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2023-TIOL-738-HC-MUM-VAT
Rohan Lobo Vs State of Goa
Whether retention of an excess tax unreasonably and without liability to pay any interest by taking undue advantage of the procrastination by the authorities in making a sanction order would amount to arbitrariness, which Article 14 of the Constitution shuns - YES: HC
Whether even though Article 19(1)(f) is no longer a fundamental right under the Constitution, Article 300-A provides that no person shall be deprived of his property save by the authority of law - YES: HC
- Writ petition allowed: BOMBAY HIGH COURT
2023-TIOL-737-HC-AHM-CUS
Trafigura India Pvt Ltd Vs UoI
Cus - Tin Ingots were imported by petitioner by filing two warehouse Bills of Entry dated 05.08.2015 and dated 07.09.2015 - The goods were imported from overseas supplier M/s. Trafigura PTE Ltd, Singapore, Malaysia - The goods were manufactured by M/s. Malaysia Smelting Corporation - It was declared in the Bills of Entry that the Country of Origin of the goods was Malaysia - The Country Origin Certificate was produced and under Notification No. 46/2011-Cus, Concessional Basic Customs Duty (0%) was claimed - Upon inquiry and investigation, the customs authorities found that the petitioners were not entitled to the exemption – Inasmuch as the duty exemption was availed by the petitioners by producing the COO wherein the Regional Value Content (RVC) was allegedly misstated and misrepresented - The RVC of the goods was prescribed to be above 35% as per the condition, however, in actuality the RVC was much less than 35%, and found to have been calculated in fraudulent and misrepresented basis to project the goods accordingly - Before the Bombay High Court, the writ petitioners including the Writ Petition No. 2491 of 2018 by one Kothari Metals Ltd was filed involving the identical dispute as raised in the present cases - Bombay High Court by judgment and order dated 9.7.2021 [= 2019-TIOL-2729-HC-MUM-CUS ] rejected the petition on the ground availability of alternative remedy and the petitioners were directed to pursue the adjudicatory proceedings - Civil Appeal No. 9010 of 2019 was preferred before the Supreme Court - The writ petitions were restored by the Supreme Court by order dated 25.11.2019 = 2019-TIOL-516-SC-CUS - The Apex Court directed the Bombay High Court to decide the petitions on merits and in accordance with law in light of the fact that initiation of proceedings itself was called in question in view of Article 24 in Appendix D of the AIFTA, and this petition is pending decision - Before the Gujarat High Court, the captioned petition came to be filed under Article 226 of the Constitution, challenging the Orders-in-Original raising the issue in respect of ASEAN-India Free Trade Area (AIFTA) Article 24 and its non-observance.
Held : ( i ) Making of international treaty is an executive act by the member countries. Accordingly, the entering into AIFTA was an executive exercise by India.
(ii) The rules of international law including the provisions of treaty are not implementable or enforceable per se in the member States. The international law rules have to be transformed into State laws to make them implementable within the State and to make them govern the rights and obligations of the subjects and citizens of the State.
(iii) It is the sovereign legislature of the State which would enact the State laws or municipal laws pursuant to the treaty provisions to be applied in the country. The Government of India has enacted Customs Tariff (DOGPTA between ASEAN and Republic of India) Rules, 2009.
(iv) In the process of enactment of laws to give effect to the treaty provisions, the sovereign legislature would be competent not to recognize, except, give effect to and not to transform any of the treaty provisions into the municipal statutes.
(v) The legislature of the State may, while enacting the law, omit or rescind any of the treaty provisions. A treaty provision omitted to be transformed would not be implementable nor it could be enforced in court of law of particular State.
(vi) AIFTA Article 24, though figures in the said international treaty, it is not enacted in the Customs Tariff (DOGPTA between ASEAN and Republic of India) Rules, 2009. The Article is not given statutory recognition in this country.
(vii) Therefore AIFTA Article 24 lacks invocability to be enforced and no remedy would lie qua the provisions of the treaty in Indian Courts.
(viii) The State Laws would prevail over the international rules or treaty provisions. Even in situation of conflict between the two, the municipal law or State law will prevail.
(ix) Therefore, AIFTA Article 24 not transformed into legislative measure, cannot have efficacy of law within the State. A contention to enforce the same does not lie.
(x) Non-observance of mechanism for dispute resolution as per AIFTA Article 24 cannot have the effect and consequence of invalidating the action taken by the Customs authorities under the provisions of the Customs Act. The exercise of powers by them would not render without jurisdiction on such score.
(xi) The petitioners were found upon investigation, to have imported the goods Tin Ingots by producing misleading Certificate of Country Origin, by misrepresenting and suppressing the Regional Value Content, thereby wrongfully claiming preferential treatment in payment of basic Customs duty (0%).
(xii) In the facts of the case, the petitioners could be lawfully subjected to proceedings under Section 28 (4) read with Section 46 (4) of the Customs Act on the ground of non-levy and/or short-levy of basic customs duty in respect of goods imported by them. Extended period of limitation under Section 28(4) of the Act could be rightly invoked on the ground of suppression.
