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2023-TIOL-408-CESTAT-MAD
Ars International Vs CC
Cus - Appeal filed against impugned order passed by Commissioner who ordered for revocation of Customs Broker license of appellant, forfeiture of whole of security deposit and imposed penalty of Rs.50,000/- - As per Regulation 10(d), Customs Broker is required to advice the client to comply with provisions of the Act and bring to the notice of department in case of non-compliance - Regulation 10(e) requires that Customs Broker has to exercise due diligence to ascertain the correctness of information provided by client to him - Regulation 10(n) casts an obligation on Customs Broker to verify the correctness of IE Code, GST Registration, identify of client and functioning of client at declared address by using reliable independent authentic document, data or information - It is brought out from evidence that exporter had a valid IE Code, GST registration, PAN card and bank details - It is submitted by appellant that Customs Broker had done KYC verification of exporter by checking details of GSTIN, IE Code - Department issues GSTIN number only after background checking of exporter - Address and business details of person who has applied for GST registration is verified by department - When said registration is still operative as per the website, Customs Broker cannot be found fault if he has relied upon such data available on Government website - There is no evidence brought out that there is any overt involvement of Customs Broker in fraud committed by exporter - There is no basis to allege that appellant has violated relevant Regulations of CBLR, 2018 - Department has failed to establish with cogent evidence that there are grounds for revoking license of appellant, impugned order is therefore set aside: CESTAT
- Appeal allowed: CHENNAI CESTAT
2023-TIOL-407-CESTAT-MAD
St John CFS Park Pvt Ltd Vs CCE
ST - The only issue that arises for consideration is, whether the Revenue is justified in demanding Service Tax at the rate of 8/6% of value of services rendered and received in respect of export of cargo by treating the handling of export cargo as an exempted service - It is clear from definition under Rule 2(e) ibid., that an exempted service is one on which no Service Tax is leviable - That is to say, but for the fact that it is exempted, otherwise the tax is leviable - Further, no service could be treated as an exempted service unless it is specified so under Rule 2(e) ibid - The services which are 'excluded' cannot be given the colour of 'exemption' just to fit it somewhere so that a benefit flowing from the statute to a taxpayer is denied - The words "does not include" in definition of cargo handling service takes the service very much out of purview of taxability, thereby touching upon jurisdiction of taxing authority and hence, the same, at no stretch of imagination, could be held or equated with an exempted service - Hence, the services rendered by appellant, insofar as the same related to handling of export cargo, is excluded from taxability and thus, same cannot be brought as 'exempted' under Rule 2(e) ibid - Once it is held as 'excluded', there is also no scope to consider the same as an 'exempted' service just for the purposes of Rule 6 of CENVAT Credit Rules, 2004 - Revenue is not justified in demanding Service Tax by treating the handling of export cargo as an exempted service and consequently, impugned order is set aside: CESTAT
- Appeal allowed: CHENNAI CESTAT
2023-TIOL-406-CESTAT-DEL
National Refrigeration Vs CCE
ST - The only issue arises is that there was no suppression of facts and hence extended period of limitation could not have been invoked as period involved is July 2003 to July 2004 and SCN was issued on 12.01.2007 - On the same ground, assessee also contested that penalty should not have been imposed - Assessee does not dispute that it was provided maintenance and repair services during the period - The intention to evade payment of service tax and suppression of facts needs to be determined based on evidence available on records - As long as assessee is registered and continues to file returns as required and supplies information sought by officers, nothing more is required from them - They are required to self assess its service tax, and officer is required to carry out scrutiny of returns if filed or otherwise make best judgement assessment - Assessee had taken service tax registration and admittedly it had not filed any ST-3 returns - Even if assessee was under impression that it was not required to file returns or pay tax, there can be no justification whatsoever for assessee to not reply to or provide information which is sought by officers - Since assessee had not supplied information despite repeated reminders from Assistant Commissioner did what was best possible under the circumstances - He obtained details of amounts received by assessee from Income Tax office and made an assessment - Lower authorities were correct in concluding that assessee had intention to evade payment of service tax and had suppressed providing the information - No reason found to interfere with penalties imposed as well - Impugned order is upheld: CESTAT
- Appeal dismissed: DELHI CESTAT
2023-TIOL-405-CESTAT-DEL
Cords Cable Industries Ltd Vs CCE
