2020-TIOL-NEWS-239, Dated: Friday, October 09, 2020

2020-TIOL-1493-CESTAT-MUM

Hindustan Construction Company Ltd Vs CST

ST - Proceedings were initiated against the appellant for alleged non-payment of tax liability on work undertaken for M/s Mumbai Metro One Pvt. Ltd and M/s Delhi Metro Rail Corporation Limited during 2011-12 and 2012-13 as provider of 'Commercial or Industrial construction service' - said proceedings culminated in order-in-original dated 28 th December 2016 of Commissioner of Service Tax-VII, Mumbai - aggrieved, appellant is before CESTAT.

Held: Decision of the Hon'ble Supreme Court in Commissioner of Central Excise, Kerala v. Larsen and Toubro Ltd - 2015-TIOL-187-SC-ST was not available to the adjudicating authority and the finding therein that all the component activities of 'works contract service', to the extent taxable under separate entries prior to the new taxable service, were intended to cover service simpliciter - Consequently, the claim of the appellant to be provider of 'works contract service' cannot but be accepted - It is also not correct to contend that the coverage of the statute governing Railways is limited to government Railways; no such distinction is drawn except for the purposes of jurisdiction of the railway authorities specified therein for the governance of the Railways belonging to the government - In the absence of any qualification for the 'railway' incorporated in the exclusion component of the taxable service, any railway, irrespective of ownership, is covered - Within the scheme of 'negative list', there is a specific exemption for metro or monorail within the broader exclusion available to Railways - The exclusion of 'metro' or 'monorail' has occurred only after the period of dispute and, therefore, does not concern the Bench - The exemption afforded by notification no. 25/2012-ST dated 20 th June 2012 extends to all activities that have been filtered through the statutory hierarchy to remain taxable but for exercise of powers under section 93 of Finance Act, 1994 - Therein, the specific escapement afforded for services rendered in connection with construction of railways is by inclusion, extended to construction of monorail and metro - Under the Railways Act, 1989, the monopoly of establishing the rail networks vests with the 'Indian Railways' and any other operator functions within a policy pertaining to outsourcing of such activities save where the law, for particular objectives, makes an exception - One such is the metro operations for which specific enactments enable other operators without derogating from the status of being 'railway' and, more often than not, by enterprises that are jointly owned by the Central and State Governments - Even where the ownership does not vest in the government, the operation of such railways is under special enactment which are not excluded from the sphere of the expression 'railways' - impugned order has erred on facts, inferences and findings - Accordingly, same is set aside to allow the appeal: CESTAT [para 4, 7, 8, 11, 12]

- Appeal allowed: MUMBAI CESTAT

2020-TIOL-1492-CESTAT-MUM

Latur District Co-Operative Bank Ltd Vs CCE & C

ST - It appears that the final accounts of the appellant for 2011-12 indicated receipt of Rs. 85,16,505 against Rs.37,76,846 that was declared in the statutory returns and tax of Rs.4,88,185 was sought to be fastened on the differential of Rs.47,39,659 - It was contended by the noticee that Rs.28,89,312 were on account of administrative expenses that were reimbursed and that Rs.10,86,097 was an erroneous credit in the ledger - The adjudicating authority accepted the contention in relation to the erroneous credit but held that the other expenditure was liable to be included and fastened tax liability of Rs.3,76,317 besides other detriments - Commissioner(A) set aside one of the penalties - assessee is in appeal before CESTAT against the tax demand and penalty. Held: Appellant has cited the Tribunal decisions in their own cases viz. dated 29th December 2017 nad 30th January 2018 pertaining to eligibility for the benefit of notification no. 3/2000-ST dated 6th July 2000 exempting activities under schemes of the Government of India - In those decisions, for want of consideration of the eligibility for this benefit in the orders impugned therein, the matters had been remanded back to the original authority - following the said decisions, Bench sets aside the impugned order and remands the matter back to the original authority for a fresh adjudication after submitting claim of coverage under the said notification to proper consideration: CESTAT [para 4, 5]

