I-T- Assessee must be informed of grounds of penalty proceedings only through statutory notice and an omnibus notice suffers from the vice of vagueness: ITAT

I-T- Condonation of delay be allowed when the assessee has failed to explain the sufficient cause for the delay : ITAT

I-T- If income has been declared by an assessee under the presumptive income scheme, inter alia, u/s.44AD, as was also declared by the assessee, then the difference in the receipts in the return with the receipts in the requisite Form should be excluded from the purview of section 143(1)(a)(vi) : ITAT

I-T- Assessee erred in not providing any evidence or details during the course of revisionary proceedings to challenge the order of PCIT : ITAT

ST - SVLDRS, 2019 - Seeking extension of date for payment of ‘amount payable' - If the case of the petitioner is accepted, then it would tantamount to modifying the scheme which cannot be done: HC

Cus - Staff posted in ICDs/CFSs - Cost recovery charges - Sanction of a post is a matter of internal arrangement - Denial of waiver on the ground that the posts had not been sanctioned at the relevant point of time is arbitrary: HC

Cus - Impugned order was dispatched by speed post which should have normally been received within 7 days, presumption of Section 153 (3) would work against claim of appellant and Condonation of Delay which is hence inexplicit and cannot be considered for considerable delay on record: CESTAT

CX - Chemical Examiner can only tender opinion on subject goods & cannot fix their classification; Department too cannot rely solely on Chemical Examiner's report while ignoring several test reports, for ascertaining classification: CESTAT

2023-TIOL-1355-HC-AHM-ST

Bhupeshkuma Jagdishchandra Shah Vs UoI

ST - Petitioner seeks a direction to the Respondent No. 2 to consider Rs.27,93,323/- as a pre-deposit amount and issue fresh SVLDRS-3 in all the 5 declarations and allow them to pay the amount based on the fresh SVLDRS-3. Held: Petitioner was under a misconceived belief that by virtue of extension of limitation periods by virtue of the orders of the Supreme Court, the same benefit would be available to the petitioner under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - The last date for payment of the estimated dues for settlement of the case was 30.06.2020 and the amounts were not paid until such date - As per rule 7, the amount had to be credited in the account on or before 30.06.2020 - The petitioner made the first claim of pre-deposit only by a letter dated 7.06.2021 after almost one year of the last date for making payment under the scheme which was clearly beyond the outer limit of the operation of the scheme - If the case of the petitioner is accepted, then it would tantamount to modifying the scheme which cannot be done - Petition dismissed - Interim relief, if any, shall stand vacated: High Court [para 5, 5.1, 6.1, 8]

- Petition dismissed: GUJARAT HIGH COURT

Empezar Logistics Pvt Ltd Vs UoI

Cus - Cost Recovery posts in respect of Customs staff posted in ICDs/CFSs - Vide notification dated 11.05.2016, in exercise of powers under Section 35(1) of the Act, the petitioner company was appointed as a Custodian of all import and export cargo at the premises of the petitioner - By condition no. (o) of the said notification, the petitioners were obligated to bear and pay the cost of custom officials deputed/posted by respondent no. 3 on cost recovery basis at the facility of the petitioners - The Government of India issued instructions on 12.09.2005 providing exemption in the form of regularization in the cadre and consequent waiver from payment of cost recovery charges if the benchmark performance as provided under said instructions were fulfilled by the concerned custodian - According to the petitioner, the petitioner had met this benchmark in the years 2017-18 and 2018-19 and was, therefore, entitled to waiver of cost recovery charges - Accordingly on 05.06.2019, the petitioner made an application that since the cost recovery charges were paid till 30.06.2019, the petitioner be exempted from paying such cost recovery charges with effect from 01.07.2019 - Petitioner was informed that the proposal for exemption for payment of cost recovery charges can only be considered when the CFS has operated for two consecutive years from the date of sanction order of the creation of posts - Since the posts were sanctioned with effect from 18.03.2020, the waiver can be considered only two years after upon fulfilment of condition as provided in the circular dated 12.09.2005 - Petitioners are seeking a direction for quashing and setting aside letter dated 12.11.2020 issued by the office of respondent no. 3 calling upon the petitioners to make payment of establishment charges on cost recovery basis. Held: In case of the petitioners , admittedly, for the two years i.e. 2017-18 & 2018-19 the benchmark beyond 1200 for handling containers and as far as the number of bills of entry and shipping bills has been complied with - Admittedly, therefore, in accordance with the communication dated 12.09.2005, the petitioner company was entitled to waiver of cost recovery charges as applied by the petitioner company with effect from 01.07.2019 - Despite this, it is evident from the communications impugned in the petition that in the perception of the respondents, the proposal for exemption from payment of cost recovery charges can be requested when the CFS has been operated for two consecutive years from the date of sanction order of creation of posts - In the impugned communication, it is the case of the respondents that since the sanction of such posts was with effect from 18.03.2020 the waiver can be considered only after two years from such date - It is undisputed that the petitioners have qualified for waiver of cost recovery charges on completion of two years when in the years 2017-18 and 2018-19 they have achieved the benchmark as stipulated in the circular of 12.09.2005 and, therefore, the sanction of a post was a matter of internal arrangements between the departments which had no bearing on the cost recovery and/or waiver of such charges - The denial of waiver on the ground that such costs cannot be waived as the posts had not been sanctioned at the relevant point of time certainly is arbitrary and, therefore, cannot be sustained - Petitioners are entitled to waiver of cost recovery charges in light of circular dated 12.09.2005 with effect from 01.07.2019 - Costs recovered towards posting of custom officials at the petitioners' CFS post 01.07.2019 is to be refunded to the petitioners - Petition allowed: High Court [para 5.2, 6, 8, 9]

