| SERVICE TAX
2020-TIOL-1541-CESTAT-KOL
CGST & CE Vs Parag Steel & Wire Industries
ST - The amount involved is below the monetary limit of Rs.50.00 Lakhs which has been notified vide Board's Instruction being F.No.390/Misc/116/2017-JC - Accordingly, the appeal is dismissed under National Litigation Policy: CESTAT
- Appeal dismissed: KOLKATA CESTAT
2020-TIOL-1540-CESTAT-MUM
Wartsila Indial Ltd Vs CST
ST - Appellant, as a distributor of 'spare parts' in its own right, also acts as agent for transfer among group companies for which remuneration is also agreed upon - It is the commission amount received for the said period amounting to Rs. 110,01,38,251/- which was sought to be subjected to tax as provider of 'business auxiliary service' of Rs. 12,06,39,710/- in the show cause notice [Period 1st June 2003 to 31st March 2008] - SCN also sought to demand service tax of Rs. 1,16,84,140/-under reverse charge as provider of 'online information data base access or retrieval service' [Period 18th April 2006 to 31st March 2008] - demand was confirmed by Commissioner, hence appeal before CESTAT.
Held: High Court in Wartsila India Ltd = 2018-TIOL-2003-HC-MUM-CX (Revenue appeal) held that the issue raised is no longer res-integra; that services of procuring orders and passing it to its overseas principal/parties and receiving payments for the same in foreign exchange, is an activity of export of services covered by the Export of Service Rules, 2005 - Insofar as the demand under the head OIDAR service, the appellant had been discharging tax liability on the licence fee paid to overseas entity as recipient of 'information technology software service' ever since the incorporation of that entry in section 65(105) of Finance Act, 1994 - The only way in which the tax liability could crystalise before 16th May 2008 is its coverage by an existing taxable entry coupled with the express intent to discard it from such entry while including the service in a substitute entry - It is the finding of the original authority that the said activity would, within the territory, have been liable to tax in the hands of a domestic provider of service as 'online information and data base access and retrieval service' - Bench does not find 'information technology software service' to have originated from a discarded entry or carved out of an existing entry - The finding of the original authority is bereft of any examination of the taxable entry, unconnected with the definition and bereft of even alluding to the activities of the overseas entities for ascertainment of the delivery of such service to the appellant - Mere reference to a paragraph in the show cause notice, and especially in the context of lack of finding, does not constitute a proper adjudication that devolves upon the original authority - There has to be an allegation in the show cause notice beyond mere reference to the agreement between the appellant and the overseas entity and its elaboration by extracting appendix - Beyond that, the show cause notice has merely taken note of the payments made by the appellant, the definition of the said services under section 65(75) of the Finance Act, 1994 and by drawing upon the definition of 'information' in the Information Technology Act, 2000 and without adducing any other evidence so as come to the conclusion of taxability - Impugned order set aside and appeal allowed: CESTAT [para 5, 10, 12]
- Appeal allowed: MUMBAI CESTAT
CENTRAL EXCISE
2020-TIOL-1542-CESTAT-DEL
Hindustan Zinc Ltd Vs CCGST
CX - Appellants took marine insurance to cover the risk of transportation of goods supplied to the buyers at their door steps under FOR delivery terms - CENVAT credit on marine insurance services were denied, hence appeal.
Held: Marine insurance services were availed by the appellant-manufacturer when the property in goods was still retained with them, the delivery being on FOR basis - Hence, the opinion formed by the adjudicating authority for the impugned marine services to not being included under input services are absolutely wrong - The plea that general insurance services fall under the exclusion clause is also not appropriate to the given facts and circumstances for the reason that the general insurance services only with respect to motor vehicles are covered under the exclusion part of the definition of input services whereas the impugned goods are not motor vehicles - Order-in-Appeal under challenge is hereby set aside - appeals consequently stand allowed with consequential benefits: CESTAT [para 16 to 18]
- Appeals allowed: DELHI CESTAT
CUSTOMS
2020-TIOL-1780-HC-MAD-CUS
Yiwu Li Hang Import And Export Company Ltd Vs CCC
Cus - Petitioner prays for a Mandamus directing the respondents to consider several representations stated to have been filed by the petitioner, the latest dated 02.07.2020 and further direct the respondents to order re-export of the goods covered under bill of entry dated 23.10.2018 - Counsel for Revenue informs that proceedings have been initiated vide show cause notice dated 25.10.2019 to the importers and other domestic parties for assessment of the goods covered under the aforesaid bill of entry and are yet to be finalized.
