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2024 (5) TMI 1348 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , NEW DELHI
CIRP - Liquidation of corporate debtor - Refund of an amount with interest paid to prevent invocation of their Bank Guarantee - Failure to comply with the terms of the contract - jurisdiction under Section 42 of IBC - HELD THAT:- For the purpose of liquidation, the liquidator has some special powers which are significantly different from those of the RP. Under Section 36 the liquidator forms a liquidation estate where liquidator holds all the properties of Corporate Debtor as a fiduciary, for the benefit of the creditors. Another major function of the liquidator is the consolidation and verification of the claims submitted to him as has been prescribed by Section 35 of the IBC. After their appointment, the liquidator has to issue a public announcement within 5 days from the appointment in Form B of Schedule II of the Liquidation Regulations. The purpose of the public announcement is to call upon the creditors and other such persons to submit their claims in relation to the corporate debtor. After the receipt of the claims, the liquidator shall verify those claims submitted by the creditors and may also ask the creditors to submit any evidence in relation to their claims for the purpose of verification.
In the liquidation process, the liquidator has the power to reject claims raised and if a claim is rejected, a creditor can appeal against this decision to the Adjudicating Authority. After all the required claims have been admitted by the liquidator, he is required to determine the value of the claims for the purpose of distribution of the assets of the Corporate Debtor. This clearly entails the responsibility of more than merely collating claims but verification of claims and determination of their value.
No material has been placed on record by the Appellant which shows that the Corporate Debtor had on any earlier occasion denied making payments against the invoices raised by the Respondent. This gives sufficient room to believe that the Corporate Debtor was satisfied with the level of services performed by TCEL.
Coming to the issue of invocation of BG by the Corporate Debtor, it is the case of the Respondent that having duly performed their obligations arising out of their contract with the Corporate Debtor, and in the absence of any claim for defect or otherwise, action on the part of the RP to invoke the BG of Rs. 56.80 lakh was without any basis - The first chance that the Respondent got to recover the BG equivalent amount which was wrongfully retained by the Corporate Debtor was when the liquidation process commenced and the Respondent acted accordingly.
The liquidator is required to admit or reject a claim, basis documentary evidence. The liquidator is required to independently assess the merits of such claims based on the documents/evidence adduced by each such creditor - the Liquidator has tried to justify the wrongful invocation of BG by raising the feeble defence that the BG equivalent had been paid without any demur or protest which seems to be more of an after-thought to cover the action of the RP.
There are no hesitation in holding that the Respondent cannot be faulted in following the due process in filing its claim with the Liquidator. Furthermore, in the liquidation process, if a claim is rejected by the Liquidator, a creditor can appeal against this decision before the Adjudicating Authority. The Adjudicating Authority enjoys complete jurisdiction under Section 42 of the IBC to deal with the decision of the Liquidator rejecting the claim filed by the Respondent under Section 38 of IBC. This is in consonance with the statutory position set out under the IBC.
The Adjudicating Authority after perusing all material on record has rightly come to the conclusion while passing the impugned order that the Respondent is entitled to refund of Rs. 56.80 lakh being the amount of BG paid by it, alongwith the payment of Rs. 16.73 lakh due in respect of invoice dated 22.11.2017 and accordingly directed the Liquidator to accept these claims.
There are no reasons to interfere with the impugned order - appeal dismissed.
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2024 (5) TMI 1347 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Initiation of CIRP - NCLT dismissed the section 9 application - Nature of debt - Operational debt under the IBC or not - existence of pre-existing dispute between the parties or not.
Nature of debt - HELD THAT:- The definition of "operational debt" under Section 5(21) of the IBC is analysed. This definition specifies a claim arising from the provision of goods or services. We find that while the LOI contemplated a future license agreement, the security deposit itself was not directly linked to any service rendered by Seaview.
The judicial precedent as cited by the Appellant in Consolidated Construction Consortium Limited v. Hitro Energy Solutions Pvt. Ltd. [2022 (2) TMI 254 - SUPREME COURT] also looked into. This judgement is only an authority for the proposition that the words "claim in respect of provision of goods or services" includes not only those who supply goods or services to corporate debtor but those who receive goods or services from the corporate debtor and the words “in respect of” must therefore not received a narrow interpretation but the claim must bear some nexus with the provision of goods or services - In the present case the Appellant has neither supplied goods nor services to the Corporate Debtor nor received goods or services from the Corporate Debtor. The said judgement is therefore of no assistance to the Appellant.
