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2023-TIOL-410-HC-AHM-CX
Mohit Industries Ltd Vs UoI
CX - This is a petition preferred by the petitioner who has two factories one at Kim, District Surat and second at Masat, Silvassa - The petitioner is engaged in the business of manufacture of polyester yarn, falling under chapter 5402 of Central Excise Tariff Act, 1985 - Both the factories of petitioner had separate Central Excise Registration number - The factories of the petitioner were running prior to the date 09.07.2004 - The petitioner also availed Central Value Added Tax (CENVAT) Credit of duty paid on input and capital goods on one hand and on receipt at factory, and on the other hand, paying Central Excise duty on Finished Goods on clearance from factory - On 09.07.2004, petitioner had accumulated amount of CENVAT credit in his statutory record for both the factories separately - The Central Government has issued two notifications for Textile Industry for levy of duty. First one was Number 29/2004-CE dated 09.07.2004, manufacture of polyester yarn would need to pay duty on finished goods and he would be also eligible to avail CENVAT credit of duty paid on inputs - In second Notification No. 30/2004-CE dated 09.07.2004, manufacturer of polyester yarn will be exempt from payment of duty on finished goods with the condition that no CENVAT credit of duty paid on input would be availed - the petitioner exported finished goods from both the factories, on the payment of duty and filed the rebate claim with Respondent No. 3 and Respondent No. 4 - This was rejected on various grounds - The legal grounds, based on which rebate claims were rejected, were decided in his favour in separate proceedings by the Commissioner (Appeals) and Tribunal - According to the petitioner, during personal hearing, the copy of order was submitted to the Principal Commissioner (RA), Additional Secretary to the Government of India - However, after the change of adjudicating authority, he did not provide opportunity of fresh hearing and did not follow the principle of natural justice - The Principal Commissioner (RA) also rejected the appeals without following the principle of judicial discipline and hence, the present petition is preferred questioning the breach of principle of natural justice.
Held - Without entering into as to whether the interpretation made is in accordance with law or not, this Court notices that the revisional authority itself has made a note of the fact that there was a change of the revisional authority - Relying on the written submissions of the petitioner of 09.09.2019, where it had requested to pass the order considering the documents available in record and they did not want any personal hearing since one such hearing had already taken place on 18.09.2019 has been relied upon to decide the matter on the strength of the record - Even if it is a matter of interpretation of the Rules, the Court is of the firm opinion that the authority which hears the matter should be deciding and not the other authority - Assuming that the petitioner would have nothing else to further add, it is a serious violation of principles of natural justice, if the authority which heard the matter is different than the one which actually adjudicates - This serious lapse would surely lead this Court to interfere with the order of the revisional authority and quash the order for the parties to be relegated to the concerned revisional authority: HC