2020-TIOL-1491-CESTAT-MUM

Radioactiv Entertainment Vs CCE

ST - Appellant as provider of 'event management' service, was proceeded against for non-inclusion of payments pertaining to events organized by them for clients, in the 'gross amount' computed for tax liability on service rendered between April 2008 and March 2011 - According to the tax authorities, the entire amount totalling Rs.2,36,49,608/- having been billed, should have been taxed - Original authority confirmed the demand along with penalty and interest and this order was upheld by the Commissioner(A), hence assessee is before the CESTAT. Held : Contracts entered into with the recipients of 'Event Management' service by the appellant would determine the extent to which the two parties have visualized the proper rendering of the service and anything beyond those would be rendering of a different service that may or may not be taxable - Furthermore, in terms of the decision of the Supreme Court in Intercontinental Consultants & Technocrats P. Ltd. - 2018-TIOL-76-SC-ST , the reimbursable expenses that can be established as having been incurred for convenience, in accordance with an agreement between the two parties, to be passed on by the appellant without retention of any portion thereof is not amenable to inclusion in the 'gross amount' envisaged in section 67 of Finance Act, 1994 - Despite this defence having been placed before the lower authorities, the contentions thereof were not ascertained in the context of the contract and 'pass through' of the payments - Neither before those authorities not before the Bench has the appellant furnished the necessary evidence - This lapse on both sides is required to be resolved before appellate intervention is purposeful - Impugned order is, therefore, set aside and matter is remanded back to the original authority to dispose of the proposals in the show cause notice in the light of the decision of the Supreme Court (supra) after giving an opportunity to the appellant to produce the relevant records: CESTAT [para 8 to 10]

- Matter remanded: MUMBAI CESTAT

2020-TIOL-1486-CESTAT-MUM

Sanjeevan Medical Foundation Vs CC

Cus - Issue relates to the import of one 9" Image Amplifier TV system for Urological Investigation and assessed under Notfn 64/88-Cus - Department issued a SCN alleging that goods imported by them had not subsequently complied with the exemption Notfn 64/88 - The allegations against the assessee appears to be that records have not been authenticated by any competent authority; records were submitted to Assistant Charity Commissioner, Sangli; no physical evidence was readily available and mandatory installation certificate duly certified by DGHS was not available and therefore, it was difficult to verify the compliance of the conditions of the notification - The assessee submit that exemption certificate in terms of Notfn 64/88- Customs was issued on 16.06.1988 - They have submitted Sworn Affidavit to the fact that the impugned goods had actually been installed - The verification report simply mentions that the records submitted byassessee are not authenticated - However, the same report indicates that the report was submitted to Assistant Charity Commissioner - It is not the case of Department that the said Assistant Charity Commissioner has not accepted the report - It is also not the case of the Department that the machine was not put to use for the purposes it was imported - It was only stated that compliance could not be verified - The records being very old, the reports submitted to the other authorities and the Affidavit sworn by the importer/assessee cannot be dismissed - There are no other conditions imposed at the time of import - The Department has not established that the assessee is not entitled for the benefit of exemption notification - Expression of inability to verify will not take away the benefit granted to the importer at the time of import, particularly looking into the facts of the case, wherein, the Department sought to examine records at a later date which is more than reasonable period of time - Therefore, circumstantial evidence is to be appreciated and the benefit be extended - Therefore, the impugned order is not maintainable and hence same is set aside: CESTAT

- Appeal allowed: MUMBAI CESTAT

2020-TIOL-1485-CESTAT-CHD

RG Gupta & Company Vs CC

Cus - The assessee filed the bill of entry declaring 48.525 MT of imported goods as heavy melting scrap classifiable under CTH 72044900 of CTA, 1975 whereas as per the allegation, the actual goods are cold rolled grain, cutting sheets - Therefore, investigation started and one chartered engineer was appointed to examine the goods who gave his opinion that the goods were secondary and defective serviceable CRGO cutting sheet of various sizes and remaining 14 MT as CRGO cutting scrap was for melting purposes - A SCN was issued to assessee to demand customs duty from assessee, the goods are held liable for confiscation and the same are allowed to be cleared for home consumption after mutilation at the cost of importer so as to render scrap, the clearance of the goods shall take place only after the goods are redeemed on payment of fine and the importer is liable to penalty - The Chartered Engineer who has examined the goods are not metallurgical engineer and the reports were based on visual examination without any market inquiry, therefore, the reports provided by Chartered Engineers are not acceptable as held by this Tribunal in case of R.G. Gupta 2017-TIOL-3397-CESTAT-CHD - Admittedly, as per the steel and steel products (quality control) second order 2012, the goods are required to be testing and inspection of Bureau of Indian Standard and the same has not been done - In that circumstances, the classification arrived by adjudicating authority is not acceptable - As the reports of Chartered Engineers are not acceptable and the goods declared by assessee as scrap has been accepted - In that circumstances, the goods are none other than the scrap as declared by assessee, therefore, the same are not required to be mutilated - Moreover, the High court of Bombay in case of Madhu Sudan Metals held that no rules have been framed permitting the mutilation of goods, the mutilation cannot be allowed - Therefore, in the absence of any rules framed for mutilation, the mutilation of said goods cannot be allowed - Admittedly, the declaration made by assessee has been accepted - Moreover, the goods were not mis-declared and held to be scrap - In that circumstances, the redemption fine and penalty imposed on assessee are set aside: CESTAT