In the present case, no GST was payable or has been paid on the security deposit. In the present case, the security deposit was not an advance licence fee but deposit for ensuring that the Appellant entered into a license agreement. The same was not liable to be adjusted against any outstanding or future license fee. No services were rendered nor supplied either by the Appellant to the Respondent nor by the Respondent to the Appellant. On the contrary, the security deposit became liable to be forfeited on account of nonperformance of the obligation of the Appellant i.e. it's requirement to enter into a leave and licence agreement. Thus, this is not a case of supply of goods or services - the scope of "operational debt" under the IBC does not encompass situations like security deposits unrelated to any immediate service rendered.
Existence of Pre-Existing Dispute - HELD THAT:- The IBC mandates that an application under Section 9 is not maintainable if a pre-existing dispute exists between the parties. The presence of such a dispute must be assessed to determine the maintainability of the application - Given the substantial and documented disputes, it is clear that a pre-existing dispute exists. This aligns with the Supreme Court's guidance in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd. [2017 (9) TMI 1270 - SUPREME COURT], where it was held that if a dispute exists and requires further investigation, the application under Section 9 cannot be maintained.
Appeal dismissed.
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2024 (5) TMI 1346 - SC ORDER
Seeking grant of Regular bail - Money Laundering - scheduled offences/predicate offences - illegal extortion of coal transportation - HELD THAT:- As on date there is no predicate offence under Section 384 of IPC or any other provision of IPC against the petitoiner - The chargesheet has been filed only under Sections 204 and 353 of IPC, and both are not scheduled offences under PMLA - As regard to the observations made by the Karnataka Police in the chargesheet, reproduced above, Mr. Raju, learned ASG, fairly states that so far, the Chhattisgarh Police have not registered any offence under Section 384 of IPC, nor has any investigation conducted by them, has been brought to the notice of the Enforcement Directorate.
Six weeks’ time granted to the Enforcement Directorate to find out the status of that investigation and place on record the additional affidavit along with the relevant material - he petitioner has already undergone incarceration for about one year and seven months - the petitioner has made out a prima facie strong case for his enlargement on interim bail.
The petitioner is directed to be released on interim bail subject to his furnishing bail bonds to the satisfaction of the Special Court, Raipur, Chhattisgarh - Post the matter for further hearing on 07.08.2024.
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2024 (5) TMI 1345 - DELHI HIGH COURT
Public Interest Litigation - allegations of money laundering and consequential loss to the public exchequer, by way of evasion of taxes - undervalued share transfer - HELD THAT:- The Petitioner is seeking directions for investigation into the valuation of the sale of the shareholding held by Respondent No. 7 issued by Respondent No. 8 and subsequently transferred to Respondent No. 9. However, in view of the fact that the said transaction has been examined by the IT Department during the block assessment of Respondent No. 7 shows that the matter is within the knowledge of the authorities and considering the fact that no adverse proceedings have been initiated by the IT Department, it is opined that no further directions are required in this petition.
Further, in view of the fact that an earlier petition in SH ANKUR GUPTA VERSUS THE UNION OF INDIA AND ORS [2022 (3) TMI 1599 - DELHI HIGH COURT] and SLP ANKUR GUPTA VERSUS UNION OF INDIA & ORS [2022 (8) TMI 1514 - SC ORDER] filed by the same Petitioner against common Respondent No. 16 has been dismissed on the finding that the same is motivated, it is opined that entertaining the present PIL at the behest of the Petitioner does not advance the cause of justice and the objective behind entertaining a PIL.
Petition dismissed.
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2024 (5) TMI 1344 - DELHI HIGH COURT
Seeking grant of Regular Bail - Money Laundering - predicate offence - delay of trial - policy worked to the benefit of select individuals and large businesses or not.
Whether the applicant is entitled to bail on sole ground of deay in trial? - HELD THAT:- The Hon’ble Supreme Court in MANISH SISODIA VERSUS CENTRAL BUREAU OF INVESTIGATION [2023 (11) TMI 63 - SUPREME COURT] has also clearly mentioned that the Courts hearing application for bail will not be influenced by the observations made in the previous orders of rejection of bail of Sh. Manish Sisodia.
