2021-TIOL-538-HC-AHM-CUS

Mahalaxmi Rubtech Ltd Vs UoI

Cus - Writ applicant has prayed for striking down of Circular no. 36/2010-Cus dt. 23.09.2010 as ultra vires Section 149 of the Customs Act and also ultra vires Articles 14 and 19(1)(g) of the Constitution of India - It is the case of the writ applicant that the goods were exported for the fulfilment of the export obligations arising in respect of the EPCG (Export Promotion Capital Goods) Licences and as the writ applicant was under an impression that the due drawback was not allowed for the goods exported for fulfilment of obligations under the EPCG Scheme, the claim for drawback was not declared on the export document - Sometime in December, 2018, the writ applicant came to know that the duty drawback at 1.5% of the FOB value was being allowed for the goods in question despite the fact that such goods were exported for the fulfilment of the obligations under the EPCG Scheme - Therefore, they preferred an application dated 28th January 2019 requesting the Commissioner of Customs to allow, in terms of s.149 of the Customs Act, the amendment of 41 shipping bills lodged during the period between October, 2017 and November, 2018 by converting such shipping bills into drawback shipping bills by mentioning the claim for duty drawback on the shipping bills and invoices - Commissioner of Customs, after giving an opportunity of hearing to the writ applicant, rejected the application preferred by the writ applicant on the ground that the CBEC in its circular No. 36/2010 dated 23rd September 2010 in para 3(a) has provided that a request for conversion of the shipping bills should be made by the exporter within three months from the date of the Let Export Order (LEO) and as the request was beyond the time limit of three months, the benefits cannot be granted - Against this rejection, the present petition has been filed.

Held:

+ In Section 149 of the Act, no time period has been prescribed and if in a substantive statutory provision of law, if no time period has been prescribed, then the CBEC could not have issued the circular providing for three months' time period to make a request for conversion from the date of the LEO. [para 16]

+ CBEC could have provided for a particular time limit only by way of regulations made in the Act. "Regulations" means the regulation made by the Board under any provisions of the Act, 1962. Bench takes notice of the fact that Section 149 came to be amended after the filing of the present writ application. The amended Section 149 reads - "In Section 149 of the Customs Act, after the words "customs house to be amended", the words "in such form and manner, within such time, subject to such restrictions and conditions, as may be prescribed" shall be inserted." [para 17]

+ A Coordinate Bench of this Court in the case of Messrs Gokul Overseas vs. Union of India = 2020-TIOL-830-HC-AHM-CUS had the occasion to consider the very same issue at length and wherein the petition filed was allowed. [para 21]

+ In the case on hand, the request is for conversion of the EPCG shipping bill into the EPCG-cum-Drawback shipping bill, for Drawback at all India rate of 1.5% of value of the exported goods. [para 24]

+ In the present case, no verification whatsoever of the goods or any examination of the exported goods is required, because the claim for Drawback is at the All industry rate, which is the common and general rate fixed by the Central Government for all exporters of the goods in the country. If the writ applicant herein had been claiming Drawback at the special brand rate, then the amendment of shipping bills by allowing conversion into Drawback shipping bill may not be possible only on the basis of the documentary evidence which was in existence at the time the goods were cleared for export.

+ But for Drawback at All industry rate, the only requirement would be to consider the export documents where the description, quantity and value of the goods have been recorded, and verified as well as assessed by the Custom Officers while allowing clearance of the goods for export. On the value so assessed by the Custom officers, the calculation of Drawback at All industry rate is only an arithmetical exercise, which could be easily done on the basis of the documentary evidence (i.e. the export documents like shipping bill and export invoice) which was in existence when the goods were cleared for export. [para 27]

+ Since in the present case, the amendment of shipping bills by converting them into Drawback shipping bills is possible on the basis of the documentary evidence which was in existence at the time the goods were cleared for export and the benefit of Drawback at All industry rate of 1.5% of value of the exported goods is also possible to be allowed, the judgement of the Delhi High Court in case of M/s. Terra Films Pvt. Ltd. is not applicable. [para 31]

+ Held that the impugned circular to the extent of para 3(a) is ultra vires Articles 14 and 19(1)(g) of the Constitution of India as also ultra vires Section 149 of the Customs Act, 1962. [para 32]