(xiii) The proceedings taken out resulting into interim orders against the petitioners were under the substantive law which were the applicable statutory customs provisions under the Customs Act.
(xiv) Non-compliance of the time limit for investigatory action under the Operational Procedures would not render the action taken under substantive law, for, the procedural aspects stand subordinate to substantive provisions.
++ Orders passed by the lower authority and impugned herein could not be said to be without jurisdiction - They are passed pursuant to competent invocation and upon valid exercise of powers under section 28(4) of the Customs Act, 1962 - This exercise of powers has to be held to be an exercise in and under the sovereign law of the land - Petitions dismissed – Interim orders are vacated: High Court [para 18, 23]
- Petitions dismissed: GUJARAT HIGH COURT
2023-TIOL-736-HC-AHM-CUS
CC Vs Oil Energy
Cus - Goods imported by appellant were confiscated on the ground that same is Superior Kerosene Oil and not Low Aromatic White Spirit as declared - Chemical examiner instead of answering the query that whether sample confirmed description of goods as Low Aromatic White Spirit reported that parameter meets the requirement of Kerosene as per IS-1459:2016 – CESTAT held that Department could not establish that goods in question is SKO, therefore, classification claimed by appellant needs to be maintained; absolute confiscation was vacated and penalty imposed was set aside – Aggrieved, the Commissioner of Customs has filed appeal before the High Court – It is submitted that CESTAT has wrongly recorded the finding that the Adjudicating Authority has based its finding only on one parameter i.e. distillation out of eight parameters for holding that the goods are SKO.
Held: At the outset, it is required to be noted that whether the subject goods fall within one category or other would essentially be a question of fact - However, even while deciding the same, if the Tribunal overlooks certain basic principles of law applicable to the case on hand and records a finding which could be termed as perverse, then definitely, such decision of the Tribunal would give rise to a question of law – In the present case, to arrive at the conclusion that the product is SKO, there are eight parameters which need to be tested. As per the Test Report, three parameters were tested - However, the Test Report of the Chemical Examiner categorically suggests that the goods imported by the importer are meeting with the specification of Kerosene - Bench is, therefore, of the view that present appeal is required to be admitted for considering the following substantial questions of law: ( i ) Whether the Tribunal was right in holding that the Department has not discharged the onus to establish the cargo as Superior Kerosene Oil (SKO)?; (ii) Whether in the facts and circumstances of the case, the CESTAT was correct discarding Chemical Examiner's Report as inconclusive, especially when the importer had not sought re-testing of the samples before the Original Adjudicating Authority or during investigation?; & (iii) Whether in the facts and circumstances of the case, the CESTAT was correct in setting aside the directions of absolute confiscation of Prohibited Goods under section 111(d), 111(m), 111(o) & 118 and penalty under section 112(a) of the Customs Act by the Adjudicating Authority, despite the mis-declaration and mis-classifications of goods?: High Court [para 11, 13, 15, 16]
- Appeal admitted: GUJARAT HIGH COURT
2023-TIOL-735-HC-AHM-CX
N N Harsora Pvt Ltd Vs UoI
CX - SVLDRS, 2019 - Joint Commissioner of Central Excise and Customs, Vapi passed an order confirming the CX demand of Rs.22,18,148/- and a personal penalty of Rs.10,00,000/- was imposed upon the petitioner no.2 - Incidentally, petitioner had made pre-deposit of Rs.19,12,196/- during investigation, which was appropriated by the adjudicating authority - Commissioner(A) rejected their appeal for failure to make pre-deposit of a particular amount - Petitioners willingly submitted before the Tribunal that they are ready and willing to deposit another amount of Rs.5,00,000/- towards the penalty - In response to the petitioner filing an application under SVLDRS, respondent observed that the petitioners had paid total amount of Rs.19,12,196/- towards the tax liability and, therefore, balance payable by the petitioners towards the tax liability was Rs.3,05,952/- - It is pointed out that the petitioners paid Rs.5,00,000/- as ad hoc deposit towards the penalty and, therefore, it could not be considered as pre- deposit against the duty amount - Petitioners were accordingly intimated by communication on 29.12.2019 and were advised to make the payment of Rs.1,22,381/- within a period of 30 days, however, the petitioners requested that Company is facing financial crunch and, therefore, time upto 30.05.2020 be granted for payment of the said amount - By the Taxation & Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 dated 31.03.2020, the date of payment under the Scheme, 2020 was extended upto 30.06.2020 - Petitioners tried to pay the amount of Rs.1,22,381/- through internet banking, however, the said amount was returned with reason "CPIN is expired".