- Appeal allowed: CHANDIGARH CESTAT

CX - Belated Refund of pre-deposit along with interest - amount set off against another demand - It is rather unfortunate that these Quasi Judicial Authorities have disregarded the underlying principle of judicial decisions and its binding effect - When the Supreme Court had rejected the appeal of the Revenue, the order of the Tribunal, which was in favour of the importer, merges with the order of the Supreme Court, under the principle of 'Doctrine of Merger' - The attempt on the part of the Revenue to interpret the order of the Supreme Court and attempting to give life to the claim, which they had lost before the Supreme Court, is nothing, but an act, which could be termed as an act of contempt of the Supreme Court's order - Judicial discipline mandates Quasi Judicial Authorities to extend sanctity to the binding precedents, more so, when such orders are from the highest Court of the Country - Court expresses its disappointment on the conduct of the concerned authorities in having scant respect towards the orders of the Supreme Court - Both the impugned orders dated 27.10.2017 and 16.05.2017 are quashed and the Writ Petitions stand allowed: High Court [para 8, 9]

CX - The appeal has been preferred by assessee against impugned order upholding duty demand plus interest and penalty confirmed vide Order passed by Assistant Commissioner for the period 2011-12 - The assessee is seeking the benefit of time bar merely by submitting that the goods i.e. the scrap items have been transferred to their other factory at Ghaziabad and hence, whatever duty is paid at Sambalpur factory will be available as credit at the recipient Ghaziabad factory and hence there would be a revenue neutral situation - Said contention is being raised for first time before the Tribunal which was never pleaded before both the authorities below and hence cannot be allowed to be taken at this stage - Assessee appears to have been involved all along in delaying the adjudication and appeal proceedings - Moreover, assessee has not submitted any rebuttal to the findings made by original authority, which are grave in nature, while confirming the duty demand - Assessee is not entitled to seek the mercy of time bar benefit: CESTAT

CX - The assessee is engaged in manufacture of power control cable - There is no dispute that the assessee is claiming refund of excise duty paid on inputs and the goods were cleared under exemption to mega power projects, wherein excise duty do not attract and further the cenvat credit of excise duty cannot be utilised; the assessee claims the refund of excise duty under Rule 5 of CCR, 2004 - Admittedly assessee have maintained proper record of their transactions including taking of cenvat credit on eligible inputs - They have claimed transfer/ shifting of their Delhi unit to their Baddi unit - But from the finding of the Court below, it is found that no finding have been recorded with respect to the claim of shifting of Delhi unit to Baddi unit and its consequent merger with the Baddi unit - Shifting of a factory to another site is the primary condition under Rule 10(1) alongwith liabilities of Delhi unit, if any, and Rule 10(3) provides for additional condition that such transfer/ unit or factory should include transfer of stock of input as such or in process, or the capital goods to the new site and such transferred goods are duly accounted for to the satisfaction of the Central Excise Authority - Thus, prima-facie with respect to claim of assessee or request for transfer of cenvat credit from Delhi unit to Baddi unit requires that a finding to be recorded by Central Excise Authority having jurisdiction over the Baddi unit to record the finding of transfer/shifting of Delhi unit to Baddi and to record a further finding in regard to transfer of inputs or capital goods and proper accountal of the same - For such purpose, the Adjudicating Authority of the Baddi unit can call for proper report from the jurisdictional Central Excise Authority of the Delhi unit - If the aforementioned two conditions are satisfied, assessee is entitled to the transfer of cenvat credit to their Baddi unit - Accordingly, matter is remanded to the adjudicating authority to pass a denovo order recording finding on the two aspects and thereafter pass consequential order: CESTAT

NDPS - Appellant has filed the present appeal impugning a judgment dated 14.09.2017, whereby the Special Court convicted the appellant of an offence punishable under Section 20(b)(ii)(C) of the Narcotics and Psychotropic Substances Act, 1985 (NDPS Act) on account of being found in possession of 4.235 kgs of charas - The appellant was also held guilty of committing an offence under Section 23(c) of the NDPS Act, for attempting to export the illicit substance - By an order dated 21.09.2017, which is also impugned in this appeal, the appellant was sentenced to undergo rigorous imprisonment for a period of ten years with a fine of Rs. 1,00,000/- and in default of the fine, to undergo simple imprisonment for a further period of four months for committing the offence punishable under Section 20(b)(ii)(c) of the NDPS Act - He was awarded a similar sentence for committing the offence punishable under Section 23(c) of the NDPS Act.

+ Prosecution's case that on testing a small quantity of the substance, it was revealed that it was charas is premised on an alleged test conducted on an ION Scan machine, in the presence of panch witnesses, as recorded in the panchnama.

+ Prosecution has failed to establish that (a) the contents of each of the packets were separately tested (probably a small quantity equivalent to the head of a match stick of the said substance was tested); (b) that the said test indicated that the substance contained 3% Heroin and 13% THC and; (c) that the contents of all four packets were mixed to form a homogenous mixture and three samples of 45 grams were drawn from it (the said samples may have been drawn from the contents of one or more packets).

