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2023-TIOL-166-SC-GST
Flipkart Internet Pvt Ltd Vs State of Bihar
GST - s.107(6) of the Act, 2017 - Patna High Court had held that the balance in Electronic credit ledger [ECRL] is a self-assessed input tax credit and is subject to assessment proceedings and, therefore, cannot be used for purpose of paying pre-deposit; that the pre-deposit should be paid through Electronic Cash ledger [ECL] only; that, therefore, the appeals were not maintainable as the payment of pre-deposit was not complied with; that the conclusion of the appellate authority that the payment of pre-deposit can only be made through ECL needs no interference (paragraphs 77 & 78 refers) - Appeal to Supreme Court.
Held: Issue notice to respondents - Pending disposal of this matter, the observations in paragraphs "77 and 78" of the impugned order shall remain stayed: Supreme Court
- Interim order passed: SUPREME COURT OF INDIA 2023-TIOL-1686-HC-MUM-CUS
Container Corporation of India Ltd Vs CC
Cus - Appeal filed before the CESTAT has been rejected, hence the present appeal u/s 130 of the Act, 1962 - It was revealed that as against the declared goods of 7454 kgs. of stainless steel household articles mentioned in the said shipping bill, the goods present in the container were 12695 kgs of 'Red Sanders', which were prohibited goods, as the export of Red Sanders was prohibited - Such prohibited goods attempted to be illegally exported, were seized under the provisions of the Customs Act and were stored in a sealed container, kept in the custody of the appellant's CFS under a panchanama dated 14 June, 2013 - On 14 August, 2014, a surprise visit was conducted by the customs officials, at the premises of the appellant and it was found that the container in question containing red sanders No. GESU-3997518 as handed over to the appellant's CFS for safe custody, vide a panchanama dated 14 June, 2013 was tampered/ pilfered and the entire red sanders of 12695 Kgs. was found stolen by such modus operandi - show cause notice was issued to the appellant alleging that as per sub-regulation 6(f), 6( i ) and 6(q) of the 2009 Regulations, safe custody and movement of containers to and from the CFS with proper authorization was the prime responsibility of the CFS - An order-in-Original dated 18 April, 2023 came to passed by the Commissioner of Customs confirming the allegations in the SCN and suspending the approval granted vide Public Notice No.134/2020 dated 14.10.2020 for operation as Customs Cargo Service Providers (CCSP); holding that the total value of the pilfered goods of Rs.4,44,32,500/- be recovered from the appellant along with imposition of penalties under the Customs Act, 1962 and the Handling of Cargo in Customs Area Regulations, 2009 - Aggrieved by the Tribunal order upholding this order, the present appeal.
Held : It is not in dispute that there is an "undertaking" on the part of the CFS to indemnify the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, inter alia in regard to the loss suffered, and in the present case, on export goods, by an unnatural cause, during storage of goods - Once the appellant was bound by such undertaking as contemplated by Regulation 5(6) and having consciously accepted the fact that the goods worth Rs.4,44,32,500/- have been stolen/pilfered, then certainly statutory obligation under Regulation 5(6) kicks in, so as to make the appellant liable to indemnify the said loss of goods which had occurred due to theft of the goods - It is crystal clear that the Commissioner had become entitled to such amount of loss as suffered - It also cannot be said that the Commissioner was not entitled for recovery of loss from the appellant for the reason that the exporter was facing criminal proceedings - The goods were prohibited goods not capable of being exported - They were of high value - It thus cannot be said that there was no loss suffered on account of theft of the said goods - Appeal is without merit, hence dismissed: High Court [para 21, 22]
Penalty - Section 117 of the Customs Act is an independent provision inter alia dealing with the contravention of the provisions of the Act - Commissioner was justified in imposing a penalty for contravention of the provisions of Customs Act - Insofar as the imposition of penalty under Regulation 12(8) is concerned, Regulation 12(8) of the 2009 Regulation mandates that if the Custom Cargo Service Provider (appellant) contravenes any of the provisions of the said Regulations or abets such contravention or fails to comply with any provisions of the regulation with which it was his duty to comply, then he shall be liable to a penalty which may extend to fifty thousand rupees - In the present case, there is a clear contravention of Regulation 5 and Regulation 6, as noted above, hence, the penalty under Regulation 12(8) cannot be faulted: High Court [para 27, 29]
- Appeal dismissed: BOMBAY HIGH COURT
2023-TIOL-1685-HC-MUM-CUS
Sarla Performance Fibres Ltd Vs UoI
Cus - Anti-dumping duty - Petitioner raises an issue on the legality of the impugned notifications dated 13 January, 2012 and 19 January, 2017 issued by the Government of India in exercise of the provisions of Section 9A(5) of the Customs Tariff Act, 1975 imposing anti-dumping duty in respect of goods in question, which are Nylon Filament yarn - On 18 December, 2017 the Commissioner of Central Excise and GST passed an order imposing on the petitioner an anti-dumping duty amounting to Rs.4,31,05,000/- based on the impugned notification - Petitioner has filed an appeal against the said order before the CESTAT - Petitioner further submits that the notifications are required to be struck down by this Court, which is not the power conferred with the Tribunal.
