Hindustan Unilever Ltd Vs CCT

Whether 329-day delay in filing appeal merits being condoned where such delay is attributed to the assessee's case file being misplaced by the assessee's Authorized Representative - YES: HC

- Assessee's revision petitions allowed: UTTARAKHAND HIGH COURT

SERVICE TAX

2020-TIOL-1672-HC-AHM-ST

N J Devani Builders Pvt Ltd Vs UoI

ST - It is the case of the petitioner that, during the period from October, 2005 to March, 2006, the petitioner paid service tax under the head 'commercial or industrial construction service', though no service tax was leviable at all, on the business activity of the petitioner at that time though the petitioner rendered the 'works contract service' which was liable for levy of such service tax w.e.f. 01.06.2007 - However, the Appellate Tribunal, Ahmedabad passed a final order dated 03.06.2019 in Appeal No.ST/107/2009 rejecting the submission of the petitioner that no service tax was leviable or recoverable from it for the period prior to 01.06.2007 on the ground that the petitioner never contested their classification of services before the authorities and applied for registration for works contract service only in January, 2008 and therefore, the services would remain classified under 'commercial or industrial construction services' prior to such period - Petitioners contend that they are in such circumstances constrained to invoke the extraordinary jurisdiction of this Court under Article 226 /227 of the Constitution of India for correcting such jurisdictional error, and also the redressal of grievance for gross violation of principles of natural justice that has resulted in exfacie illegal order against the petitioner instead of filing appeal before this Court under the provisions of Central Excise Act.

Held: It emerges on record that the petitioner no.1 was rendering services classifiable as 'works contract' - This fact has neither been disputed by the Commissioner nor by the Tribunal - That only because the petitioner no.1 registered itself for the service tax under the head of 'commercial / industrial construction services', the petitioner cannot be fastened with liability to pay service tax on the services rendered by it as 'work contract' services - Apex Court in the case of L& T Ltd. [ 2015-TIOL-187-SC-ST ] had held that the levy of service tax on works contract was non-existent prior to 01.06.2007 - In view of the above dictum of law, which is followed by all the other High Courts and the Tribunals including the Coordinate Bench of the Appellate Tribunal in the Service Tax Appeal No. 379/2009 in the case of the petitioner itself, the Tribunal could not have arrived at a contradictory finding in Service Tax Appeal No. 107 of 2009 - Bench is, therefore, of the opinion that the impugned order passed by the Tribunal in Service Tax Appeal No. 107 of 2009 is without jurisdiction and contrary to the law laid down by the Apex Court in the case of L & T Ltd. (supra) - The Tribunal has further erred in brushing aside the decision of the Coordinate Bench by referring it to be the decision of the Mumbai Tribunal which is contrary to the record - The Tribunal is bound to follow the decision of the Coordinate Bench, whether it is situated in the same region or any other region on the similar facts - Thus, the Tribunal has committed a breach of judicial propriety by remanding the matter to the adjudicating authority to verify the applicability of the notification dated 01.03.2006, though, admittedly the petitioner was not liable to pay the service tax prior to 01.06.2007, as the petitioner was rendering services of 'works contract' - The contention raised on behalf of the respondents that as the petitioner had voluntarily registered under the head of 'commercial /industrial construction services', the petitioner is liable to pay service tax, is not tenable as the petitioner cannot be held to be liable to pay service tax prior to 01.06.2007, where, it is not in dispute that the petitioner was rendering 'works contract service' - Petition succeeds and is hereby allowed - Impugned order dated 03.06.2009 passed by the Tribunal in Service Tax Appeal No. 107 of 2009 is hereby quashed and set aside and consequently Show Cause Notice F.No. STC/ 452/O&A/ SCN/ NJD/ 2006 dated 12.3.2007 is also quashed and set aside - However, Petitioner is not entitled to any refund of the service tax already paid by it: High Court [para 6.1, 6.5, 6.6, 7 to 9]

- Petition allowed: GUJARAT HIGH COURT

2020-TIOL-1477-CESTAT-MAD

Komatsu India Pvt Ltd Vs CST

ST - Appellant's company belongs to the Komatsu Group, having their business establishments in the countries of Japan and Singapore - During the initial period of setting up of the factory premises, the appellant had entered into secondment agreement with its parent companies, by which the employees of the said companies were deputed to work in the appellant's factory - For deployment of the employees, the appellant had incurred expenditure in foreign exchange towards payment of salary to the employees - Revenue was of the view that such payment of salaries is a taxable service under the head "Manpower Recruitment or Supply Agency Service" - SCN was issued alleging that the appellant is required to pay service tax under reverse charge mechanism, as a recipient of such taxable service - demand confirmed, hence appeal to CESTAT.