- Petition allowed: GUJARAT HIGH COURT

M M Vora Automobiles Pvt Ltd Vs CCE & ST

ST - The appellants are running the various service stations of Mahindra & Mahindra while providing services to the Vehicles of the Customers - They raised invoices for servicing and separately for the consumables such as Lubricating Engines Oil or parts etc - As regard, the service bill they discharge service tax under the Finance Act, 1994 and in respect of sale of consumables they charged state VAT and paid to the State VAT Department - The case of the Department is that since the consumables were used for providing the service to various service station the value of the consumable should be included in the gross value of service - Accordingly differential service tax demand was raised and the same was confirmed by the Adjudicating Authority and held by the Commissioner (Appeals) in the impugned order. Held - The Appellant have raised service bill on which service tax was paid and in respect of the consumables the same was sold by raising sales bill on which VAT was paid - Therefore, part for which the goods were sold clearly covered under the sale of goods on which no service tax should be charged - This issue has been considered by this Tribunal in various judgments including judgment cited by the counsel - The issue at hand stands settled vide the order passed in the case of Commr.C.Ex., & ST., Meerut- II Vs. Krishna Swaroop Agarwal wherein it was held that - "...The Board Circular referred to above in effect actually states that Service Tax is not leviable on the transaction treated as sale of goods and subjected to levy of sales tax/VAT. It is seen that as recorded by the Commissioner (Appeals), respondents were able to establish that amount on which the impugned Service Tax has been demanded actually pertains to the sale of spare parts/accessories/consumables like lubricants etc. by showing copies of the VAT assessment orders for the financial years 2006-07 & 2007-08. It would clearly entitle them to the benefit of Notification No. 12/2003-S.T. Indeed even the provisions of Section 67 lay down that the value for the purpose of levy of Service Tax is the gross amount charge for taxable service. Thus, we do not find any merit in the Revenue's appeal which is hereby quashed..." - As the issue is already settled, it is no longer res integra - The present appeal is disposed off accordingly: CESTAT

- Appeal disposed of: AHMEDABAD CESTAT

Arjun Enterprises Pvt Ltd Vs CC

Cus - Condonation of Delay - The reason given in Condonation of Delay application is non-receipt of impugned order in time, whereas revenue brings on record the proof of dispatch which indicates that impugned order was dispatched on 15 June, 2022 by speed post - In view of fact that impugned order was dispatched by speed post which should have normally been received within 7 days, presumption of Section 153 (3) would work against claim of appellant and Condonation of Delay which is hence inexplicit and cannot be considered for considerable delay on record: CESTAT

