|
2021-TIOL-661-CESTAT-MUM
Reliance Jio Infocomm Ltd Vs CC
Cus - In the relevant period, the assessee-company which is a major telecom operator in India, was issued an SCN proposing that the classification of the goods described in the Bills of Entry as eNodeB BTS/Micro Cell BTS/Femto Cells BTS/Pico Cells BTS the goods and claimed to be Base Transceiver Stations for the 4G Long Term Evolution LTE network should not be changed from Customs Tariff Heading Tariff Items 8517 61 00 to 8517 62 90 of the Customs Tariff Act, 1975 - On adjudication, the proposals in the SCN were confirmed - Hence the present appeals. Held - Classification of a product has to be determined on the basis of the tariff entries and the Instructions issued by the Board have also to be examined in the light of the tariff entries - eNodeB is an evolved Base station of 4G Technology, which does not have the drawback of the Base Stations of 2G and 3G technology of having to communicate via a separate Controller owing to inability to communicate directly, which results in slowing down the speed of the connection - Merely because the Base Stations of 4G LTE have overcome the drawback of the Base Stations of 2G and 3G technology, it cannot mean that eNodeB is not a Base Station - Hence eNodeB BTS/Micro Cell BTS/Femto Cells BTS/Pico Cells BTS rightly classifiable under Tariff Item 8517 62 90 ibid : CESTAT + It also needs to be noticed that the show cause notice that was issued to Reliance Jio, in paragraph 6.5, states that eNodeB is a LTE/4G equipment which has built in functionality of Base Transceiver Station and Base Station Controller of a 2G wireless network or NodeB and Radio Network Controller of a 3G wireless network and although it may be commercially referred to as a 'Base Station' of LTE network in the 4G Wireless Network, its functionality is beyond that of the earlier Base Stations (Base Transceiver Stations of 2G Networks or NodeB of 3G Networks). The show cause notice, therefore, proceeds on the footing that the classification of eNodeB should take into consideration the fact that it is a machine performing functions of both the Base Transceiver Stations/eNodeB as well as that of the Base Station Controller/Radio Network Controller. (Para 30); + It further needs to be noted that the impugned order also accepts that the goods are 'Base Stations' especially in normal terminology and that a plain reading of the term 'Base Station' would no doubt reveal that it should correctly be classifiable under Tariff Item 8517 61 00 ibid, which is meant specifically for 'Base Stations'. This classification, however, has not been accepted in the impugned order solely for the reason that when seen from the perspective of the technology involved in the goods which encompass certain other control features that go beyond the basic functionalities of a Base Station, eNodeB should be classified under Tariff Item 8517 62 90 ibid. (Para 31) + Every cellular network, whether it is 1G Network (First Generation Network), 2G Network (Second Generation Network), 3G Network (Third Generation Network) or 4G Network (Fourth Generation network), must necessarily have a Base Station, as a Cellular Network cannot be without a Base station. 4G Network, therefore, must also have a Base Station, and it has been contended on behalf of Reliance Jio that eNodeB is the Base Station of 4G Network and would, accordingly, be classified as 'Base Stations' under the specific sub-heading for 'Base Stations' i.e. 8517 61 00. It is not the case of the Department that there is some other equipment, other than eNodeB, which is the Base station of 4G network and indeed none has been pointed out during the course of hearing. (Para 33) + It would be seen that even the aforesaid Instructions issued by the Board accept that eNodeB is commercially referred to as 'Base Station' of LTE network but the reason why eNodeB has not been classified under Tariff Item 8517 61 00 ibid is that its functions go beyond the functions performed by the earlier 'Base Stations' of 2G network or 3G network. (Para 36) + What is important to note is that the classification of a product has to be determined on the basis of the tariff entries and the Instructions issued by the Board have also to be examined in the light of the tariff entries. (Para 37) + It is seen that eNodeB is an evolved Base station of 4G Technology, which does not have the drawback of the Base Stations of 2G and 3G technology of having to communicate via a separate Controller owing to inability to communicate directly, which results in slowing down the speed of the connection. In that sense, the Base Stations of 4G Technology (digital signals) are at par with the Base Stations of 1G Technology (analog signals) in the sense that 'Handover' in both takes place at the Base Stations itself and not via a separate