+ It is at once clear that the samples cannot be considered as a representative of the contents of all the four packets.

+ Court is unable to accept that the prosecution was not required to lead any evidence to establish that the substance recovered from the appellant was charas.

+ Since the prosecution has failed to establish that the sample drawn by PW-4, which was sent for chemical examination, is a true representative of the entire substance recovered, it has failed to establish that the substance allegedly recovered was charas. The appellant is, therefore, liable to be acquitted for the offence for which he was charged and convicted by the Trial Court.

+ It is noteworthy that the substance wrapped in polythene with an adhesive tape had been produced. However, the polythene was not kept in a Delhi Duty Free bag. The said Duty Free bag was absent. The detention slip bearing No.66563 which pertain to the said substance described the goods as under:-

"Chocolate brown substance said to be CHARAS placed in transparent polybag then in duty free poly bag then covered with white cloth and sealed with seal no.6."

+ It is also relevant to note that the panchnama (Ex.PW4/E) also records that: "the remnant substance weighing 4.1 kgs was repacked in transparent polythene bag and this polythene bag was packed in Delhi Duty Free polythene bag and this Delhi Duty Free Polythene bag was then wrapped with brown adhesive tape and was then wrapped with white cloth and stitched and sealed with Custom Seal No. 06 over a slip containing dated signatures of ours along with the dated signature of the pax and the Custom Officer."

+ The fact that the polythene bag containing the substance was not packed in a Delhi Duty Free polythene when the pullanda was opened raises considerable doubt whether the substance had been tampered with.

+ The fact that the pullanda containing the alleged recovered substance was found in a sealed condition, does not explain the absence of the Delhi Duty Free bag. The only explanations are that the panchnama and the detention receipts incorrectly record as to how the case property was packed or that the pullanda had been opened and resealed.

+ Since the seal as well as the recovered contraband continued to be in possession with the Custom Officers, the possibility of the same being opened and re-sealed cannot be ruled out. It is also apparent that the record maintained regarding the movement of case property is not accurate. In this case PW-4 seems to have access to the articles kept in safe custody and could remove them without making any entry in the SDO(A) Register. This is clearly evident as there was no entry made in the Register for removal of the sample A-1. Thus, the contention that there are doubts that the substance recovered could have been tampered, is merited.

+ Merely because the sample had been received by the Chemical Examiner bearing the seals of Customs No. 6 and the remaining substance was produced in court in a sealed pullanda bearing the seal of Customs No. 6 does not necessarily mean that the said sample or the case property could not have been tampered with.

+ Appeal is allowed and the appellant is acquitted of the offences punishable under Sections 20(b)(ii)(C) and 23(c) of the NDPS Act. The appellant has been in custody for over eight years and six months. He shall be released immediately if not wanted any other case. [para 78, 83, 84, 89, 91, 101, 102, 103, 107]

Cus - Refund - If no interim order has been obtained by the department within a specified period, refund has to be allowed and of course the same will be subject to the outcome of the appeal - In the case on hand, the appellate authority passed the order dated 18.02.2020 - More than seven full months have elapsed in the meanwhile - If the department was aggrieved, the department should have expeditiously filed an appeal and pursued the matter and obtained interim order - The petitioner cannot be made to wait indefinitely - The department cannot take its own sweet time to file the appeal and pursue the same - The department ought to have acted expeditiously in the matter - Petitioner is after all asking for his money in terms of the Circular 276/186/2015-CX.8A dated 01.06.2015 issued by the Government of India - Respondents are directed to implement the Order-in-Appeal dated 18.02.2020 and disburse the refund due to the petitioner at the applicable rates of interest - This refund shall be made within a period of four weeks - Writ petition stands allowed: High Court [para 7, 8]

Cus - Refund of SAD - Notification 102/2007-Cus - Sanctions were reviewed under Section 129D(2) of the Customs Act and in the appeals filed by the Customs authorities, the sanction of refund was held to be incorrect - Consequently, the second respondent had passed 4 orders of recovery of the refunds granted earlier - CESTAT, had earlier passed orders in favour of the dealers, holding that, so long as appropriate VAT/Sales Tax was paid, the SAD refund was admissible - In view of the order in the case of M/s. Aditya International Ltd. & Others vs. The Commissioner of Customs (Appeals-II) & Others = 2020-TIOL-754-HC-MAD-CUS, allowing the writ petitions and ordering for refund of the SAD in favour of the importer, all the impugned orders are quashed and the Writ Petitions stand allowed: High Court [para 3, 5]

ST - The assessee had filed declaration under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Appeals dismissed as withdrawn with liberty for assessee to approach the Tribunal to restore the appeals in case discharge certificate is not issued for the dispute pertaining to these appeals: CESTAT