+ It is a matter of fact that from 09.07.2004 the applicant started to avail both the notifications simultaneously and kept separate record. The CBEC vide Circular No.795/28/2004-CX dated 28.07.2004 clarified that there is no restriction on availing both the notifications simultaneously. The CENVAT credit prior to 09.07.2004 was carried forward in the record maintained under Notification No.29/2004 and fresh CENVAT credit was availed and duty on finished goods was paid through this CENVAT Register. For any clearance of finished goods made under Notification No.30/2004, no CENVAT credit was availed on inputs and no duty was paid on the finished goods manufactured from such inputs. It is, therefore, the case of the petitioner that accumulated amount of CENVAT credit cannot be declared nonest and it can be legally used for the payment of duty on finished goods for subsequent clearance. It is further the say that provisions of Rule 11 (3)(ii) are not applicable to the current case as their final product POY is not absolutely exempt under Section 5A of the Central Excise Act and it is liable to duty at the rate given under Notification No.29/2004-CE and hence, it is exported under the payment of duty. It is held that the right to avail CENVAT credit accrues as soon as the scheme is availed. The right to adjust the tax on final product accrues to the assessee on the date when they pay the tax on the raw material or the inputs and the right would continue until the facility availed they had to get worked out or until those goods exists as per the decision of the Apex Court in M/s.Eicher Motors Limited vs. Union of India, = 2002-TIOL-149-SC-CX-LB . Relying on the CBEC Circular No. 845 of 2007 dated 01.02.2007 wherein it is clarified that in case the credit taken on input used in manufacture of the said goods cleared under Notification No.14/2004 or Notification No.30/2004 has been reversed before utilization, it would amount to credit not having been taken. It is the say of the petitioner that the applicant which has reversed the CENVAT credit involved in the stock of 31.07.2006 on 01.08.2006 and cleared the texturized yarn under Notification No.30/2004, the Board Circular does not prohibit the assessee to avail the Notification No.30/2004 and the balance amount in such eventuality of CENVAT credit cannot lapse hence, the serious challenge is made to the show cause notice;
+ it is noticed that after detailed examination of sub-rule (3) (i) and (ii) of Rule 11 of the CENVAT Credit Rules so also the Circular No.795 which allows the manufacture to avail both Notifications Nos.29 and 30 as well as considering various decisions, the revisional authority held that the applicant had opted for benefit of exemption notification continuously for years onwards after 09.07.2004. The CENVAT credit balance carried forward in the CENVAT account lapsed after insertion of sub-rule (3) of Rule 11 of the CENVAT Credit Rules w.e.f. 01.03.2007 since the applicant availed total exemption on all the final products during the aforesaid period and as such the duty paid from such lapsed CENVAT credit on the said exported goods at a much later date is not a payment of duty and therefore, the rebate claims were rightly held inadmissible by Commissioner (Appeals). - Writ petition allowed: GUJARAT HIGH COURT
2023-TIOL-270-CESTAT-MUM
Jayesh Shipping Pvt Ltd Vs CC
Cus - The appellant filed the present appeal to contest vires of confirmation of Customs duty of about Rs 2.66 crores on re-determined value of about Rs 17.58 crores of Barge imported against Bill of Entry u/s 28 of Customs Act along with interest u/s 28AB of the Customs Act, as well as confirmation of 'work accomodation barge Sarku Utama' u/s 111(m) of Customs Act with option to redeem on payment of fine of Rs 1.75 crores & equivalent penalty u/s 114A of Customs Act - The cavil of the appellant is that the transaction value of USD 25,000,000 in the memorandum of agreement (MoA), as well as bill of sale, with the seller, M/s Sarku Engineering Services SDN BHD, Malaysia had been discarded and that, in doing so, Rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 had been invoked for alleged lack of consistency among the values ascertained by their surveyor and the value for the purposes of 'marine hull and machinery insurance' policy of M/s Oriental Capital Assurance for resort to rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 by adoption of value of USD 3,814,411 estimated by M/s Intertek Testing Services Pvt Ltd to which landed cost was added for assessment - The Director of the importing company, Mr Ashish Ingle, is also challenging the penalty imposed on him under section 112 of Customs Act, 1962.
