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2023-TIOL-1116-CESTAT-ALL
Bharat Heavy Electricals Ltd Vs CCE
CX - The Appellant is a public sector unit located in Jhansi - For the various reasons the value of the goods could not have been determined at the time of clearance - All the contracts which were entered into for supply of Large Thermal/ Hydro power and Transmission Project & with Indian Railways were having a price variation clause - The prices were finalized subsequently after three to four years for the finalization on the prices by Ministry of Heavy Industries & Ministry of Railways - Differential duty was paid on finalization of the assessment on the value so determined finally - The Appellants were constantly working under the scheme of provisional assessment from 1990 onwards and even after introduction of Central Excise Rules, 2002 the permission was granted and everything was proceeding smoothly till December, 2016 - In December, 2016 the jurisdictional Assistant Commissioner observed that provisional assessment permission could not be applied on monthly basis and be granted every month for the assessment of that month - Thereafter, such Order-in-Original came to be sustained by the Order-in-Appeal being challenged.
Held - In the case of the Appellant it is admitted fact that the contract and supplies made against the said contract area spread over a large period of time spanning more than year and the prices of the goods supplied in terms of these contracts cannot be determined on the monthly basis or on the basis of financial year - These prices are finalized much after supply of goods by the Appellant by the relevant ministries and accordingly the differential duty is paid - Provisional assessment is made for the reason that value are rate of duty could not have been determined finally at the time of clearance - In the present case admittedly the value of the goods cleared is not determined at the time of clearance that the assessments are made provisionally so that the differential duty would be recovered on finalization of the assessment - The definition of relevant date as per Section 11A provides that the relevant date would be date of final adjustment of duty on the finalization of assessments - In the present case we do not find any action being taken by the Revenue after having denied the permission to make assessments provisional to demand the duty in respect of the clearances made within the prescribed time limit as per Section 11A - In case the submission of the Revenue is agreed to, the Appellant would without even a notice issued under Section 11A within the prescribed time limit whatsoever payments made by the Appellant on finalization of assessment could not have been recovered - Provisional assessment is a facility to the revenue to keep the assessments alive and not to the person claiming for provisional assessment which is on account of the reason that the correct value for rate could not have been determined - The issue involved in the present case has become inconsequential - The counsel for the Appellant submits that they have from the date of clearance in 2017, in all the cases, the case, determined the final value and paid the differential duty along with the interest as has been held by the Apex Court - On payment of differential duty along with interest on finalization of value subsequent to the clearance of goods, no further action is due against the Appellant except in case where the duty has been short paid, for any reason in pursuance of the impugned order which otherwise by the lapse of time has become inconsequential: CESTAT
- Appeal partly allowed: ALLAHABAD CESTAT
2023-TIOL-1115-CESTAT-KOL
C P Construction Company Vs CCGST & CE
ST - The Appellant is a Proprietorship concern, registered with the Service Tax department under Commercial or Industrial Building and Civil Structures' and 'Maintenance or Repair Services' - The examination of audited financial accounts of the Appellant for the periods 2005-06, 2006-07, 2007-08 and 2008-09, copies of work order for the relevant period, payment receipts and ST-3 returns for the material period, revealed that the Appellant has received certain sum from various clients on which no Service Tax was paid for the respective years - On the basis of the said verification, a demand of Service Tax of Rs.52,27,911/-, including Cess was raised on the Appellant vide Show Cause Notice dated 13.10.2010 - The Notice was adjudicated by the Commissioner, Bolpur vide impugned order dated 17.02.2011, wherein he has confirmed the service tax of Rs. 42,24,192/- demanded along with interest and imposed equal amount of tax as penalty under Section 78 of the Finance Act, 1994 - The balance demand in the Notice was dropped - Penalties were also imposed under Section 76 and 77((2) of the Finance Act, 1994. Held - The Appellant is eligible for abatement on the gross value in respect of the 'Erection and Commissioning' service and the demand confirmed in the impugned order without extending the 67% abatement is set aside - The demand of service tax on 'Crane Hiring' Charges is upheld for the normal period of limitation along with interest under 'Supply of tangible Goods service - The demand confirmed on this count for the extended period of limitation is set aside - The penalties imposed under Sections 76 and 78 of the Finance Act, 1994 are set aside - The penalty imposed under section 77(2) of the finance Act, 1994 is upheld: CESTAT