Held: Law as laid down (on the legal status of such extended notifications) by the Supreme Court [in M/s. Kumho Petrochemicals Company Ltd - 2017-TIOL-232-SC-CUS ] under Article 141 of the Constitution of India is the law of land - Once the principle of law has been laid down by the Supreme Court, it is binding on all the Courts in the country, which would also include this Court and the Tribunal - For such reason, Bench is not in agreement with petitioner when he submits that such a position in law is not likely to be considered in the proceedings which are pending before the CESTAT - CESTAT is already seized of the matter - Thus, keeping open all contentions of the petitioner on the challenge as raised in the petition, Bench disposes of this petition: High Court [para 6, 7, 9]
- Petition disposed of: BOMBAY HIGH COURT
2023-TIOL-1684-HC-MUM-GST
Playerzpot Media Pvt Ltd Vs UoI
GST - Petitioner inter alia seeks quashing of SCN dated 27 September 2023 issued by DGGI; striking down s.15(5) of the Act, 2017 as unconstitutional; striking down rule 31A(3) of Rules, 2017 as ultra vires Sections 2(31), 7, 9 and 15 of the Act, 2017; restrict the Respondent No. 4 and Respondent No. 5 from adjudicating the Impugned SCN pending final disposal of this writ petition - Petitioner draws attention of the Bench to the orders passed by the High Court of Sikkim in the case of Delta Corp Limited and Anr . = 2023-TIOL-1346-HC-SIKKIM-GST . , where the Court had directed that a status-quo be maintained on the show cause notices; to an order passed by Division Bench of the Gujarat High Court in the case of NXGN Sports Interactive Private Limited Special Civil Application No.19183 of 2023 dated 3rd November 2023 wherein ad-interim relief was granted restraining revenue from taking any further steps on the adjudication of the show cause notice while permitting the petitioners to file a response to the show cause notice.
Held: Bench is of the opinion that we need to pass orders similar to the orders passed in the case of Delta Corp - Accordingly, notice to be issued to the Attorney General, returnable on 17th January, 2024, insofar as the challenge to the provisions of Section 15(5) of the CGST Act, 2017 being unconstitutional and violative of Articles 246A and 366(12) of the Constitution of India - Adjudicating Officer may proceed to hear the petitioners on the show cause notice, however, final orders on the show cause notice shall not be passed without the leave of this Court: High Court [para 5]
- Notice issued: BOMBAY HIGH COURT
2023-TIOL-1106-CESTAT-CHD
Pearl Enterprises Vs CCE
CX - Principal manufacturer i.e. M/s Colgate manufactured toothpaste in their factory and the same was provided to the appellant in ready condition along with the cartons which had MRP printed on the same; the toothbrush was procured by M/s Colgate from a third-party and Excise Duty was discharged on the same; appellant merely inserted one 100gms toothpaste and toothbrush provided by M/s Colgate in the promo pack carton which already contained 200gms toothpaste; the same was returned to M/s Colgate - The appellants were under the impression that they are providing " Business Auxiliary Service " to M/s Colgate and have registered themselves for payment of service tax and have been duly discharging the applicable service tax on the job charges received by them from M/s Colgate - Revenue is of the view that the said activity amounts to manufacture and the appellant is liable to pay central excise duty of about Rs.14.93 crores for the period October 2007 to June 2009 - Proposals in the SCNs were confirmed along with interest and penalties, therefore, the present appeals.