Controller. (Para 38) + This has also been explained in the 3GPP website http://www.3gpp.org/techno1ogies/keywords-acronyms/98-lte. It states that in 4G Technology there is no separate Central Controller controlling the various Base Stations and the Base Stations have the necessary intelligence to communicate directly as a result of which 'Handover' of calls takes place directly without the intervention of any Controller. This helps to speed-up the connection set-up and reduce the time required for 'Handover'. It has further been explained that for an end-user, the connection set-up time for a real time session is crucial and that if the 'Handover' takes too long, the end-users tend to end the calls. (Para 39) + Merely because the Base Stations of 4G LTE have overcome the aforesaid drawback of the Base Stations of 2G and 3G technology, it cannot mean that eNodeB is not a Base Station. It cannot, therefore, be said that 'Base Stations' of 4G technology cannot be called 'Base Stations' because unlike Base Stations of 2G technology and 3G technology, it does not require a separate Controller. As noticed above, historically the very first Base Station of 1G Technology also did not have a separate Controller and the requirement of a Controller in 2G technology and 3G technology was perceived to be a drawback, as it slowed down the speed of connection. Thus, it cannot be urged that the Base Station of 4G technology is not a Base Station and cannot be classified under Tariff Item 8517 61 00 ibid, which is specifically for 'Base Stations'. (Para 40) + This discussion inevitably leads to the conclusion that the goods deserve to be classified under Tariff Item 8517 61 00 ibidn as contended by Reliance Jio and not under CTH 8517 62 90 as contended by the Department. The impugned order dated 14.06.2019 passed by the Commissioner, therefore, to the extent it classifies the goods under Tariff Item 8517 62 90ibid and consequential demand of differential duty w.e.f. 01.03.2016, cannot be sustained and is set aside. (Para 61)
- Assessee's appeal allowed/Revenue's appeal dismissed: MUMBAI CESTAT
2021-TIOL-660-CESTAT-BANG
Apnacar.Com Pvt Ltd Vs CCT
ST - The assessee-company was being investigated by the DGCEI during the relevant period - The assessee pre-deposited about Rs. 19 lakhs as service tax liability & such amount was quantified neither by the assessee nor by the Department - In regular course, the asseessee paid about Rs. 28.84 lakhs as predeposit, out of which about Rs. 35 lakhs were appropriated by the Department during adjudication - Interest was appropriated as well - Penalty was imposed u/s 78 of the Finance Act, 1994 & the same was paid, whereupon the litigation against the assessee ended - Thereafter, the assessee claimed that an excess amount of about Rs. 13 lakhs was appropriated in course of adjudication proceedings - The assessee submitted copies of challans to establish payment of service tax in excess of the liabilities - The assessee claimed refund of the excess amount paid by it in course of adjudication proceedings - The assessee furnished a Chartered Accountant certificate who had certified, at the request of the appellant, that a few of the payments were made from the appellant's sister concerns towards Service Tax during investigation - However, the Department rejected the assessee's refund claims on grounds of unjust enrichment. Held - The adjudicating authority observed that the assessee's refund claim was not backed by documentary evidence - Besides the Chartered Accountant certificate furnished by the appellant is given in 2019 while the payments were made in the year 2008 - The CA further specified that the certificate had been issued at the request of the assessee - Hence the CA certificate is a self serving document which cannot serve as conclusive proof - Law provides permissible documentary evidences that are accepted by the sanctioning authority and apparently, no effort seems to have been made by the assessee in this regard - Nonetheless the assessee deserves a second chance since refund is subject to Section 11B wherein the Revenue has to credit the refund amount claimed into the Consumer Welfare Fund, if the claimant is not entitled to it - Hence the order rejecting refund is quashed & the case is remanded to the AO for reconsideration of the assessee's eligibility for refund of duty: CESTAT
- Matter remanded: BANGALORE CESTAT
2021-TIOL-659-CESTAT-AHM
Kiran Syntex Ltd Vs CCE & ST