+ Board has issued Circular being No.80/10/2004- clarifying the issue. In the said Circular it has been clarified that these materials are normally procured from the market and are not covered under the duty paying documents. In the case of composite contracts, bifurcation of value of goods sold is often difficult. Considering these facts, an abatement of 67% has been provided in the case of composite contracts where the gross amount charged includes the value of material cost. The Circular also clarifies that a general exemption is available to goods sold while providing service under Notification No.12/2003-ST, but the exemption is subject to the condition of availability of documentary proof specially indicating the value of the goods sold. From the Circular cited above, we observe that if a service provider wanted to avail abatement of actual material used in providing service as per Notification 12/2003, they have to provide all the bills evidencing the sale of material. However, in a composite contract involving material and service, it is not required to submit the bills evidencing sale of the materials used in providing the service to avail the abatement of 67%. It is enough if the terms of the Contract indicate that materials also involved in providing the service and the bill raised includes the material cost also. A perusal of the contract indicate that the 'Erection and commissioning Service' rendered by the Appellant include supply of materials also and there was no separate charges raised for the materials used in providing the service. Thus, the we find that the terms of the contract clearly indicate that the 'Erection and commissioning' service rendered by the Appellant in the present case involves supply of materials and the bills raised by the Appellant include the material cost also. In view of the above we hold that the Appellant is eligible for 67% abatement and liable to pay service tax only on 33% of the value of the service. In the impugned order, the adjudicating authority has demanded service tax on the gross value without giving the 67% abatement. Thus, we find that the demand confirmed in the impugned order without giving 67% abatement is not sustainable and hence we set aside the demand pertains to 67% of the value confirmed in the impugned order;
+ Regarding demand of service tax on 'Crane Hiring ' charges under the category of 'Supply of tangible Goods service', we observe that initially the Notice was issued demanding service tax on 'Crane hiring' charges under Financial Leasing service up to 15.05.2008 and under 'Supply of tangible goods' service w.e.f.16.05.2008. The adjudicating authority dropped the demand under 'Financial Leasing service' for the period up to 15.05.2008 on the ground that option to own the cranes at the end of the lease period is an essential ingredient to demand service tax under 'Financial Leasing' which is not available in this case. After examining the work orders for supply of the cranes he concluded that the 'Crane Hire charges' collected by the Appellant is rightly chargeable to service tax under the category of 'supply of tangible goods' service w.e.f.16.05.2008 and confirmed the demand only for the period after 16.05.2008. Aggrieved against the confirmation of demand on 'Crane Hiring' charges' the Appellant contended that the transaction involved is of 'deemed sale' and hence not liable to service tax. The contention of the Appellant is that they have handed over possession and effective control of the cranes to transferee and they have no control over the cranes after handing over the same to the contractor. Thus, it is their contention that the contract should be construed as 'deemed sale' not liable to service tax;
+ The terms and conditions mentioned above clearly indicate that the appellant has not transferred possession and effective control of the cranes to the transferee. They have only transferred the 'right to use' the cranes to the transferee. As per Section 65(105)(zzzzj), service provided in relation to machinery and equipments for use, without transferring the right of possession and effective control of the machinery is liable to service tax under the category of 'Supply of Tangible Goods service' w.e.f.16.05.2008. As per the terms and conditions of the contract discussed above, we observe that the service of 'Crane hiring' rendered by the Appellant falls within the ambit of 'Supply of tangible Goods service' as defined under Section 65(105)(zzzzj) of the Finance Act, 1994. Accordingly, we hold that the adjudicating authority has rightly confirmed the demand of service tax on 'Crane hiring Charges' under the category of 'Supply of Tangible Goods service' w.e.f 16.05.2008.
- Appeal partly allowed: KOLKATA CESTAT
2023-TIOL-1114-CESTAT-DEL
Heeralal Chhaganlal Tank Vs CC
Cus - The Assessee in the present case are jewelers holding Import and Export Code No.1388003325 - The importer- appellant had filed 10 Bills of Entry for re-import of goods exported earlier for participation in exhibition or on a consignment basis - While re-importing of these goods, the appellant-importer was exempted from Customs Duty under clause (5) of the Notification No.45/2017-Cus dated 30.6.2017. From the perusal of shipping bills, it appears that the goods were exported either under claim of refund of IGST paid on export or under LUT/Bond without payment of duty of IGST - The Department formed opinion that at the time of re-import thereof, the importer was eligible for exemption under Sr.No.1 (c) or 1 (d) as the case may be, of the Table in Notification No.45/2017-Cus dated 30.6.2017 which exempts imported goods from so much duty of customs leviable thereupon which in excess of amount indicated in the corresponding entry in column (3) of the said table in the said notification - Since the Assessee had claimed exemption under Sr.No.5 from whole of customs duty as also IGST, the Department opined gross mis-declaration of exported goods. Resultantly, while issuing show cause notice F.No.VIII (H)10/15/Adj./2019/6056 dated 6.9.2019, the appellant was denied entitlement to exemption under Sr.5 of Notification No.45/2017 dated 30.6.2017 - Since the Assessee had not paid customs duty, amounting to Rs.1,20,17,423/- was proposed to be recovered from the Assessee alongwith penalty and the goods imported by the said bill of entry were proposed to be confiscated. The said proposal has been confirmed vide Order-in-Original No.04/ 2020 -COMMISSIONER (P) Jodhpur dated 5.3. 