Held: Petitioners have paid Rs.19,12,196/- towards the tax dues and, thereafter the Appellate Tribunal directed petitioner to pay Rs.5,00,000/- - Thus, an amount of Rs.5,00,000/- deposited by the petitioners by way of penalty cannot be considered towards "tax dues" - Basic object of the Scheme, 2019 is to reduce litigation by allowing the eligible assessee to make the payment of the outstanding dues after availing the relief under the Scheme, 2019 - The petitioners herein made bonafide attempt to make the payment as determined under the Scheme, 2019 and the petitioners are also ready to pay the amount in question in accordance with law along with interest for the period for which the petitioners were not permitted to make the payment by the respondents - Therefore, Bench is of the opinion that this is a fit case for invocation of powers under Article 226 of the Constitution of India - present petition stands allowed partly - The respondent authorities are directed to accept the payment of Rs.1,22,318/- as specified in SVLDRS-3 along with interest @ 9% per annum from 30.06.2020 till the date of payment and grant the benefit of the Scheme to the petitioner - The petitioner shall deposit the said amount with interest within a period of four weeks: High Court [para 16, 20, 21]
- Petition partly allowed: GUJARAT HIGH COURT
2023-TIOL-542-CESTAT-BANG
Doddanavar Brothers Vs CCE
ST - Refund of CENVAT - Rule 5 of CCR, 2004 - Appellant had claimed refund of Rs.96,58,828/- and the original authority, having accepted entitlement of only Rs.20,97,907/-, the appellant has filed an appeal - There are two components to the rejected portion of the claim of which Rs.10,560/-, pertaining to 'technical testing and analysis' at their site by M/s Met Chem Laboratories, was found ineligible as documentary evidence in support thereof was not available and the said supplier not listed in the contract between appellant and the buyer overseas, and Rs.75,51,171/- for not having been filed within 60 days from the end of the quarter in which exports had been effected.
Held: The precaution of carrying out such tests before shipment, to minimise the risk of non-acceptance of cargo before loading on outbound conveyance, is not beyond the scope of the eligible service in the impugned notification; nor has it been attributed to any activity other than in relation to the export goods - The denial of refund on such a rigorous consideration is not in accordance with the spirit of reimbursement designed as a policy instrument - It is apparent from the subsequent clarification of Central Board of Excise& Customs (CBEC) 112/6/2009 -ST that the amendment effected in November 2008 did not specify that the lengthened window for making claims was intended only for future consignments - Order rejecting the refund claim is set aside - Appeal allowed: CESTAT [para 9, 10]
- Appeal allowed: BANGALORE CESTAT
2023-TIOL-541-CESTAT-BANG
Shantesha Motors Pvt Ltd Vs CCE
ST - Appeal is filed against confirmation of service tax demand of Rs.3,17,161/- by the Commissioner(A) - Appellant submits that the notice itself was not tenable as the specific enumeration within section 65(19) of Finance Act, 1994 corresponding to each of the impugned activities had not been identified; that the entire amount collected on sale of 'extended warranty service' to customers was, invariably, being remitted in full to M/s Maruti Udyog Ltd and that, in absence of consideration, by retention or receipt, from or on behalf of vehicle owners having their cars serviced during the warranty period, such activity did not constitute taxable service - It is also contended that such activity may, if at all, be categorized as rendering of 'authorised service station' service but not the service alleged to have been rendered in the show cause notice - Insofar as charges collected for registration of new vehicles, if at all, taxability under the category of rendering 'support service for business or commerce' may have accorded some semblance of credibility to the show cause notice.
Held : Tax on consideration for 'business auxiliary service', as defined in section 65(19) of Finance Act, 1994, is predicated upon rendering of service on behalf of client who becomes obliged to recompense provider of the service and absence of even one element in the intermeshed transaction precludes coverage thereunder - That the appellant undertakes any warranty-related handling of vehicles at the instance of M/s Maruti Udyog Ltd will not, of itself, establish that taxable service under section 65(105)( zzb ) of Finance Act, 1994 had been rendered - A transaction involving the purchaser of car, as recipient of 'extended warranty', making payment to the principal of the appellant without any part thereof flowing to the appellant, is not intended to be taxed - Insofar as ‘car registration charges' are concerned, it is nothing more than a facilitation offered by the appellant to vehicle purchaser which does not suffice for resort to tax under section 65(105)( zzb ) of Finance Act, 1994 - Amount received as commission for securing insurance policies of vehicles sold by appellant - The policies are issued by insurance companies to purchaser of cars and, from the records, it appears that it is neither M/s Maruti Udyog Limited, whose dealer the appellant is, nor the appellant who offers such service - In the absence of contractual agreement between insurer and dealer, the finding of 'taxable service', envisaged by section 65(105)( zzb ) of Finance Act, 1994, having been rendered is not justified - All the three components of the demand, as upheld by first appellate authority, suffers from infirmity of not being consistent with definition of 'taxable service' - impugned order set aside and appeal allowed: CESTAT [para 7, 8, 9, 10, 11]
- Appeal allowed: BANGALORE CESTAT |
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