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2023-TIOL-899-CESTAT-ALL
Interarch Building Products Pvt Ltd Vs CST
ST - Limitation - Whether services are classifiable as CICS or WCS - A show cause notice dated 23.10.2012 was, accordingly, issued to the appellant for the period January 2007 to March 2012 alleging that the appellant had utilized CENVAT credit of Rs. 112.61 crores on building material, which was inadmissible - A second show cause notice dated 22.05.2014 was issued to the appellant for the period April 2012 to June 2012 raising the same allegations - This was followed by a third show cause notice dated 27.10.2014 for the period July 2012 to December 2013 and a Statement of Demand dated 23.10.2015 for the period January 2014 to March 2014 - Commissioner, by his order dated 31.03.2017 confirmed the demands raised in all the three SCNs - Tribunal, by its order dated 09.11.2017, allowed the appeal observing that the Composition Scheme was optional and the provisions of rule 2A of the 2006 Rules were subject to the provisions of section 67 of the Finance Act; that there was no question of applicability of rule 2A, nor could the Composition Scheme be forcibly applied - Department filed an appeal before the Supreme Court and the Supreme Court, in its order dated 2nd May 2023, has while quashing and setting aside the judgment and order dated 09.11.2017 passed by the CESTAT, remitted the matter back to the CESTAT, limited only to decide the issue of limitation and re-computation of demand in terms of Rule 2A - Supreme Court inter alia held that either the assessee has to go for Composition Scheme or go for Determination of Value as per Rule 2A and the assessee has to pay service tax on the service element and can claim CENVAT Credit on the said amount only. Held: Limitation - It would be seen that audit reports are dated 27.09.2010 and 25.05.2012 - It is, therefore, clear that even after examination of the records of the appellant, the department did not raise any objection regarding the category of the service rendered by the appellant - The reason assigned for invoking the extended period of limitation is that the appellant had wilfully wrongly classified the service under category of commercial or industrial construction service instead of works contract service - There is, therefore, force in the contention advanced by the appellant that the department was aware of the facts inasmuch as the audits were conducted and, therefore, it cannot be alleged that the appellant had concealed material facts from the department, much less concealed them with an intent to evade payment of service tax - It is, therefore, not possible to sustain the invocation of the extended period of limitation from June 2007 upto September 2010 resorted to in the first show cause notice dated 23.10.2012 issued for the period January 2007 to March 2012 - In terms of directions issued by Supreme Court in the judgment dated 02.05.2023, the appellant has to pay service tax on the value of services as per rule 2A of the 2006 Rules and thereafter avail the CENVAT credit - The appellant would be entitled to refund of Rs. 28.72 crores if the taxable value of the works contracts executed by the appellant for the period from 01.06.2007 to 31.03.2014 is calculated in terms of rule 2A of the 2006 Rules - This factual position was stated by the appellant in the written submissions, a copy of which was served upon the department, but it has not been controverted - By way of abundant caution, the appellant was required to submit a duly certified statement of a Chartered Accountant and such a certificate is submitted - Order dated 31.03.2017 passed by the Commissioner is set aside and the appeal is allowed: CESTAT [para 25, 36, 38, 39]
- Appeal allowed: ALLAHABAD CESTAT
2023-TIOL-898-CESTAT-AHM
Dishman Pharmaceuticals And Chemicals Ltd Vs CST
ST - The service tax was demanded on bank charges deducted by foreign bank while remitting export proceeds of appellant to Indian Bank - The Indian Bank has deducted the same amount from total proceed while remitting it to appellant - Thus, Indian bank has merely recovered the amount as reimbursement of service charges borne by them - Therefore, in this transaction the service provider is foreign bank and the service recipient is Indian Bank located in India as the recipient of service from foreign bank is actual liable to pay service tax under reverse charge mechanism, in terms of Rules 2 (d) (1) (iv) of Service Tax Rules, 1984 - Even assuming that appellant have received any service, it is only from Indian bank therefore, as per forward charge mechanism, Indian bank is liable to pay service tax - Accordingly, appellant is not liable to pay service tax - In view of judgment in appellant's own case 2023-TIOL-179-CESTAT-AHM , the issue is no longer res- integra and in identical facts and transaction the assessee is not held to be liable for payment of service tax - Accordingly, impugned orders are not sustainable: CESTAT
- Appeals allowed: AHMEDABAD CESTAT
2023-TIOL-897-CESTAT-MUM
Sheetal Manufacturing Company Pvt Ltd Vs Pr.CC
Cus - The Assessee had received a consignment of Cut and Polished Diamonds from the USA, through a M/s Brinks Global Services, USA, and M/s Diamonds and Diamonds Corp, New York for which they filed bill of entry no. 6738822/03.02.2020 declaring, and on the basis of invoice no. DC/128/2019-20 dated 28th January 2020, 311.03 carats with value of USD 52,298.05 (Rs. 37,47,155.9) for assessment after subjecting to 'first check' in accordance with established procedure - During the prescribed check, the consignment was found to contain 410.17 carats valued at USD 119245.85 comprising two boxes - One matching the declaration and the other containing 99.14 carats of 'cut and polished diamonds' valued at USD 66,947.80 (Rs. 47,97,455) - The Assessee claimed that they had shipped 1218.31 carats of 'cut and polished diamonds' in two consignments of 890.88 carats, valued at USD 86,040.60, against shipping bill no. 9634307/13.01.2020 and 327.43 carats, valued at USD 225,299.25, against shipping bill no. 9657543/14.01.2020 on 'consignment approval sale basis' and that the two boxes were unsold returns from the two consignments respectively entitling them to the benefit of 'nil' rate of duty in terms of notification no. 45/2017-Cus dated 30th June 2017 claimed by them in the bill of entry filed purportedly for clearance of the first of the unsold returns - The failure to declare the second box in the impugned consignment was found sufficient for depriving