2020 except proposal confiscating the goods under Bill of Entry was not accepted. Held - The issue involved in the present appeal is about applicability of condition of Notification No.45/2017 dated 30.6.2017 as to whether the re-import, in the present case, shall be covered under entry 1(d) or under entry 5 of Sl. No. 5 Notification No.45/2017 dated 30.6.2017 - Both parties have relied upon the circular No. 108/27/2019-GST dated 18.7.2019 read with circular No. 21/2019-Customs dated 24.7.2019 - Hence, order under challenge is hereby set aside except for the amount of duty to be paid with reference to bill of entry No.6830735 dated 16.6.2018. Consequent thereto, appeal stands partly allowed: CESTAT + Perusal of the said notification and circular makes it clear that where the goods exported either under the Scheme of refund of integrated tax paid on export of goods or under bond without payment of integrated tax, on being re-imported, that too within six months of export, the same shall not amount to supply of goods - As per Section 5(1) of the IGST Act levy of the integrated tax is on inter-state 'supply' of goods or services or both - Thus, for levy of integrated tax there must be 'supply' of goods or services or both - In the present case, the goods are sent either for exhibition or on consignment basis - The goods which are re-imported are the once which are not sold in the Exhibition or are not approved by the buyer - The ownership of the goods does not transfer to the buyer/consignee to whom the goods i.e. appellant - In case of Exhibition, the appellant only takes the goods out of India and brings the same back after Exhibition. For supply of goods, there has to be supplier of goods and recipient of goods - However, in case of goods taken for exhibition both are same person - It is well settled principle that sale cannot be made to oneself only, similar concept is applicable in case of supply as well; + Further, there is no consideration paid when the goods are re-imported by the appellant - Thus, at the time of re-import there is no 'supply' of goods as per Section 7 (1) (a) of the CGST Act - Even GST circular dated 18.7.2019, the CBIC has specifically clarified that since, the goods which are being sent or taken out of India for exhibition or on consignment basis are without consideration, the same shall not fall within the 'scope of supply' as laid down under section 7 of the CGST Act - The circular further clarified that since, the transaction is not a supply, the same cannot be considered as 'Zero rated supply' as per provisions contained in section 16 of the IGST Act - Department has also issued circular dated 24.7.2019 which clarifies that since, exporting of goods on consignment basis is not 'supply' in terms of section 7 of the CGST Act, the re-import of the same would not attract any integrated tax - From the bare perusal of the above extract, it is evident that the Department itself admits that in case of consignment export, the transaction shall not be considered as 'supply' when the goods are initially sent out; + From the above fact on record, we also observe that out of ten bills of entry export with reference to six of them were made with payment of IGST alongwith interest was paid at the time of export of goods - There is no denial about payment of IGST of Rs. 1,50,145/- with interest - Since the goods exported are already held to not to be 'Goods Supplied' but for exhibition, the goods exported on LUT bond gets apparently out of the scope of entry 1(d) of the notification dated 30.6.2017. Thus shall fall under entry 5 of the said notification to which applies 'Nil' duty. Thus, we are of the opinion that the demand has wrongly been confirmed with respect to these 3 bills of entry; + We further observe that from above tabled six Bills of Entry, that those were filed mentioning payment of IGST of Rs.1,50,145/- alongwith interest at the time of export of goods mentioned therein. In view thereof demand in respect of this amount also shall not be confirmed. Thus, it is clear that the demand with respect to above tabled Bills of Entry (3+6) has wrongly been confirmed for the reasons discussed above i.e. goods sent out of India on approval basis does not attract integrated tax at the time of re-import, the amount stands already paid, otherwise. The goods exported under LUT are admittedly imported within six months of the export then there is no liability to pay tax on re-import. Above all the export was not on bond as is the requirement of entry at Sr.No.1(d) of Notification dated 30.6.2017. Hence, the order under challenge about demand w.r.t. nine tabled Bills of Entry is liable to be set aside; + Now the demand in respect of one bill of entry No.6830735 dated 16.6.2018 in respect of which the export was made under LUT and re-import could not be effected within six months of the export. Keeping in view the circular dated 24.7.2019 as quoted above, we hold that re-import of the goods after return from the exhibition can be confirmed under Notification 45/2017-Customs dated 30.06.2017 provided re-import happens within six months from the date of delivery challans for export. Since the time limit was only condition for availing the benefit of Notification, we hold that the appellant cannot claim exemption from payment of integrated tax with reference to this one bill of entry. Thus, we hold that the benefit of the notification has rightly been denied with respect to one Bill of Entry. The demand w.r.t. said Bill of Entry is therefore upheld. The order under challenge to the extent of demand proportionate to the value of goods re-imported vide the said bill of entry is hereby sustained; + With respect to imposition of penalty upon the appellant, we observe that the issue in the present case is of the interpretation of a particular notification. The appellant are held to have rightly availed the benefit of Notification No.45/2017-Customs dated 30.6.2017. We do not find any evidence on record produced by the department which may prove alleged mens rea for the appellant to evade payment of customs duty. Though one Bill of Entry is held as not eligible for exemption from full customs duty but for want of evidence of alleged intent to evade, we do not find any justifying reason for imposition of penalty upon the appellant. Hence, we set aside order imposing penalty upon the appellant.
- Appeal partly allowed: DELHI CESTAT |
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