Held: On close reading of the said statutory provisions viz. Section 65(68) & 65(104)(k) of the Finance Act, 1994, it transpires that the role of the manpower recruitment or supply agency is confined to the area of recruitment or supplying of the manpower to cater to the requirements to the service recipient - The manpower supplied to the recipient of service is under the control and supervision of the agency, who deploys the same as per the directions of the recipient of service - Further, the agency has no obligation to pay the salary and other charges to the manpower deployed by it - Considering the scope and ambit of the definition of "Man Power Recruitment or Supply Agency Service", the CBEC vide Circular No. B1/6/2005-TRU dt. 27.7.2005 has clarified that in order to be categorized under such taxable service, the relevant aspect for consideration is that the staff are not contractually employed by the recipient, but come under his direction - In this case, the fact is not under dispute that the appellant had not entered into any specific agreement with the overseas group companies, so that the latter will perform the role of manpower agency for providing or recruiting the manpower to the former - On perusal of the contract entered into between both the sides, Bench finds that there is no existence of service provider-service recipient relationship - Further, the appellant had also separately entered into contract with the employees deputed by the group companies, providing for payment of salary and other benefits - Mere transfer of fund on security reason for the benefit of the family of the employees based in abroad cannot create the tax liability under such category of taxable service - It is not the case of Revenue that over and above the amount paid to the employees or their families, any other additional amounts were charged by the overseas entities or paid by the appellant towards such deployment of the employees - Under such circumstances, it cannot be said that the overseas group companies have provided the service of recruitment or supply of manpower and the appellant should be liable to pay service tax as a recipient of such service under the reverse charge mechanism - No merit in the impugned order passed by the Adjudicating authority, therefore, same is set aside and the appeal is allowed: CESTAT [para 5, 6]

- Appeal allowed:CHENNAI CESTAT

CENTRAL EXCISE

2020-TIOL-1471-CESTAT-MUM

Skoda Auto Volkswagen India Pvt Ltd Vs Pr CCE

CX - Appellant and VWGSIPL are subsidiaries of M/s VWAG, Germany - Appellant is engaged in manufacture and production of cars of models Polo and Vento, as per the designs and specifications of M/s VWAG, Germany, and sell them in the territory of India to only and only M/s VWGSIPL, a marketing subsidiary of M/s VWAG - Any operating loss suffered by appellant i.e. VWIPL is made good by the M/s VWAG, Germany - All the facts as recorded in impugned order on the basis of various agreements clearly point to one fact that the issue for consideration is not one of relationship between the buyer and seller simplicitor, because the two Indian subsidiaries are mere puppets in the hand of M/s VWAG, Germany who is authority to determine and take decisions in relation to production and sale of the vehicles of Volkswagen Brand namely Polo and Vento in Indian territory - In fact German unit by rendering financial assistance to both the Indian subsidiaries make them financially viable for their operation - If corporate veil is pierced, then the entire operations of manufacture and sale of these vehicle was throughout on account of M/s VWAG, Germany - Appellants have also relied upon the CAG report to argue that the Ministry of Finance has itself admitted the view that though VWIPL and VWGSIPL are interconnected but the clearance made from VWIPL to VWGSIPL are not covered by Rule 10, as they are not holding and subsidiary company - The conclusions which had been arrived at by the CAG in their audit report are identical to what the Tribunal have arrived at - The opinion of the Ministry referred in Audit Reports is not conclusive and also is not the statement of law - It is also not a binding judicial precedent - In the case of Grasim Industries 2018-TIOL-181-SC-CX-CB , a five member bench of Supreme Court, answered the question referred to it, stating that principles of determination of normal value and judicial exposition in respect of "normal value" applies to "transaction value" - Thus, the value that qualifies to be a value under Section 4(1)(a) can be value which is on account of sale at arm's length, and not any value that is determined for transfer/ clearance of goods - In absence of any value under Section 4(1)(a), the only route available for determination of value will be under Sec.4(1)(b) through Rule 11 of valuation rules and the value shall be determined using reasonable means consistent with the principles and general provisions of these rules and sub-section (1) of section 4 of the Act - By application of Rule 11, in case of related person transactions the value needs to be determined by application of Rule 9 of CEVR, 2000 - Thus, in absence of Section 4(1)(a) value satisfying the criteria laid down by Apex Court in case of M/s FIAT Industries 2012-TIOL-58-SC-CX the value is finally determined in terms of Rule 9 only, on the basis of sale price of M/s VWGSIPL to the dealers - As regards to the Benefit of Cum Duty Price, the benefit of cum duty price will be admissible to appellant if it can be shown that the price which is taken for computation of assessable value and duty demand is inclusive of excise duty and cesses - Since the Commissioner has not even examined this aspect, the matters need to be remanded back to the Commissioner for re-determining the value of clearances after allowing the benefit of cum duty price - Thus the demand for duty needs to be recomputed after allowing the benefit of cum duty price from the sale price to dealers.