CX - The assessee-company was engaged in twisting of polyster yarn at its unit situated at Karanj, Taluka- Mandvi, Surat (hereinafter, referred as twisting unit) - It was also briefly engaged in texturizing of yarn at the same unit - At another unit of the assessee, it carried out dyeing of the twisted yarn (hereinafter, referred as dyeing unit) - At the twisting unit the appellant received texturized yarn or draw twisted yarn which was purchased either from manufacturers under Central Excise invoices or from the open market from various dealers under Commercial Invoices - The assessee then subjected such yarn purchased by it to the process of twisting - In respect of such twisting yarn, the assessee availed the benefit of duty exemption under the following Notifications, which granted exemption to twisted polyster filament yarn manufactured out of textured or draw polyster filament yarn falling within Chapter 54 of the First Schedule to the Central Excise Tariff Act on which the appropriate duty of excise under the first schedule, special duty of excise under the second schedule or as the case may be, the additional duty leviable under the Customs Tariff Act, 1975 (51 of 1975) has already been paid - The assessee availed exemption under these notifications on the twisting yarn made out of the textured yarn purchased by them from the open market - At its twisting unit, the assessee also received partially oriented yarn/non-texturised yarn purchased by the assessee & which was then subjected to texturising - The assessee paid duty on the textured yarn which was then subjected to the process of twisting in respect of such twisted yarn & the assessee availed exemption under these notifications - Subsequently the DGCEI commenced investigations into the exemptions availed by the assessee under the relevant notifications, in respect of the yarn twisted at the twisting unit and the yarn dyed at the dyeing unit - Thereafter, SCN was issued proposing to raise duty demand for the relevant period - The Revenue claimed there to be no evidence of duty paid on twisted yarn procured from open market - In respect of the dyed yarn, the Revenue claimed there to be no evidence that duty-paid yarn was used in its making - In respect of dyed yarn which was made out of textured or twisted yarn purchased from the open market, the Revenue claimed there to be no evidence of duty being paid thereon - On adjudication, the proposals in the SCN were confirmed - Before the Tribunal, the matter was remanded on two occasions - Pursuantly, the SCNs were again confirmed - On the third occasion, the Tribunal quashed the O-I-O & matter was remanded - The adjudicating authority was directed to decide upon the issue of limitation by relying on orders passed by the Tribunal in another matter involving identical circumstances - As the demands were confirmed once again, the present appeals were filed. Held - The Department has not established that the goods which was procured from open market either attracts nil rate of duty or some exemption was availed - In the present case since, the goods purchased directly from the manufacturer and purchased from the open market it cannot be said that, the goods used is either exempted or attracts nil rate of duty - This issue has been considered in various judgments cited by the appellant wherein, it was held that the goods which were purchased from the open market are deemed to be duty paid: CESTAT + As regard preliminary issue raised by the revenue that being two units of the appellants involved in this case, whether only one appeal is sufficient or one more appeal is required to be filed. We find that this is third round of appeal. This issue was not disputed by the revenue in earlier two round of appeals, which attained finality, therefore at this stage the objection of the revenue is not tenable. Moreover, even though there are two units i.e. Twisting unit and other is Dyeing unit but both the units belongs to one company, hence only one consolidated appeal is sufficient, particularly when Order-In-Original is one common order in respect of both the units. Hence, the revenue's objection on this point is not sustained. (Para 4); + we find that since the appellant have procured the goods from the open market the same being not procured directly from the manufacturer they have not received the duty paid invoices however, the department could not establish that the texturized or draw twisted yarn purchased from the open market is non duty paid. The goods per se indeed dutiable and does not attract nil rate of duty therefore, it cannot be said that merely because the goods were purchased from open market under commercial invoices is non duty paid. This issue has been considered in various judgments cited by the appellant wherein, it was held that the goods which were purchased from the open market are deemed to be duty paid. (Para 4.3) ; + in the above judgments, it is clearly held that when the yarn is purchased from the open market it is deemed to be duty paid and the appellant does not have to show the purchase on payment of duty. The adjudicating authority simply relied upon the statements of the appellant's representative that the base yarn was purchased