ST - Appellant is engaged in manufacture of instrumentation/power cable and paid an amount towards rent to Naveen Sawhney and D.K. Prashar for the premises let out by them to the appellant - A SCN was issued to appellant invoking extended period of limitation - The premises which were let out to appellant are owned by Naveen Sawhney and D.K. Prashar in their individual capacity and it is not the case of department that properties were owned by them as Directors of appellant - Rent was collected by them in their individual capacity and merely because they also happen to be the Directors of appellant would not mean that they had collected rent as Directors of appellant - The person liable to pay service tax under reverse charge mechanism has also been stipulated under rule 2(1)(d) of Service Tax Rules, 1994 - Commissioner (A) assumed that Naveen Sawhney and D.K. Prashar are providing service of renting of immovable property as Directors of appellant, whereas they are providing said service in their individual capacity as owners of premises and not as Directors of appellant - Appellant, in such a situation, could not have been asked to pay service tax on a reverse charge mechanism - What needs to be further noticed is that service tax had been deposited on the rent received by Naveen Sawhney and D.K. Prashar from appellant - Thus, impugned order cannot be sustained and is set aside: CESTAT
- Appeal allowed: DELHI CESTAT
2023-TIOL-404-CESTAT-DEL
CCE & CGST Vs Trinetra Cement Ltd
CX - The assessee, M/s. Trinetra Cements, Rajasthan was a subsidiary of M/s. India Cements - It manufactured cement and clinker and availed CENVAT credit of the excise duty paid on its inputs and service tax paid on its input services including the service tax passed on to it by its head office in Gujarat through input service distributor invoices under the CENVAT Credit Rules, 2004 CCR - Its head office in Gujarat was registered as an Input Service Distributor ISD under the Service Tax Rules, 1994 and issued ISD invoices distributing the service tax paid on various services to its manufacturing units including the appellant - The appellant availed CENVAT credit on the basis of such ISD invoices some of which is in dispute in these appeals. Held - The appeal is partly allowed to the extent of allowing CENVAT credit on Event Management services and Mandap Keeper Services and the impugned order stands modified to this extent. Rest of the impugned order is upheld: CESTAT + the CCR envisage recovery of irregularly availed CENVAT credit from the one who has so availed it under Rule 14 and they have no mechanism to recover CENVAT credit from the ISD who merely passes the CENVAT credit to its units. However, if the CENVAT credit is availed on the strength of an excise invoice issued by the manufacturer who supplied the inputs or a service tax invoice issued by the provider of input service, the assessment of the excise duty or the service tax in such invoices cannot be examined or opened by the officers dealing with the CENVAT credit of the recipient of the input or input service. The reason for this is self-evident. If the manufacturer pays excise duty or a service provider pays service tax incorrectly, the assessing officers in whose jurisdiction they fall have to decide the issue and the officer having jurisdiction of the buyer is not the assessing officer of the supplier of the goods or services. In MDS Switchgear relied upon by the learned counsel, the Department issued a SCN to the assessee seeking to change the assessable value and consequently, the duty of its supplier and thereby, restrict the MODVAT credit taken by the assessee. The demand was confirmed by the Commissioner but it was set aside by the Tribunal which decision was upheld by the Supreme Court. However, the ISD invoices stand on a different footing and no duty is assessed by the jurisdictional officer of ISD as it neither pays any excise duty or service tax nor does it avail and utilize the benefit of the CENVAT credit but merely passes the credit of service tax paid by the service providers to its units which avail CENVAT credit and use it. These units file returns which show, among other things, the CENVAT credit availed. The jurisdictional officers have to scrutinize and assess them and if any CENVAT credit is irregularly availed on the strength of invoices (including ISD invoices), it can be recovered under Rule 14 of CCR from them. The case laws relied upon by the counsel deal with situations where the jurisdictional officer of the assessee who used the CENVAT credit wanted to reassess the duty paid by the manufacturer of the goods; Held - Advertising services - A plain reading of Rule 2(l) of CCR allows credit of advertising expenses and it does not place on any restrictions on what type of advertising qualifies for CENVAT credit. So long as the advertisement is for the excisable goods sold or the taxable services rendered, there can be no restriction on availing the CENVAT credit - In particular, there is no condition that the brand which has been advertised should have been owned by the assessee availing CENVAT credit - If company A manufactures goods under the brand name belonging to company B under licence, it is natural for A to advertise its goods with that brand name and such advertising expenses get squarely covered under Rule 2(l) of CCR - We, therefore, find that the assessee was entitled to CENVAT credit on advertising services and the Commissioner has correctly allowed CENVAT credit - Revenue's appeal deserves to be dismissed - The other submissions by both sides regarding the date of amalgamation of the assessee with M/s. India Cements are irrelevant as we find that there is no requirement that the brand name under which the goods have been advertised must belong to the assessee: CESTAT