- Application dismissed: DELHI CESTAT

Arham Petrochem Pvt Ltd Vs CCE

CX - The dispute in this case is about correct classification of a product described as ARH-C Crude Oil (Residue Oil obtained from distillation of Water in the Raw material Comingled Crude Oil purchased by the Appellant) - The Tariff entry and chapter heading is "Petroleum Oils and Oils obtained from bituminous minerals, crude - 27090000 "as claimed by the Appellant and" Other Petroleum Oils and Oils obtained from bituminous minerals (other than crude) - 27101990" as contended by the Department - The present appeal was filed against Order-in-Original passed by the Commissioner of Central Excise, Gandhinagar confirming demand and recovery of Central Excise duty of Rs.1,72,87,474/- with interest under Section 11AB and equal amount of penalty under Section 11AC. Held - The product ARH C Oil (Residue bottom Oil) obtained by such processing of the comingled/condensate crude oil is nothing but Crude oil itself and not any new product which accordingly merits classification under Chapter 27090000 as classified by the Appellant and not under Chapter 27101990 as done by the Revenue. + We take note of the fact that the process adopted by the Appellant is essentially "Decanting & Distillation" of a very minor/miniscule (2 to 5%) quantity of the bottom residue oil left in their storage tanks as received from their suppliers. This is essentially done to remove the water content & other impurities from the said bottom oil only to make it usable with their basic raw material which is comingled/condensate crude oil. Blending here is nothing but remixing of the processed residue oil back with their basic raw material and not any new product; (P 14) + Hence both the test reports obtained by the DGCEI as compared by them categorized the product ARH C Oil in the category of crude oil. We therefore find that the DGCEI in their file noting found the product to be composed of crude mineral hydrocarbon oil. Accordingly we find that all the above 3 test reports i.e. 2 from the Central Excise Laboratory Vadodara and 1 from Caleb Brett found the samples to be clearly of Crude oil and not other petroleum product; (P 19) + the Revenue in spite above clear position, had issued the notices only upon the further Opinion obtained by the Department to the 1st Test Report dated 3.10.2006 issued by the Chemical Examiner, Mr G P Sharma, Regional Laboratory Vadodara. Mr G P Sharma had upon being asked to clarify suggested in his letter dated 5-1-2007 that - a. The Product in question is not a Crude mineral hydrocarbon oil - b. The Product is a derivative of Petroleum Crude Oil and such product cannot be categorized in CH 27090000 of the CET. Accordingly it was only upon this further opinion and not the test reports that the Department issued the notices and seeks to classify the product as derivative of Other Petroleum products under CH 2710191990; (P 20) + However we find that the Chemical Examiner firstly himself cannot classify the goods in question as is done by him. He can only give his opinion. Equally we find that the Department cannot ignore the 3 test reports and seek to classify the product differently merely on such opinion of the Chemical Examiner without further evidence; (P 21)

+ We also find that the Senior Chemical Examiner (Grade I) Dr Rao had clearly tested and opined that the product comes in the category of Crude oil. So had been the test report of Caleb Brett. In fact the test report of Caleb Brett clearly found that the sample does not match with any of the finished petroleum products but comes in the category of Crude oil. Hence once these 2 reports coupled with the1st test report of Mr G P Sharma, when all showed the product sample to be in the category of Crude Oil, the examiner Mr Sharma could not have opined differently; (P 23)

+ In view of the CETA & its explanatory notes the issue here about classifying Residue of Oil (ARH C Oil), obtained from Distillation of Comingled/Condensate Crude oil remains and continues to merit classification under Ch 2709. The issue is also directly covered in various decisions (Supra) and also these decisions suggest that distillation/dehydration does not bring out any new commodity and Residue comingled crude oil remains same after such process, which is already covered under Explanation of the 7 processes for the same under Chapter heading 2709; + Admittedly the Explanatory note of HSN 2709 clearly covers "decantation, distillation (Which is actually dehydration) and elimination of light fractions and also any other minor process, which does not change the essential character of the product. Admittedly the CH 2710 explanatory note C only covers those oils which have 70% more weight of petroleum oil. Hence, the petroleum oil is to be in majority for any Oils to go under 2710. We also find that the said Chapter note C covers only those products under Ch 2710 " which contain by weight 70% or more of petroleum oils or oils obtained from bituminous minerals which are not covered by more specific heading ". Equally under Part II Note (b) there is a clear exclusion to " products and preparations containing less than 70%by weight of petroleum oils or similar oils from bituminous mineral s". + Hence we find on detailed analysis that not only the explanatory note to Ch 2709 covers the appellant's residue bottom oil to be same as crude oil but the Note to Ch 2710 only covers within its ambit products and preparations which by weight have more than 70% of petroleum oil or oils from bituminous minerals. And in fact there is a clear exclusion to products below 70% of such weight content. Also the 1st test Report dated 3/10/2006 of CRC Vadodara shows ARH - C Oil to be mixture of "Crude Mineral Hydrocarbon having Flash Point below 25% C obtained from Bitumen Mineral Crude. However thereafter only the Opinion of Chemical Examiner cannot decide classification, when the same is also contradictory to his own report dated 3/10/2006. Also the Test report dated 28/09/2007 by the Chief Examiner (Grade I) of the very same Vadodrara Laboratory clearly shows ARH- C Oil as Crude mineral Hydrocarbon Oil. Also the Comparison of both test reports obtained by the DGCEI at the same time and its analysis clearly show ARH-C (Residue Oil), to be same as commingled crude oil since both are composed of "crude mineral Hydrocarbon oil" and not of any finished petroleum product and they are clearly shown to be in category of crude oil based on which the Additional Director General of DGCEI also remarked that when 2 test reports are in the favor of the appellant how can the demand be even raised and case was dropped. We also find from the relevant pages from the Petroleum Handbook which clearly define that upon distillation the distilled product remains the same as the principal product whereas water separated is distilled water. Admittedly in the Appellant's case also the balance 5% quantity of ARH-C oil (Residue) so obtained from distillation is again mixed with their raw material commingled crude oil.

- Appeal allowed: AHMEDABAD CESTAT