the goods of the benefit of the exemption notification to confirm recovery of duty liability on value of Rs. 85,44,610 on 410.17 carats while directing the AO to ascertain the correctness of the claim for exemption on 311.03 carats valued at Rs. 37,47,155 for the remission of duty to that extent even as the entire consignment was confiscated under section 111(i) and section 111(m) of Customs Act, 1962 though permitted to be redeemed on payment of fine of Rs. 8,00,000 under section 125 of Customs Act, 1962 besides imposing penalty of Rs. 40,877 on the importer under section 112 of Customs Act, 1962 and of Rs. 5 0000 on the 'consol agent', M/s Brinks BVC, under section 117 of Customs Act, 1962 while dropping proceedings against the Customs Broker. Held - That the undeclared quantity of 'cut and polished diamonds' came to light during the examination is not in question - However, as pointed out on behalf of the Assessee, 'cut and polished diamonds', being subject to 'first check' - a relic of the regime of Sea Customs Act, 1878 with custodianship vesting with customs - resorted to, for lack of details with the importer, even under the regime of Customs Act, 1962, appeared to have been adopted 'diamonds' at the Bharat Diamond Bourse for convenience of control by the customs authorities - Nonetheless, its unvarying imposition on every consignment was a throwback to the days before 'self-assessment' and even delegated custodianship consequent upon rescinding of Sea Customs Act, 1878 - The inevitability of such inspection does not sit well with the allegation that there was deliberate misdeclaration of material particular which alone would warrant invoking of section 111(m) of Customs Act, 1962: CESTAT Held - Invocation of Section 111(i) - Likewise, in invoking section 111(i) of Customs Act, 1962, the adjudicating authority appears to have overlooked the 'physical control' regimen of times past that continues to rule the Bharat Diamond Bourse at Mumbai in accordance with official instructions staying the hand, and passage, of time that that had brought about devolution of obligations on importers preferring declarations under section 46 and section 50 of Customs Act, 1962 - The insistence on visiting the importer with the same rigour of responsibility and onus, as pervades the customs areas outside the Bourse, is nothing short of a scathing indictment of the manner in which the 'first check' system is operated - Surely, that cannot have been the intent of the lower authorities - As Counsel has reiterated, time and again, the deterrence implicit in unalloyed 'first check' precludes any inclination in that direction and, in any case, the absence of motive, concludible from entitlement to exemption, rules out indulgence in foolhardy undertaking speculated upon by the adjudicating and appellate authorities - It appears to us a reasonable premise that concealment does not entail two boxes of 'cut and polished diamonds' matching in value with the first of the 'house airway bill' and their presentation in such form for 'first check' appraisal by customs authorities: CESTAT Held - Moreover, the first appellate authority appears to have found section 118 of Customs Act, 1962 to be the apt breach to justify the confiscation ordered, though for other reasons and other breaches, by the original authority - It is also clear from the records that, against the dropping of proposal for confiscation under section 118 of Customs Act, 1962, no appeal had been preferred in consequence of review enabled by section 129D of Customs Act, 1962 - Invoking of an authority under a statute may, thus, be latitude that an original authority can avail of - The order impugned here is the outcome of an appeal, filed by an importer whose grievance, and thereby the framework of the appeal itself, was limited to the points raised in appeal and section 118 of Customs Act, 1962 was not one among them for the same had been considered and dropped in the order appealed against - The provision, so deliberately dropped, could not have been revived in appeal within the boundaries noticed by the Supreme Court in the judgements supra except by an appeal of Revenue or, in specific exercise of power so granted by the statute, by reframing of the issues in appeal but only after placing the appellant before it on notice of intent to do so - Owing to this statutory enablement, and non-exercise thereof, the cited decisions would not legitimise the overreach undertaken by the first appellate authority - Therefore, the recourse to section 111(i) of Customs Act, 1962 to order confiscation of the imported goods is not tenable: CESTAT Held - By the failure of the confiscation upheld in the impugned order, the consequent penalty under section 112 of Customs Act, 1962 cannot be sustained - Moreover, the findings of the original authority are replete with observations about the mistake that occurred as well as the role of the 'consol intermediary' for not reflecting the contents of the consignment despite having issued 'house airway bill (HAWB)' in acknowledgement of having assumed custodianship of the package and its contents - The fastening of wrongdoing on the appellant, therefore, does not sustain: CESTAT
- Appeal partly allowed: MUMBAI CESTAT
2023-TIOL-896-CESTAT-CHD
Sun Pharma Laboratories Ltd Vs CCE
CX - Issue involved is as to whether the method of calculation, for availing CENVAT Credit, adopted by appellants, by taking into account the Tariff Rate of basic Customs Duty is correct - Appellant rely upon Tribunal's orders in their own case - Commissioner (A) has gone through calculation chart placed on record and finds that appellants have applied the formula given under Rule 3(7)(a) of CENVAT Credit Rules; while calculating the CENVAT credit, they have taken into account the tariff rate of basic customs duty which is not correct as the CENVAT credit is to be calculated by taking into account the basic customs duty leviable and charged - To this extent, order of Commissioner (A) is legally sustainable as it is very clearly given in formula - Moreover, the genesis of issue lies in an audit objection - Department has not brought anything on record to substantiate the allegation of suppression to enable invocation of extended period - Commissioner (A) set aside the penalty and has also not given any specific findings on invocation of extended period - Extended period cannot be invoked - Impugned order is sustainable for normal period: CESTAT
- Appeal allowed: CHANDIGARH CESTAT
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