Held: It is the contention of the Department that the process undertaken by the appellants falls under (c) [viz. adoption of any other treatment to render the product marketable to the consumer] and thus, amounts to manufacture - Bench finds that other than this averment neither the show-cause notice nor the O-I-O elaborate on how the activity undertaken by the appellant renders the goods marketable - It is M/s Colgate Palmolive India Ltd. [ CPIL] that manufactures the toothpaste and purchases toothbrush on payment of duty and supplies the same to the appellant - The goods have already become marketable before they reach the premises of the appellants - It is the case of the Department that the process undertaken by the appellants makes them marketable as the combi-pack contains a disclaimer that "individual items are not for sale" - M arketability of the goods and the manner in which they are marketed by an individual manufacturer are quite different - The manner in which the goods are marketed does not at all make them marketable - If that is the case, no toothpaste or toothbrush should have been marketed not only by M/s CPIL but also by others, in a standalone condition - However, it is everybody's knowledge that toothbrush and toothpaste are also sold as individual pieces - The scheme of offering them in a combi pack does not make them marketable only as a combo - Commissioner has failed to distinguish between "marketability" and the manner in which the said product is "marketed" - The appellants are merely completing the process of combi pack manufactured by the principal manufacturer i.e., M/s CPIL, therefore, Bench is of the considered opinion that the process undertaken by the appellants takes care of the manner in which the said product is marketed and in no case makes the goods marketable - Held that the process undertaken by the appellant does not amount to manufacture - Order set aside and Appeal allowed with consequential relief: CESTAT [para 15, 16]
CX - Whether the appellants are eligible for the exemption contained in the Notification No.50/2003 as the declaration was filed late.
Held: It is not the case of the Department that the appellants are not situated in an area to which the said exemption is not available - Therefore, by undertaking the activity in the specified area, the appellants have made themselves eligible as per the substantial condition of the notification - In such circumstances, it has to be held that the declaration is only procedural - Moreover, all the details as required as per the notification have been furnished by M/s CPIL - The appellants are eligible for the exemption contained in the Notification No.50/2003: CESTAT [para 19]
CX - Limitation - Department was kept informed about the activities of the appellants by their principal manufacturer as early as 2007 - Therefore, Bench finds that there is no positive act on the part of the appellants to show intent to evade payment of duty - Further, the appellant has entertained a bona fide opinion that the said activity did not amount to manufacture but was exigible to service tax - At no point of time, even though a couple of audit inspections were conducted, Department did not raise any objection as to the payment of service tax on the activity undertaken by the appellants - Bench is of the considered opinion that Department has not made out any case for invocation of extended period: CESTAT [para 23]
- Appeal allowed: CHANDIGARH CESTAT
2023-TIOL-1105-CESTAT-MAD
Vaibhav Metals Vs CGST & CE
CX - Aluminium scrap on importation was diverted by the original importers to certain other actual users i.e. manufacturers of aluminium ingots, profiles etc. whereas the CENVAT credit of CVD paid on those goods were availed by the said purchasers of such goods on high sea sales basis - The manufacturers who purchased the imported goods on high sea sales basis for availing the CENVAT credit actually bought locally available scrap (at lower value) to account for the production of the finished goods in their factory - The department was of the opinion that central excise duty was being evaded by way of illegal availment of CENVAT credit of CVD paid without physically receiving the goods - Show Cause Notice was issued to the appellants proposing to demand Rs.3,14,24,906/- being the wrongly availed inadmissible CENVAT credit - Penalties were proposed under Rule 26 of the Central Excise Rules, 2002 on various importers and persons involved in the alleged illegal act including the appellants - After due process of law, the original authority confirmed the demand and imposed penalties, therefore, the appeals.