The impugned order has completely mis-directed while determining the issue of limitation - There can be no dispute about the fact that the issue of valuation of Polo and Vento Variants of the Cars manufactured and cleared by Appellant was always in the knowledge of department and was subject matter of correspondence and discussions - It was also taken up in the audit conducted by Central Excise Revenue Audit and is part of CAG Report of 2014, tabled in Parliament - When the entire issue was under discussion and inquiry, and revenue entertained the view about the correctness of methodology of valuation adopted as is evident from CAG Report of 2014 - Change in opinion or insufficiency of enquiries earlier made by the department cannot be said to be amongst the grounds enumerated in section 11A (4) for invoking the extended period of limitation - Hence, extended period of limitation as provided by Section 11A (4) will not be available for making the demand of duty in the circumstances of this case - Since the demand of tax has been upheld the demand for interest will follow - It is now settled law that interest under Section 11AA, is for delay in the payment of tax from the date when it was due - Since appellants have failed to determine the correct assessable value and pay the correct amount of duty by the due date interest demanded cannot be faulted.

The Commissioner has imposed penalty under Rule 26 of CER, 2002 relying on the decision of Apex Court in case of Gujarat Travancore Agency 2002-TIOL-1816-SC-IT - In such case involving complex issues in relation to interpretation of statutory provisions, where revenue also entertained the same view as appellants, the penalties imposed under Rule 26 of CER, 2002 cannot be justified and are set aside, following the decision of Apex Court in case of Hindustan Steel 2002-TIOL-148-SC-CT-LB - The appeals filed by Appellant namely M/s VWIPL, are partially allowed and the matter remanded back to the Commissioner for redetermination of the quantum of duty payable - The appeals filed by M/s VWGSIPL are allowed setting aside the penalties imposed under Rule 26 of CER, 2002: CESTAT

- Appeals partly allowed: MUMBAI CESTAT

CUSTOMS

2020-TIOL-1479-CESTAT-MUM

Harital Marbles Pvt Ltd Vs CC

Cus - In the de novo adjudication, Commissioner observed that the goods imported are calcareous stone 'other than marble' which could be allowed to be imported only against SIL during the relevant period, therefore, he directed confiscation under Section 111(d) and 111(m) of the Customs Act, 1962, imposed fine and penalty in each case – appeals filed against these orders.

Held:

+ Even though the appellants have raised an alternative argument that in the common parlance the goods imported by them is known as marble, but they failed to produce any evidence to substantiate the said claim - Thus, in absence of sufficient proof the said alternate plea also cannot be acceptable - Therefore, the goods imported by the appellants are not 'marble' but 'calcareous stone other than marble' which requires specific import licence at the relevant time.: CESTAT [para 13]

+ Contention of the appellant is that all these goods imported into India after 8.5.1999, hence insisting specific import licence only for the reason that the shipment were done prior to the said cut off date i.e. 8.5.1999 is not tenable in law - No merit in the said contention inasmuch as the issue is settled in a series of cases viz. Royal Impex - 2019-TIOL-596-HC-MAD-CUS , & Agro 1 Stop - 2019-TIOL-732-HC-MAD-CUS and Siddhi Vinayak - 2019-TIOL-1118-HC-MUM-CUS , whereunder it is held that the date of shipment is relevant for compliance and not the date of import - in absence of SIL for import of the calcareous stone, the same are liable for confiscation and attracts penalty - Supreme Court in Stoneman Marble Industries – 2011-TIOL-12-SC-CUS held that the redemption fine be restricted to 20% of CIF value and penalty to 5% of the said value and, therefore, in the facts and circumstances of the case, ends of justice would meet if the fine and penalty is reduced to 20% and 5% respectively - impugned orders are modified to the extent of reduction of fine and penalty to 20% and 5% respectively, and all the appeals are remanded to the adjudicating authority to calculate the redemption fine and penalty accordingly: CESTAT [para 14, 16, 18, 19]

- Appeals disposed of: MUMBAI CESTAT

2020-TIOL-1478-CESTAT-MUM

Signet Chemical Pvt Ltd Vs CC

Cus - Issue involved in the present appeals centres mainly around classification of "Non-pareil seeds 40-60 Mesh Sugar sphere (pharmaceutical grade) which are also described as "Sugar Spheres" or "Neutral Pellets" or "Non-pareil seeds" - Contention of the Revenue is that the imported sugar spheres or Non-pareil seeds 40-60 Mesh Sugar sphere (pharmaceutical grade) are classifiable under CTH 1701 9990 whereas the appellant while filing the Bill of Entry declared classification under CTH 1702 9090, but later during the appellate/adjudication proceedings claimed its classification alternatively under 1704 9090 of Customs Tariff Act, 1975.