This observation of the Hon’ble Apex Court leads to only one conclusion that the learned Trial Court or this Court in event of the applicant moving fresh bail application can, independently apply its mind to the facts of the case and decide the bail application on merit - In the considered opinion of this Court, the directions of the Hon’ble Supreme Court entitle the applicant Sh. Manish Sisodia to file a fresh bail application in case he feels that the trial has not expeditiously proceeded in this case. The adjudication of the bail application, therefore has to be on the basis of the merits of the case, with an additional consideration of delay in trial or the right of speedy trial.
Whether the applicant or other accused persons can be held responsible for delay in initiation of trial due to their act of filing different applications before the learned Trial Court? - HELD THAT:- There is no dispute about the fact that the trial in this case is yet to commence, since the proceedings, which are to be mandatorily carried out under the law as per code of Criminal Procedure, are still underway as the accused persons have moved multiple individual applications related and unrelated to Sections 207/208 of Cr. P.C. i.e. for supply of relevant documents, which is continuing till today - In the case of P. GOPALKRISHNAN VERSUS STATE OF KERALA AND ORS. [2019 (11) TMI 1827 - SUPREME COURT], the provision of Section 207 of Cr. P.C. was held to be a part of right to fair trial.
This Court cannot ignore the valuable right of an accused to access justice, and avail legal remedies available to him within the framework of the law especially when he is in judicial custody or even otherwise when he is facing criminal trial.
Thus, prima facie, the accused persons including the applicant herein have delayed the pre-charge proceedings under Section 207 of Cr. P.C. by taking three months time from 19.10.2023 to 19.01.2024 for inspection of un-relied documents despite repeated directions from learned Trial Court to conclude the same expeditiously.
Applications unrelated to Section 207/208 of Cr. P.C. - HELD THAT:- In this Court’s opinion, the mere act of filing an application seeking any relief cannot automatically be construed as a delay tactic since an accused, who is in judicial custody, cannot be stopped from moving applications for fulfilment and enforcement of their personal, legal and fundamental rights and their applications cannot be simply termed as frivolous.
The duration of pre-trial proceedings, which includes the mandatory procedures and steps provided under Cr. P.C in criminal cases, necessarily adds to the overall pace and duration of trial of a case.
Observations Regarding All Accused Persons Acting in ‘Concert’ With Each Other To Delay Trial - Whether Reasonable and Justifiable? - HELD THAT:- In the opinion of this Court, while the accused persons may be perceived as acting collectively, it is essential to acknowledge their distinct roles and rights as individuals before the Court. In legal proceedings involving multiple accused persons, it is not uncommon for their legal strategies to align or for similar applications to be filed by their respective legal counsels. However, the mere similarity in legal approach adopted by different counsels for the accused persons may not be a concerted effort as each accused is entitled to pursue his defence independently.
Delay in commencement of trial cannot be attributed to the ED or CBI or Ld. Trial Court - HELD THAT:- The prosecution did not take time or delay commencement of trial by not providing them copies or not complying with the orders of the Court. Further, most of the applications were decided on the same day by the learned Trial Court - This Court further holds that there has been no delay on the part of the learned Trial Court and that arguments on charge in the case filed by CBI have already been part-heard and further arguments were not addressed as co-accused namely Sh. Abhishek Boinpally, Sh. Arun R. Pillai, Sh. Sameer Mahendru, Sh. Amandeep Singh Dhall, Sh. Arjun Pandey, Sh. Rajesh Joshi and Sh. Chanpreet Singh Rai have filed an application and argued before the learned Trial Court that till the entire investigation is completed, the arguments on charge should not be heard.
Have the proceedings before the learned Trial Court proceeded at Snail’s pace? - HELD THAT:- No fault can be found with the Directorate of Enforcement or Central Bureau of Investigation that there was a voluminous record of investigation. It is also not the fault attributable to the prosecution or the learned Trial Court that some of the accused persons in the CBI case do not want to address arguments on charge till investigation is finally concluded. It is also not the fault of prosecution that multiple individual accused persons have multiple individual defence counsels who will argue individually before the learned Trial Court, both during the course of pre-trial proceedings and later during trial, which will take time - The practical realities of trial and pre-trial stages in the complex case as the present one involving extensive investigation may, at times, compromise with speed of the pre-trial duration.