from local merchants from open market without duty paid invoice. Only on the basis of these statements, it cannot be established that the base yarn procured from the open market shall be treated as non duty paid. As regard the dyed yarn, the same was manufactured partly from twisted yarn received from the appellant's twisting unit which was made out of duty paid textured or draw twisted yarn and the textured or draw twisted yarn purchased from the open market. (Para 4.4); + As regard the twisted yarn received from the appellant's twisting unit, there is no dispute that though the appellant have availed exemption on twisted yarn but the textured or draw twisted yarn used by the appellant themselves for manufacture of twisted yarn the appropriate excise duty was paid. (Para 4.5) ; + In this case since right from the processing of textured or draw twisted yarn up to the manufacture of dyed yarn, the activities were carried out by the appellants themselves. Since the initial raw material i.e. Textured or draw Twisted yarn on which excise duty was paid, the condition of the exemption provided to dyed yarn that the same should be manufactured out of duty paid goods stands satisfied. The contention of the department is that since the dyed yarn was manufactured by the appellant from the twisted yarn on which exemption from duty was availed the condition of exemption of dyed yarn was not complied with is not tenable. When the dyed yarn is made out of twisted yarn and the twisted yarn in turn is made out of duty paid or draw twisted yarn the dyed yarn is also to be considered as having been manufactured out of duty paid textured or drawn twisted yarn therefore, they are eligible for the benefit of the said notifications. (Para 4.6); + As regard the dyed yarn made out of draw or twisted yarn purchased from open market such yarn purchased from the open market has to be treated to be duty paid since, the department could not establish that the said yarn purchased by the appellant was not duty paid. This issue has already been discussed by us in para 4.3 above which is equally applicable in this case of dyed yarn also therefore, the dyed yarn made out of the yarn purchased from the open market is entitle to the exemption. (Para 4.7) ; + As regard the submission made by the appellant on limitation, we find that in the present case the issue involved is of interpretation of notification. On the same issue there were number of judgments including the judgment of Supreme Court in favour of the assessee therefore, the appellant had entertained bona fide belief that they are entitle for the exemptions notifications therefore, it cannot be said that there is any fraud, collusion, wilful misstatement or suppression of facts or contravention with intention to evade duty on the part of the appellant. Moreover, in the earlier round of the appeal in the same case before this Tribunal, the Tribunal has given the observation in the order dated 13.05.2011 that the Adjudicating Authority shall decide the issue of the limitation following the decision of the Tribunal, in identical case of KIRAN INDUSTRIES in which on identical facts it was held by the Tribunal that the larger period of limitation does not apply. We find that in the case of KIRAN INDUSTRIES the demand for longer period was set aside. The facts of this case as well as KIRAN INDUSTRIES'S case are absolutely identical therefore, following the decision of KIRAN INDUSTRIES particularly when it was directed by this Tribunal, it was incumbent on the Learned Commissioner to drop the demand for the longer period. Accordingly, we are of the clear view that demand for the longer period is clearly not sustainable. (Para 4.8);
+ As regard the judgment relied upon by the revenue in the case of Dhiren Chemical Industries - 2002-TIOL-83-SC-CX-CB and on Board's Circular No. 125/36/95-CX, dated 15-5-1995, we find that the said judgment is not directly applicable, in the facts of the present case for the reason that in the said judgment the Supreme Court has held that where the goods is exempted or attract nil rate of duty used in such goods shall not entitle the manufacture to avail exemption which contains the condition that goods should be used out of the other goods on which duty was paid. In the present case, the Department has not established that the goods which was procured from open market either attracts nil rate of duty or some exemption was availed. In the present case also since, the goods purchased directly from the manufacturer and purchased from the open market it cannot be said that, the goods used is either exempted or attracts nil rate of duty. Hence, the ratio of the Supreme Court judgment in the Dhiren Chemical Industries case is not applicable to the facts of the present case. (Para 4.9)
- Assessee's appeals allowed: AHMEDABAD CESTAT
|
|