+ Writ application succeeds and is hereby allowed. The impugned order passed by the Principal Commissioner of Customs, Ahmedabad is hereby quashed and set aside. It is declared that the writ applicant is entitled to the drawback of Rs. 11,18,458/- being the principal amount with statutory interest as provided in Rule 14 of the Drawback Rules. [para 33]

-Petition allowed : GUJARAT HIGH COURT

2021-TIOL-133-CESTAT-MAD

Rasipuram Agricultural Producers Cooperative Marketing Society Ltd Vs CCE

ST - The appellants are cooperative society dealing with various commodities mainly cotton, groundnut and turmeric - The department was of the view that the appellants were conducting auction which would fall within the definition of auctioneering service introduced w.e.f. 1.5.2006 for which SCN was issued - However, the demand under this category was dropped by original authority - He referred to the decision in case of Attur Agricultural Producers Co-Op. Mktg. Society Ltd. 2019-TIOL-3058-CESTAT-MAD to argue that the very same facts were considered by this Bench in said case and held that the activity would not fall under auctioneering service - With respect to the second issue of demand under Business Support Service confirmed in both appeals, the activities done by appellant is only lending of loans to their members to meet sudden expenses - The loan is given against pledging of jewels - To process the application before sanction of loan, the purity of jewels is checked and the value is arrived at on the appraisal done - This activity of lending is held by department to be Business Support Service - The confirmation of demand under this head in both the appeals is erroneous as the activity does not fall under definition of Business Support Service - The very same issue was considered in said decision of Attur Agricultural Producers Co-op Marketing Society and the Tribunal held that the activity would not fall under Business Support Service - As regards to the demand under GTA Service, same was confirmed by both the authorities below - The appellant was carrying on the work of lifting and delivering the goods to the ration shops under Public Distribution System - They were carrying goods in the nature of wheat, rice, pulses and sugar - An amendment by Notfn 4/2010 was brought forth in Notfn 33/2004 whereby the transportation of food grains or pulses was also exempted from levy of service tax - There were several litigations on this issue and the Tribunal in case of Lakshmi Narayan Mining Co. held the issue in favour of assessee and it was upheld by Karnataka High Court - From this angle as the issue was interpretational in nature and also for the reason that there were notifications exempting service tax for carrying food items which underwent amendment later, it cannot be said that the appellant has suppressed facts to evade payment of service tax - In fact, they were carrying food items as part of PDS - Such transportation would be clearly accounted with government and it cannot be said that appellant has willfully suppressed any facts - In SCN, apart from a bald allegation that appellant has suppressed facts, there is no evidence of any positive act of suppression established by department - The demand invoking extended period cannot sustain - On the same grounds, penalties imposed under section 76 and 78 of FA, 1994 is unwarranted - The appellant would be liable to pay service tax along with interest under GTA services for the normal period if any - The demand under GTA services for the extended period alone is set aside: CESTAT

- Appeal allowed: CHENNAI CESTAT

2021-TIOL-132-CESTAT-AHM

Growmore Ceramics Pvt Ltd Vs CCE & ST

CX - The issue relates to interpretation of a document recovered by revenue during investigation - The demand is based on sales register retrieved from the computer which does not stands reflected in the statutory records of sales for the year 1999-2000 - After the first remand order, the matter was again adjudicated by commissioner - In the said order, the commissioner citing largely from the O-I-O dated 11.07.2003 came to the conclusion that the demand was correctly made and reconfirmed the same - The matter was again agitated by appellant before tribunal - After examining the observations made in earlier order of Tribunal, the order of commissioner was set aside and matter was remanded again - Thereafter, the matter was taken up for adjudication by Commissioner once more and vide the order dated 16.04.2020 the demand was once again confirmed ignoring the observation made by tribunal twice over - Thereafter, the impugned order has once again confirmed the entire demand without following the direction in first tribunal order dated 26.11.2007 and also the second tribunal order dated 24.01.2019 - The fact of duplication of demand has been specifically examined in both the tribunal's order and the finding of both the orders are very clear and precise leaving no scope for interpretation - Even if the Adjudicating Authority had any doubts regarding what was stated in first tribunal order dated 26.11.2007, the same was clarified in the second Tribunal order dated 24.01.2019 - In case, the commissioner was aggrieved by observation of second Tribunal order dated 24.01.2019 the right course of action was to take the matter to the higher forum and not to ignore the same - The impugned order passed directly in violation of two tribunal's orders is bad in law and is therefore set aside - The matter once again remanded to the Adjudicating Authority for fresh adjudication following the directions made in earlier order of tribunal dated 26.11.2007 and repeated in its order dated 24.01.2019: CESTAT