Held: Commissioner (Appeals) in determining the classification of the chemically pure sucrose mixed with starch and water, correctly applied Rule 3(b) of General Rules of Interpretation - He has observed that the classification of principal constituent in the mixture which provides essential character to the product be adopted for the mixture - In the present case, chemically pure sucrose is the main constituent and provides the essential character to the mixture as neither the starch which acts as binder nor water which is used in the process can be called as the essential item to be used in the pharmaceutical industry, the purpose for which the mixture is manufactured – Revenue has also produced data relating to contemporaneous imports of other importers who classified similar product under CTH 1701 9990 - Therefore, it can safely be concluded applying the aforesaid tests that the imported product in question common in both the Appeals fall under CTH 1701 9990 - Consequently, demand of duty and interest in Appeal No. 89829/2018 confirmed for the normal period is upheld - However, Bench is of the view that since the issue relates to classification of goods between two competing Headings, being a question of interpretation of law, hence, imposition of penalty is uncalled for and unwarranted, accordingly set aside – Insofar as the demand in the case of Appeal No. C/85493/2019, the period involved is March, 2012 to February, 2015 and admittedly, the appellant, from time to time filed Bills of Entry declaring their product under CTH 1702 9090 - In such circumstances, allegation of suppression of facts or mis-declaration solely on the basis that the correct classification which according to the Department would fall under different Tariff Heading i.e. 1701 attracting higher rate of duty during the period under dispute cannot be sustained - demand confirmed in the impugned Order invoking extended period relating to Appeal No. C/85493/2019 is set aside on the ground of limitation – Appeals disposed of: CESTAT [para 13, 16, 18, 19]

- Appeals disposed of: MUMBAI CESTAT

2020-TIOL-1472-CESTAT-MUM

Vishu International Vs CC

Cus - The assessee filed 10 shipping bills for export of certain goods - Through such Shipping Bills, the assessee also claimed IGST refund and duty drawback - On examination, the Revenue opined that the goods were grossly overvalued for claiming undue benefit of enhanced IGST refund and drawback - As the goods were found liable to be confiscated u/s 113(i) and 113(ia) of the Customs Act, they were seized - The assessee was given the option to seek provisional release of the goods on execution of bond equivalent to the value of seized goods supported by a bank guarantee - Instead of taking provisional release of the goods as directed, the assessee filed appeal to the Commr.(A), who proceeded to dismiss the same - The Commr.(A) refused to intervene with the conditions prescribed for release of the seized goods - Hence the present appeal.

Held - The issue that needs to be considered is whether the adjudicating authority has provided opportunity to the assessee before passing an adverse order - It is seen that the order of the Commr.(A) does not record any findings in respect of such order passed by the adjudicating authority - Nonetheless, the assessee is also obliged to cooperate with the investigating agency for speedy disposal of the matter, as delays benefit nobody - Considering the facts and circumstances of the matter, if the goods are overvalued then the assessee would have paid higher IGST at time of clearance of goods for export - There is no merit for inclusion of IGST paid while determining quantum of bank guarantee - IGST refundable is available with the Revenue, who may continue investigations and finalize refund on completion of investigation - Upon deducting the total amount paid from the total value recorded in the O-i-A, the case of overvaluation to claim undue benefit against the assessee, is considerably less - In the present case, where the goods have not been released even after lapse of 18 months, there is no justification for imposing such harsh conditions by the Revenue for permitting provisional release of the goods - Hence the assessee is directed to furnish a bond equivalent to the value of the seized goods as directed by the Revenue, supported by a bank guarantee of a lesser amount, which is in keeping with the spirit of Board Circular No. 30/2013-Cus . dated 05.08.2013 - Moreover, while the assessee claimed that proceedings had not yet finalized, the assessee was stated to not be cooperating in the investigation - Hence the assessee is directed to cooperate fully in the investigation and present itself before the investigating authorities whenever called upon: CESTAT

- Assessee's appeal partly allowed: MUMBAI CESTAT