Held - Business Auxiliary Services - CENVAT credit has to be allowed only if the excise duty paid on the inputs and service tax paid on the input services used in or in relation to the manufacture of the final products - The law does not permit CENVAT credit of any service tax paid on any bill for any service availed in the course of business - If such was the intention of the law, there would have been no need to restrict credit to 'inputs' and 'input services' and further clearly defining these two terms - The term 'input service' has a means clause and an inclusion clause which further enlarges the scope of the term and an exclusion clause which reduces its scope - Any services availed on vehicles and service tax paid on service component of any works contract for construction of a building are clearly excluded from the scope of 'input services' - Therefore, even if such services fall in the means portion of the definition of 'input services', they do get excluded by the exclusion clause of the definition: CESTAT Held - Business Auxiliary Services - Since the appellant is claiming the benefit of CENVAT credit, it is for the appellant to show how the services fall within the definition of 'input service' - The submission of the counsel for the appellant is that all these programmes from gold distribution melas to marriage anniversary and food bills should be treated as expenses towards business promotion - We do not agree - Every expense which any business incurs will have some bearing or relationship with its business and if the intention of the CENVAT credit Rules is to allow CENVAT credit on every bill, they would have said so - Instead, credit is confined to duty paid on inputs and service tax paid on input services and a detailed definition of 'input services is provided' - We are not convinced that celebrating marriage anniversaries, family visits, melas, and buying chocolates and pens, etc. fall within the definition of the 'input services' of the appellant - We agree with the detailed reasoning given by the Commissioner in the impugned order for denying CENVAT credit of Rs. 31,96,936/- on business auxiliary services: CESTAT Held - Event Management service - these services were availed, as recorded in the impugned order, to arrange annual award and other functions/ programmes for the dealers - However, the Commissioner denied CENVAT credit that the invoices did not mention what event was being organized - When one hires a service provider, he may not always indicate in detail the programme which is being organized - Instead, he indicates the services which he provided and the name of the client - In our considered view, the services rendered towards the annual awards or other programmes for the dealers have a direct nexus to sales promotion and CENVAT credit is admissible on such services - Accordingly, we allow CENVAT credit availed by the appellant on these services: CESTAT Held - Mandap keeper services - if the invoice was issued to the appellant and it was for food for 1100 persons and the appellant claims that it was for their business function, there is no reason to doubt and say that it was for a private function in the absence of any evidence that the invoice meant for a personal function was shown as an invoice for official meeting and billed to the appellant - Hence the appellant was entitled to CENVAT credit of this amount: CESTAT
Held - Tour operator Services - Given the nature of the invoice in question, it does appear to be an invoice for holiday of a large number of persons - There is nothing to show that this expense was on account of any business trip - In view of the specific exclusion of the services meant for personal consumption or use of any employee in the definition of 'input service', no CENVAT credit will be admissible on this account: CESTAT
- Appeal partly allowed: DELHI CESTAT
2023-TIOL-403-CESTAT-KOL
Hindalco Industries Ltd Vs CCE
CX - Appellant has cleared their finished goods on stock-transfer basis to their sister units - They have paid excise duty on the basis of 110% of estimated cost of production by adopting previous year's CAS-4 adjusted for inflation for increase in current year - The Department noticed that appellant has short paid duty in months of December 2009 to March 2010 for ingots and February 2010 to March 2010 for coils - Accordingly, differential duty has been demanded vide SCN and the demand has been confirmed by Adjudicating authority - Appellant stated that on many months they have paid duty in excess of duty payable as per CAS-4 Certificate issued at the end of year - Only for few months there was a short payment of duty - When excess paid duty is adjusted against short payment, net result is that there is no short payment by appellant - Adjudicating Authority failed to do this adjustment - Demanding duty only on the short payment, ignoring the excess payment is bad in law - Accordingly, demand confirmed in impugned order is not sustainable - Appellant has argued that entire exercise is revenue neutral as duty paid by them will be available as credit for their sister unit - Tribunal agrees with this view of appellant - Thus, entire exercise is revenue neutral - As entire exercise would be revenue neutral, there is no loss of revenue to exchequer - Demand confirmed in impugned order is not sustainable - Since the demand itself is not sustainable, interest demanded and penalty imposed against appellant in impugned order is also not sustainable: CESTAT
- Appeal allowed: KOLKATA CESTAT |
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