- Matter remanded: AHMEDABAD CESTAT

2021-TIOL-131-CESTAT-MAD

BMW India Pvt Ltd Vs CC

Cus - The appellant had imported BMW Cars from their parent company in Germany in the month of May 2009 under 7 Bills of Entry - The appellant filed a refund claim of excess duty paid as per the re-assessment O-I-O - The main issue to be decided is whether refund is hit by unjust enrichment - Appellant has drawn the attention towards invoices, credit note and Chartered Accountant certificate - A compilation of statement showing non-collection of excess duty paid by appellant was furnished at the time of hearing - In this statement, Sl.No.17 is with regard to Bill of Entry No.205828 - Import Cost (AC + higher duty) is Rs.1,06,19,073/- - The customs duty paid for this Bill of Entry is Rs.12,67,292/- and the possible sale price would then be Rs.93,51,781/ - whereas the actual sale price is Rs.81,61,556/- - The credit notes are also filed along with appeal - Credit note dt. 05.06.2009 issued to the appellant by foreign supplier is enclosed - The department contends that as per Section 28D of Customs Act, there is a presumption that the incidence of duty has been passed on when the customs duty is paid - Such presumption is a rebuttal presumption - The certificate of Chartered Accountant would show that he has examined records and verified as to the details of refund claim made by appellant - Further, it is also shown that the amount was reflected in accounts /balance sheet under head 'Customs Refund Receivables' - This would clearly go to establish that the excess duty has not been passed on to the buyers by the appellant - All these documents have been clearly examined by original authority - Tribunal agrees with the decision of refund sanctioning authority that incidence of customs duty has not been passed on to another - The impugned order cannot sustain and same is set aside: CESTAT

- Appeal allowed: CHENNAI CESTAT

2021-TIOL-130-CESTAT-HYD

Dwaraka Constructions Vs CC, CE & ST

ST - The appellant is registered with service tax department and has been paying service tax - Departmental officers received the intelligence that they had been evading service tax in respect of services rendered by them - A SCN was issued to them demanding service tax under Repair & maintenance of roads, Business auxiliary services and Goods Transport Agency Services - Of the three demands, the demand in respect of repair and maintenance of roads is undisputedly covered by retrospective exemption provided by way of Section 97 of Chapter V of FA, 1994 - Therefore, the demand on this account is set aside - As far as the demand on GTA services is concerned, appellant has already paid the amount along with interest and is not contesting the same - Therefore, the demand to this extent is upheld - As regards to demand on "business auxiliary services", demand has been raised on the amounts said to have been received as commission by appellant from the sub-contractor - These amounts match with the TDS amounts deducted from their bills by the Govt department - Tax deduction at source is an amount deducted by person paying the amount - The amount so deducted is paid by deductor to the income tax department and a credit for that amount goes to the payee - The amounts so deducted get set off against the tax liability of payee and if deducted in excess, the amounts are refunded by income tax department - In these cases, the payee is the appellant and the client Govt department has deducted 2% as TDS as per the rules and paid them 98% - If any tax was to be deducted from the sub-contractors payment, it should have been done by the appellant and that amount should have been paid to the income tax department and a credit of such payment would have accrued to the sub-contractor which they could have set off against their (sub-contractor's) tax liability - There is nothing on record to show that a tax has been or was required to be deducted by appellant from the sub-contractors - Such amount is not the amount in dispute - What the appellant has done is, they have deducted 2% as commission from the sub-contractors and took it into their own books of account as an income - Therefore, there is no force whatsoever in the argument of appellant that the amount shown as commission in their books of account is actually tax deducted at source (TDS) - In fact, a perusal of the profit and loss statements of the appellant during the relevant period shows that the amounts have been recorded on the income side as "commission" and there is no corresponding "TO TDS" on the expenditure side - The net profit has been calculated after subtracting the expenses and depreciation from the income including the commission - This net income has been duly reflected in their income tax returns - Thus, the appellant has received commission of 2% of contract value in contracts which they have outsourced to their subcontractors - No service tax can be charged from the appellant under the head business auxiliary services - As bulk of the demands in the impugned order are already set aside, exercising the powers under Section 80 of Finance Act 1994, all the penalties imposed upon the appellant are set aside: CESTAT

- Appeal allowed: HYDERABAD CESTAT