Held: Since proceedings are on-going for assessment, it would not be appropriate to consider or grant the mandamus as sought - Writ petition is accordingly dismissed: High Court [para 3]
- Petition dismissed: MADRAS HIGH COURT
2020-TIOL-1779-HC-MAD-CUS
Maruvur Arasi Logistics Pvt Ltd Vs CC
Cus - Petitioner seeks a certiorari calling for and quashing order in original dated 24.12.2018, passed by the Commissioner of Customs, primarily on the grounds that the same has been passed in violation of the provisions of Sections 28(2) and 28(4) of the Customs Act, 1962.
Held: On a holistic reading of Section 28, the reasoning appears to be that where, in cases of a regular assessment, the voluntary payment of duty of interest would close the door on all further proceedings, in a case of willful misstatement/ collusion/suppression, there are other consequences that might visit the assessee, for which the options are kept open - The benefit under Section 28(2) is thus restricted only to those cases of regular assessment simplicitor and not an assessment involving alleged collusion, mis-statement or suppression of facts - In the present case, the SCN has been issued invoking the provisions of section 28(5) which contemplates an alternate scheme of assessment - Petitioner would argue that this was not a case of suppression at all and the invocation of section 28(4) was itself erroneous - However, both the SCN as well as the impugned order of assessment contain voluminous factual assertions and allegations in regard to collusion, wilful mis-statement and suppression of facts on the part of the petitioner, and it is certainly not appropriate for the Bench to go into such disputed questions of facts in writ proceedings - This is best left for the appellate authority - The determination of the proper period of limitation involves mixed questions of facts and law and necessary enquiry upon the facts to determine whether the petitioner satisfies the conditions precedent under Section 28(5) is best left to the appellate authority to take a decision after due examination of all relevant facts and details - Bench is, therefore, not inclined to interfere in the impugned order on this aspect - Section 28(2) makes reference to the duty and interest remitted by the assessee computed in terms of Section 28(1), that is, in cases where there is no allegation of collusion, mis-statement or suppression of facts - The placement of Section 28(2), immediately after 28(1) is also supportive of the aforesaid conclusion - It is evident that it is only the remittance of duty and interest as referred to in sub-section (1) that is addressed in sub-section (2) of Section 28 - Writ petition is dismissed permitting the petitioner to file an appeal challenging the impugned order before the appellate authority within a period of two weeks from the date of uploading of this order: High Court [para 16, 17, 18, 20, 21]
- Petition dismissed: MADRAS HIGH COURT
2020-TIOL-1778-HC-MAD-CUS
Hewlett Packard Enterprise India Pvt Ltd Vs JCC
Cus - Bills of Entry (B/E) were filed during the period 24.07.2019 to 26.07.2019 seeking clearance of Information Technology (IT) products - According to the petitioner, the invoices in relation to the aforesaid 17 B/E contained an error in the unit price of the imported products that came to be perpetrated in the B/E as well - They, therefore, approached the Deputy Commissioner of Customs/R2 on 09.09.2019 pointing out the same and seeking amendment of the B/E under Section 149 of the Customs Act, 1962 in order that the correct value of the imported products be reflected therein - A communication dated 27.09.2019 came to be issued by the Assistant Commissioner of Customs, wherein the amendment sought was rejected as the imported goods had been cleared for home consumption.