Held - We do find that the adjudicating authority has incorporated facts, not suitably tested by offering opportunity to challenge, which is anathema to just and fair adjudication - The deficiency in not placing the appellants on notice of these allegations would need to be remedied and it is only by a fresh adjudicating process that the factual position may be established - As pointed out by Council, the restricted framework of section 28 and section 114A of Customs Act, 1962 would have to be adhered to in in the fresh proceedings - The adjudicating authority is also obliged to explain the different positions adopted for valuation of the same vessel which, but for a brief while, was within Indian territorial waters and, yet, was found to be valued with substantial difference on the two occasions; this could have a significant bearing on the manner in which the residual method is used for conformity with the scheme of valuation espoused in rule 3 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - The determination of the value in the certification of the Chartered Engineer retained by the investigators would have to be elaborated upon by the adjudicating authority for it to have credibility acceptable to the appellate process - Hence the matter is remanded for re-determination of all these issues: CESTAT
- Case remanded: MUMBAI CESTAT
2023-TIOL-269-CESTAT-MAD
Dassault Systemes Simulia Pvt Ltd Vs CCE & ST
ST - The appellant is engaged in the sale of software programme "Abaqus" to various customers - There was an audit conducted by officers of the Internal Audit Group of Service Tax Commissionerate, Chennai, wherein they appeared to have ascertained that the appellant's Head Office was at U.S.A., from whom they purchase the software, enter into an agreement/contract with Indian customers for maintenance and enhancement of the software sold by them and that the appellant had incurred expenditure in foreign currency towards the purchase - The SCN reveal that the appellant offered various licence types to their customers and the revenue generated therefrom were duly reflected in their balance-sheet as Annual, Paid-up, MES and Academic and from the break-up details that were available from the appellant's balance-sheet, it was ascertained that the expenses related to Academic, Paid-Up Annual And Monthly, were related to the purchase of software and MES-ME related to maintenance, enhancement and support of the software provided by the foreign companies to the appellant - The Revenue opined that the assessee's activities constituted management, maintenance or repair service with effect from 10.07.2004 and that therefore, the appellant being the recipient in India was liable to pay Service Tax under reverse charge mechanism in terms of Section 66A of the Finance Act, 1994 read with Rule 2(i)(d)(iv) of the Service Tax Rules, 1994 - The Revenue also invoked extended period of limitation to raise duty demand.
Held - Section 66A is the charging section under reverse charge mechanism on the services provided or to be provided by a person who is not having a permanent address or usual place of business or residence in a country other than India; and received by a person having business or place of residence, in India - Taxation of Services (Provided from Outside India and Received in India) Rules, 2006, as the name itself indicates, shall apply for services provided from outside India and received in India, when Section 66A ibid is applicable - There is no difficulty for this proposition as the very Rule 3 ibid. starts with " subject to Section 66A of the Act…" - Conjoint reading of these provisions shows that they shall apply when services are provided from outside India and not if the services are provided by a person in India to any other person in India - Both provisions apply only when service provider is located outside India and service recipient is located in India - Further, the Adjudicating Authority has negated the claim of the appellant that it is the second proviso to Rule 3(ii) of the Taxation of Services Rules that would apply, by holding that the software which was supplied by the foreign company was very much available in India upon its receipt by the appellant, which was only thereafter forwarded within India to the customers - it is the second proviso which specifically refers to the taxable services inter alia referred to in sub-clauses (zzg), (zzh) and (zzi) of clause (105) of Section 65 of the Act, which are provided in relation to "any goods…" - There is no dispute here that the software is treated as 'goods' and the alleged service albeit provided through internet, but performed in India - Therefore, to say that the software was available in India, with the appellant and hence the provision of service was from India only, as observed by the Adjudicating Authority, runs counter to the demand of Service Tax under reverse charge mechanism within the meaning of Section 66A read with Rule 3 (ii) of the Taxation of Services Rules - Hence the appellant could not have been fastened with the service tax liability under Management, Maintenance or Repair Service, since there is no document placed on record to negate the appellant's claim that it did not render any service in India - The Revenue too could not place any evidence on record to show that the appellant rendered nothing but management, maintenance or repair service - Hence the demand merits being quashed: CESTAT
- Appeal allowed: CHENNAI CESTAT
2023-TIOL-268-CESTAT-AHM
Pet Metal Pvt Ltd Vs CCE & ST
CX - The penalty was imposed on appellant who is a Director of Company M/s. Pet Metal Pvt Ltd. under rule 15(1) of Cenvat Credit Rules, 2004 - From the plain reading of said rule, it is clear that penalty under aforesaid provision can be imposed only on person who is availing Cenvat Credit - The wrong availment of credit was done by M/s. Pet Metal Pvt Ltd. and not by present appellant - Therefore, penalty under rule 15(1) of CCR, 2004 cannot be imposed on person who has not availed Cenvat Credit - Penalty under rule 15(1) cannot be imposed on appellant, therefore, the impugned order stands modified to said extent: CESTAT
- Appeal allowed: AHMEDABAD CESTAT |
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