At times, justice hurried may lead to justice being buried either to the accused or to the prosecution which is not the intent of criminal jurisprudence of this country.
Principles governing grant of regular bail u/s 439 of CRPC and in cases involving economic offences - HELD THAT:- In the case of Y.S. JAGAN MOHAN REDDY VERSUS CENTRAL BUREAU OF INVESTIGATION [2013 (5) TMI 896 - SUPREME COURT] the Hon’ble Supreme Court observed that economic offences constitute a class apart, and thus, gravity of such offences has to be kept in mind while considering a plea for grant of bail.
The focus is on prima-facie assessing the evidence available at this stage, to decide if it justifies either the continuation of custody or the grant of bail, without delving into a detailed examination of the merits of the case or making definitive findings of fact.
The case of CBI and the ED - role of applicant Shri Manish Sisodia - HELD THAT:- The Directorate of Enforcement alleges that Sh. Manish Sisodia was not only the head of the Group of Ministers (GoM) which was tasked by the Cabinet to examine all aspects of the erstwhile excise system, report of the expert committee and comments received from the stakeholders, but he was also the Excise Minister and had played a key role in modifying the terms of the Excise policy in a manner which would benefit the co-accused persons. It is alleged that Sh. Manish Sisodia had got the policy formulated and implemented in a way so as to allow illegal gains to certain persons/entities, against advance kickbacks of about Rs. 100 crores received from them, which were later utilised by the Aam Aadmi Party in the Goa Assembly Elections - Thus, it is alleged that Sh. Manish Sisodia was one of the key conspirators in formulating, conceptualizing and implementing the various processes and activities in dealing with the proceeds of crime including creating an entire ecosystem for generating, concealing, projecting as untainted, possessing and using the proceeds of crime.
Association of the Applicant Sh. Manish Sisodia with co-accused Sh. Vijay Nair - HELD THAT:- A perusal of the statement of co-accused Sh. Arun R. Pillai also discloses that Sh. Vijay Nair had the support and sanction of Sh. Kejriwal and Sh. Manish Sisodia for all his activities related to the Excise Policy 2021-22. The statement of Sh. Butchi Babu also reveals that Sh. Vijay Nair was acting on behalf of Sh. Kejriwal and Sh. Manish Sisodia and was working on their behalf on the Excise policy. During the course of investigation, a few provisions of the liquor policy were also found in the WhatsApp chats of Butchi Babu, sent by Sh. Vijay Nair, before the policy was finalized by the Group of Ministers headed by Sh. Manish Sisodia - there is sufficient material on record, at this stage to prima facie show that Sh. Vijay Nair was acting on behalf of the applicant Sh. Manish Sisodia as well as Aam Aadmi Party in demanding and receiving the kickbacks from co-accused persons including members of South Group and ensuring that favourable clauses were inserted in the new Liquor Policy for their benefit.
Orchestration of Pre-Decided Emails by Sh. Manish Sisodia and Creation of Fake Public Opinion - HELD THAT:- In order to overcome the hurdle posed by the Expert Committee Report, Sh. Manish Sisodia had called for public opinion, parts of which were also manufactured by him only, in order to show to the general public that it was the general public and other stakeholders, who were giving suggestions contrary to the Expert Committee report, and not the Government of Delhi, which were taken into consideration while formulating the new Excise Policy.
Change of Draft Cabinet Note by Sh. Manish Sisodia to Hide Opinion of Legal Experts - HELD THAT:- The prosecution alleges that Sh. Manish Sisodia had deliberately altered a draft Cabinet note to exclude the opinions of three legal experts — including one former Attorney General of India and two former Judges of the Hon’ble Supreme Court, which was obtained by Delhi ALCOBEV Retailers Association and mailed to the email ID of Excise Department. These legal experts had recommended maintaining the existing excise policy, which would have hindered Sh. Manish Sisodia’s desire to introduce a new policy, allegedly in conspiracy with the South Group.