Held: The lis in this matter revolves around the interpretation of the phrase 'in existence', as according to the revenue, the phrase should be read as available with the Department and it is only if the documents relied upon by the petitioner seeking amendment were, in fact, 'on record' that such amendment could even be considered - Bench does not agree with this contention of Revenue - What is contemplated vide the proviso to Section 149 is an opportunity to be extended to an assessee to produce such documents that were 'in existence' at the stipulated time that would serve to establish the error, if any, in the B/E - The genuineness of such documents or a confirmation as to whether such documents were actually 'in existence' is certainly to be left open for thorough examination by the customs authorities and the Court would have no say in such a factual matter - Suffice it to say that the Department should take note of the documents that are presented by an assessee as being 'in existence' at the relevant time to evidence an error sought to be amended - rejection of the request for amendment by the respondent is set aside to be re-done de novo - Petitioner is granted liberty to file such documents as it may rely upon as contemporaneous within two (2) weeks - Bench reiterates that the revenue is at liberty and, in fact must, examine whether the documents relied upon by the petitioner are contemporaneous and 'in existence' at the relevant point in time. - Appropriate orders shall be passed after hearing the petitioner within a period of six (6) weeks: High Court [para 13 to 15]
- Matter remanded: MADRAS HIGH COURT
2020-TIOL-1777-HC-ALL-CUS
Jaymatajee Enterprise Seller Vs CC
Cus - Petitioners received an order from one M/s Jagdamba Enterprises for supplying 17920 K.G. of betel nuts and the petitioner purchased 24,000 K.G. of betel nuts from one Neelkamal Saha, West Bengal by means of two tax invoices dated 14.8.2020 each for 12,000 K.G - It is stated that said Neelkamal Saha had purchased 19,884 K.G. of betel nuts in an E-auction held by the Customs Department - After purchasing the said betel nuts from the said Neelkamal Saha, the petitioners transported the said goods to the consignee M/s Jagdamba Enterprises through Truck owned by the petitioner no. 2 and the goods were sent along with requisite E-Way Bill Invoices [value of Rs. 29,56,800/-] etc. - As soon as the Truck carrying the betel nuts entered the State of Uttar Pradesh, the respondent no. 3 intercepted the said Truck and vide Panchnama dated 17.8.2020, seized the goods as well as the vehicle - Officers informed the Truck driver that they have received specific information that 'Areca Nuts' of foreign origin was being transported - On opening of the material being transported it transpired that some bags had inscriptions in foreign language which led the officers to believe that the areca nuts were of foreign origin, that the same appeared to be illegally imported from Bangladesh in violation of Section-11 read with the provisions of Foreign Trade Regulation Act and, therefore, the seizure - Petitioners argues that as no bonafide 'reasons to believe' existed, the seizure of the goods was wholly arbitrary and illegal; that the goods were perishable in nature; that as the goods i.e. 'Areca Nuts 'were not 'notified goods' under Section 123 of the Act and do not fall in the category of prohibited/notified goods, the seizure order is liable to be quashed and goods were liable to be released; reliance is placed on a judgment of this Court, whereby the High Court had directed in Writ Tax No. 589 of 2017 that the goods be released on furnishing security other than cash and bank guarantee in respect of the total amount of value of the goods - Writ petition has been filed challenging the seizure of goods of petitioner no. 1 and vehicle of petitioner no. 2 vide Panchnama dated 17.8.2020 and the order of provisional release dated 1.9.2020, whereby an order has been passed releasing the goods provisionally on execution of bond for the value/estimated value of the seized goods i.e. Rs. 53,76,000/- and furnishing of bank guarantee/security deposit of Rs.1,34,40,000/- and execution of Bond for the value/estimated value of the seized truck i.e. 7,00,000/- and furnishing Bank Guarantee or Security Deposit of Rs. 70,000/-.
Held:
Alternative remedy: [para 22, 25]
+ Bench is in complete disagreement with the argument of the respondents that in view of the availability of alternative remedy of appeal against the order of provisional release, the writ petition is liable to be dismissed; and for the following reasons:-
(i) No appeal lies against a seizure order;
(ii) the goods detained are perishable in nature and considering the fact that relegating the petitioners to the appellate remedy would render the entire exercise futile as by then the goods itself will be of no value;
(iii) the seizure memo as well as the provisional release order are contrary to the Act and the departmental instructions;
(iv) order has been passed in violation of principles of natural justice inasmuch as neither in the provisional release order has the contention of the petitioners being addressed nor has any opportunity of hearing accorded before passing the provisional release order, and ;
(v) the order of provisional release has been passed even contrary to terms of the circular issued and there is no independent exercise of discretion by the Adjudicating Authority while passing the provisional release order.
