwise - Therefore, otherwise also, on both the counts, the finding of the Adjudicating Authority is firstly not relevant, consequently, will not adversely affect the eligibility of the notfn 104/94-Cus: CESTAT
- Revenue's appeal dismissed: AHMEDABAD CESTAT
2020-TIOL-1457-CESTAT-MUM
Kanungo Ferromet Pvt Ltd Vs CC
Cus - The asssessee had filed bill of entry claiming benefit of concessional rate of duty, covered by serial no. 368 in notfn 50/2017-Cus for the import of 1,48,960 kg of 'heavy melting scrap', classifiable under heading no. 72044900 of First Schedule to CTA, 1975, which the examining authority, was described as 'long cuboid bars with a cylindrical core of copper' and, owing to the unlikelihood of conforming to the declared description subjected to 'positive material identification (PMI)' tests in November 2017 that confirmed the core to be copper (of 99% purity) and the surrounding metal to comprise of iron (99% steel with traces of other metals) - To ascertain the copper content of the impugned imports, samples were drawn from the first consignment and sent to the National Metallurgical Laboratory, Jamshedpur with consent of the importer that the sample was representative of both the consignments - Member (T) observed that t he impugned goods are imported for sale to recyclers - A submission preferred on behalf of assessee is that 'copper' in the cylindrical core could not predominate by weight over the 'steel' in the cuboid surrounding it and that a visual inspection of the surface area of the cross-section suffices to establish so - From the exhibits placed on record, common sense, combined with the knowledge of relative density of steel and copper, would not have it otherwise - If at all, copper, with lower melting point than steel, was, technologically, capable of recovery, that would not have altered the nature of impugned goods for description as 'composite article' for discarding the declared value - Resort to legal fiction afforded by notes in the sections or chapters of the First Schedule to CTA, 1975 for 'breaking the tie' to arrive at fresh classification, cannot, by any stretch, be construed as evidence of deliberate misdeclaration or as impinging upon a commercial agreement in which commercial parlance of trade is the lingua franca of the contract - Discarding of declared value without establishing that the transaction and the contract are at variance is contrary to law as enacted - The impugned order does not dispute that the impugned goods are 'waste and scrap' of one sort or the other - Therefore, whether the note in Section VII is applicable or not, the value declared in the invoice cannot be subject to variation unless the prescriptions in section 14 of Customs Act, 1962 that render the transaction value to be acceptable have not been conformed to - There is no evidence to that effect in the SCN or the impugned order.
In view of difference of opinion as to allowing of appeal, as held by Member (T), and remanding the matter for re-test, as held by Member (J), Registry is directed to place the records before the President for reference, under section 129C (5) of Customs Act, 1962, to Third Member for answering the points: CESTAT
- Case deferred: MUMBAI CESTAT |
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