Held : It is relevant to note that standards of evidentiary requirement differ greatly between civil and criminal laws - It is not disputed that, in this case, cross examination of persons who gave the statements as sought by the appellant was allowed but not availed - Hence, the adjudicating authority after allowing for cross examination, which was not availed, correctly relied upon the statements and cannot be faulted - This Tribunal cannot go into the merits of the AA's satisfaction, if it is reasonable - A conspiracy is always hatched in secrecy, and it is, at times, impossible to adduce direct evidence of the same - Documentary evidence in such cases is not forthcoming - Hence the intention of the parties involved in these activities is effectively brought to life through the statements of those who are in the know of things - Voluntary statements, if clearly proved and found acceptable, are the most effective proof of law and can't be ignored - Bench does not find any lacunae in the proceedings by the Adjudicating Authority and the impugned order does not deviate from the provisions of section 9D ibid - The blame worthy act has hence to be inferred from the circumstances and the conduct of the people involved - The main noticee has not taken forward his appeal and the legal position has crystalised in terms of the impugned order, bringing finality to the issue of establishing duty evasion - Discussion in the impugned order has established the role and knowledge of the appellants in the clandestine activity designed to misuse CENVAT credit - Involvement of the Appellants has been established mainly on the basis of collaborative statements, perhaps due to the clandestine nature of the activity and the lack of proper documentation - However, the imposition of stiff penalties requires stronger evidence - Matter relates to a very old issue and there would be no purpose in extending the litigation on the matter of penalty - On balance, Bench feels it proper to restrict the penalties to the pre-deposits made as pleaded - Appeals disposed of: CESTAT [para 6.5, 6.7, 6.11, 7.1, 7.2, 7.9, 8.1, 8.2]
- Appeals disposed of: CHENNAI CESTAT
2023-TIOL-1104-CESTAT-MAD
Nissan Motors India Pvt Ltd Vs CGST & CE
ST- (1) Whether part of salary / emoluments paid by appellant to secondees in India in Indian Rupees will form part of consideration under Section 67 of Finance Act, 1994 for the services of Manpower Recruitment or Supply Agency's Services [MRSA] provided by Nissan Japan to appellant - (2) Whether payments of part of salary to secondees in Indian currency will form part of 'gross amount charged' for arriving at the taxable value.
Held: Whereas Member (Judicial) is of the view that as per Section 67 the costs incurred which are not charged, cannot form part of the consideration and cannot be included in the taxable value; that the decisions of the Tribunal in the case of M/s. Neyveli Lignite Corporation [CESTAT-Chennai Final Order No.40215/2023 ] and M/s. Boeing India Defence Pvt Ltd. [ 2023-TIOL-417-CESTAT-DEL ], would be squarely applicable and therefore the demand cannot sustain and requires to be set aside; that the demands are also hit by limitation since there is no suppression and the issue being interpretational; that the department is taking different views on the subject, the Member (Technical) inter alia observed that services of the secondee cannot be vivisected and held to be rendered in parts, dehors the Agreement; that the demand for the normal period is sustainable; that the penalties are set aside and if amounts deducted towards TDS have entered into the calculation for demanding duty, the same should be deleted and duty reworked for the normal period- In view of the Difference of Opinion between members, the matter is referred to the President: CESTAT
- Difference of Opinion: CHENNAI CESTAT
2023-TIOL-1103-CESTAT-BANG
Tyco Electronics Corporation India Pvt Ltd Vs CCE & ST
Cus - Appellants had imported raw material and components and also procured goods from DTA without payment of customs duty and excise duties in terms of Notification No. 52/2003-Cus and 22/2003-CE - Since these had become obsolete items, the appellant sought permission from the Department for its destruction and have also informed that destroyed goods will be sold as scrap and duty would be discharged on the scrap value of obsolete raw materials - However Adjudicating authority directed the Appellant to destroy or dispose the goods only after payment of duty on the assessable value at the time of import with interest - As this order was upheld by Commissioner(A), the present appeal before the Tribunal.
Held: As per the Circular 60/1999-Cus dated 10.9.1999, the supplier of such defective/damaged or otherwise unfit for use, goods, does not insist on re-export of such goods, the same may not be re-exported subject to the condition that such goods shall be either destroyed with the permission of the Assistant Commissioner in-charge of the unit or cleared into DTA on payment of full Customs duty - Thus, the adjudication authority ought to have allowed the request of the appellant for destruction of such goods either within the unit or destroyed outside the unit when it is not possible to destroy the same within the unit without insisting for payment of custom duty especially when respondent have allowed destruction of obsolete goods subject to payment of scrap value earlier - Para 6.15 (b) of the Foreign Trade Policy clearly states that "no duty shall be payable in case capital goods, raw material, consumables, space, goods manufactured, processed and packaged, and scrap/waste/remnants/rejects are destroyed within unit after intermission to customs authority or destroyed outside unit with permission of customs authorities" - Notification No.34/2015 has amended condition (8) of notification 52/2003 along the lines of the above clause 6.15(b) to bring parity between the FTP provisions and the customs notifications - It is, therefore, clear that when goods are destroyed, they are not liable to duty on the original value at the time of import - No merit in the impugned orders - Appeals are allowed: CESTAT [para 12, 13, 17]
- Appeals allowed: BANGALORE CESTAT |
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