Role of Applicant in Ensuring Allotment of L-1 License to M/s Indo Spirits - HELD THAT:- The statement of Sh. C. Arvind also reveals that he was asked by Sh. Manish Sisodia to ensure that the issue regarding the file of M/s Indo Spirits is resolved. This is further corroborated by the statement of Sh. Narinder Singh, the then Assistant Commissioner (IMFL), who has disclosed that Sh. Arava Gopi Krishna had called him on 05.11.2021 and asked him to grant the license to M/s Indo Spirits on priority basis - As per prosecution, this allegation can also be materially corroborated with the way the file of M/s Indo Spirits was cleared on the same day and formal order of allocation of license was issued on 08.11.2021.
Creation of Uneven Level Playing Field - HELD THAT:- The provisions of the Policy imposed prohibitive costs and stringent eligibility criteria that effectively excluded smaller retailers from the competition. The high non-refundable participation fee of Rs. 10 lakhs and substantial earnest money deposit requirements of Rs. 30 crores (in case of bidding for one retail zone) and Rs. 60 crores (in case of bidding for more than one retail zone), favored larger entities with significant financial resources, allowing them to dominate the bidding process for retail zones - Consequently, the policy prima facie facilitated the concentration of retail licenses in the hands of a few large players, as also argued by learned Special counsel for E.D.
Destruction of Electronic Evidence by Sh. Manish Sisodia - HELD THAT:- This Court cannot rule out the potential of the applicant to destroy and tamper with the evidence, and influence witnesses in future, if released on bail, which is based on the reasonable apprehension of the prosecuting agency which is derived from the previous conduct of the accused available on record.
Whether case for grant of bail is made out, on merits - HELD THAT:- There is no dispute about the fact that Sh. Manish Sisodia was the Minister concerned of Excise Department, who was responsible for formulation as well as implementation of Delhi Excise Policy 2021-22, and due to the irregularities committed in its formulation, such as increasing the margin of wholesale distributors from 5% to 12% without any reasonable justification, the wholesale distributors were able to earn an additional profit of 7% amounting to Rs. 338 crores. There is material on record to prima facie show that the members of South Group were involved in formulation of the Delhi Excise Policy and had met with co-accused Sh. Vijay Nair on several occasions, who was the In-charge of Media and Communication wing of Aam Aadmi Party and used to function from the office of Delhi’s Chief Minister and at times, had represented himself as OSD to the Excise Department, whose Minister concerned was Sh. Manish Sisodia - It is again clarified and reiterated, at cost of repetition, that at the stage of grant of bail, this Court has to only prima facie go through the material and not conduct a mini-trial to reach a conclusion as to whether the accused is guilty beyond reasonable doubt or not. The stage of such assessment is the stage of trial and not hearing of a bail application.
Whether the applicant can be granted bail on sole ground of delay in trial, even though he is not entitled to grant of bail on merits? - HELD THAT:- In case of SATYENDAR KUMAR JAIN VERSUS DIRECTORATE OF ENFORCEMENT, ANKUSH JAIN VERSUS DIRECTORATE OF ENFORCEMENT AND VAIBHAV JAIN VERSUS DIRECTORATE OF ENFORCEMENT [2024 (3) TMI 862 - SUPREME COURT], the Hon’ble Apex Court has observed that the provision for grant of bail, on the basis of delay in trial, is already imbibed in Section 436A of Cr. P.C. which provides that an undertrial, who has remained in custody for a period of one-half of the maximum punishment which can be awarded to him upon conviction, shall be released on bail, and that Section 436A also applies with full force to PMLA - this Court is of the opinion that the applicant herein cannot be entitled to bail solely on the ground of delay in trial, especially when he has failed to pass the triple test and other parameters including gravity of offence, for grant of bail under Section 439 of Cr. P.C. as well as the twin conditions under Section 45 of PMLA.
The present applications seeking grant of regular bail are hereby dismissed.
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2024 (5) TMI 1343 - CESTAT CHENNAI
Eligibility for refund of service tax paid on transportation charges - Definition and applicability of Goods Transport Agency (GTA) - Issuance of consignment notes and its implications on service tax liability - Applicability of previous judgments and notifications - HELD THAT:- The Tribunal in the appellant’s own case [2019 (1) TMI 1230 - CESTAT CHENNAI] for the earlier period from June 2009 to May 2010 had considered the very same issue of refund of service tax for transport of their goods by road by M/s. Shiva Cargo Movers Ltd. The refund claim rejected by the department was upheld by the Tribunal.