Merits:
++ It is clear from the statute that the power of seizure of goods under Section 110 of the Customs Act can be resorted to only when the Officer exercising the said power has 'reasons to believe' that the goods are liable to confiscation. In the present case, admittedly the goods were at Gorakhpur and not seized from any port or any custom area to form a belief that the goods were being imported into India. [para 29]
++ It is on record in the form of certificates issued by the Ministry of Agriculture and Farmer Welfare as well as by ICAR to the effect that there is no mechanism available to trace the country of origin of 'Areca Nuts' and there is no laboratory test available for the same and further on the basis of examination by naked eye it cannot be conclusively determined with regard to origin of the 'Areca Nuts'. The ICAR has also opined that without there being samples available from the country of origin, it was not possible to determine the country of origin of the seized 'Areca Nuts'. That being the definite opinion of the Department of Agriculture and Farmers Welfare as well as the ICAR, it is difficult to comprehend as to how on the basis of examination by naked eye and the opinion of the traders can lead to forming an opinion that the goods in question namely 'Areca Nuts' are imported. [para 30]
++ In the present case, as demonstrated by the petitioner, prima facie that the goods in question were purchased in an E-auction held by the Customs Authorities themselves within the territory of India, the fact that there was evidence in the form of transport documents to show that the goods were being transported within India, the prima facie 'reason to believe' recorded are unsustainable.
++ It is well settled that the 'reasons to believe' must be based upon acceptable materials, which have to be more than a moonshine. The material on record overwhelming suggests that the 'reasons to believe' were based upon the opinion of the local dealers, prima facie examination of the goods by naked eye and inscriptions in foreign language on some bags. The said reasons even fail the test of 'Wednesbury principles' as no reasonable person can reach to conclusion of the country of origin of 'Areca Nuts' by mere perusal from naked eye as well as the opinion of the traders, as the Institutes as well as the Ministry have firmly opined that the country of origin cannot be traced by any laboratory method also. [para 32]
++ It is also common ground that 'Areca Nuts' is neither prohibited nor notified goods.
++ The order of the seizure is bad in law as it has failed to follow the specific instructions contained in Instruction No. 1/2017, which are binding on the respondent authorities.
++ Thus, the basis for forming 'reasons to believe' as recorded in the Panchnama are wholly without any acceptable material and there being no prima facie material to suggest that the goods in questions were of foreign origin or were smuggled into India from any Customs Station or that the goods were imported without payment of import duty, Bench has no hesitation in holding that no valid 'reasons to believe' existed for exercising the powers of seizure as was done by means of Panchnama dated 17.8.2020. Consequently, the seizure order dated 17.8.2020 is quashed. [para 35]
++ Once the seizure order dated 17.8.2020 is quashed, Bench does not deem it fit to address on the question of validity and legality of the provisional release order inasmuch as once the seizure is held to be bad in law, no confiscation can take place. [para 36]
++ Respondent authorities are directed to forthwith release the goods i.e. 'Areca Nuts' as well as the vehicle in question in favour of the petitioner nos. 1 and 2 respectively.
- Petition allowed: ALLAHABAD HIGH COURT
2020-TIOL-1543-CESTAT-DEL
Rajesh Gaba Vs CC
Cus - Appeal has been filed by assessee - Rajesh Gaba who is an employee, 'H' Card holder working with CHA-M/s Commercial Clearing Agencies Pvt. Limited, at the relevant time - Vide the impugned O-I-O against the importer-M/s Brij Enterprises and Shri B. K. Goyal, it is held that they have mis-declared in Bill of Entry and prohibited goods were ordered to be confiscated absolutely and other goods allowed to be redeemed on payment of fine, alongwith demand of custom duty and penalty - Penalty was also imposed on the CHA company and its three employees including the assessee under Section 112(a) of the Act - No case of aiding and abetting is made out against the assessee - This assessee as an employee of CHA company was working as per the instructions given to him by his senior - There is no case made out of any abnormal gain by assessee to indicate any collusion or abetment on his part with the importer of consignment under dispute Shri Goyal and/or Shri Brijesh Mishra - Penalty has been imposed mechanically without application of mind, same is set aside: CESTAT
- Appeal allowed: DELHI CESTAT |