On perusal of the said Final order it is seen that the Tribunal had referred to the decision in the case of Chebrolu Agros Pvt. Ltd.[2017 (6) TMI 1248 - CESTAT HYDERABAD]. It was observed that the said decision was maintained by Hon’ble Apex Court. It is now brought to our notice that the appeal that was filed before the Hon’ble Apex Court was in regard to the demand under Business Auxiliary Services and not GTA services. On perusal of the records, it is seen that the appellant has now produced documents to show that M/s. Shiva Cargo Movers Ltd. has not issued any consignment note. The said transporter has issued only invoices periodically to collect transport charges.
Thus, taking note of the decisions in the case of Lakshminarayana Mining Company [2019 (7) TMI 917 - CESTAT BANGALORE] and Ramco Cements Ltd. [2023 (9) TMI 1257 - CESTAT CHENNAI] we are of the considered view that the appellant has to be given an opportunity to furnish documents and evidence that M/s. Shiva Cargo Movers Ltd. is not a Goods Transport Agency and also that no consignment notes were issued.
The matter therefore requires to be remanded to the adjudicating authority who is directed to consider afresh refund claim of the appellant. The adjudicating authority shall decide applicability of the above cited decisions of the Tribunal independent and uninfluenced by the decision of Tribunal in the appellant’s own case for the earlier period.
Thus, the impugned order is set aside. The appeal is allowed by way of remand to the adjudicating authority.
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2024 (5) TMI 1342 - CESTAT CHENNAI
Work orders/contracts involved supply of materials - Benefit of abatement under Notification No. 1/2006 - Whether the contracts entered into were in the nature of works contracts and if they are divisible in nature - HELD THAT:- Works contract service was brought within the tax net w.e.f. 01.06.2007 with the insertion of Section 65 (105) (zzzza) to the Finance Act, 1994. The statute does not qualify the liability to tax or otherwise, on any conditions, in the case of composite contracts like the extent of supply portion or the service portion, which according to us is like attempting to vivisect/dissect the understanding of the parties to the contract, which is not permissible. This has been held so by the Apex court in the case of Bharat Sanchar Nigam Ltd. Vs. Union of India [2006 (3) TMI 1 - SUPREME COURT].
Looked from this perspective, we are of the view that since the period involved in this appeal is from October 2006 to September 2011 which is prior to 01.07.2012 which is the date of insertion of explanation to Section 65B, the composite contracts involved in the present appeal were not amenable to service tax, as per the law laid down by the Apex court in the case of CCE Vs. Larsen & Toubro Ltd.[2015 (8) TMI 749 - SUPREME COURT]. We find that the dictum in the above decision has been consistently followed by all the CESTAT benches, in the orders relied upon by the appellant during the course arguments before us.
Thus, we are of the view that the demand in the present appeal is clearly unsustainable and consequently, we set aside the impugned order and allow the appeal with consequential benefits if any, as per law.
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2024 (5) TMI 1341 - CESTAT CHENNAI
Liability to pay service tax - labour charges (job work charges) for undertaking the activities like bending, cutting, shearing, and punching on goods fabricated for a power plant - Onus to pay excise duty - HELD THAT:- In the present case, the supply of raw materials as well as clearing of worked goods are undertaken by the appellant by giving declaration as per Notification No. 214/86-CE. Thus the onus to pay excise duty is on the principal manufacturer.
The Tribunal in the case of Pioneer Engineering Industries [2018 (6) TMI 719 - CESTAT CHENNAI] had considered the very same issue and held that the activity undertaken by the assessee in the nature of cutting, punching, drilling, heat treatment on steel plates so as to send the products to M/s. BHEL would amount to manufacture. The Tribunal had relied upon the decision of the Hon’ble Supreme Court in the case of Orissa Bridge & Construction Corpn. Ltd. Vs. Commissioner of Central Excise, Bhubaneswar [2008 (8) TMI 585 - SUPREME COURT] to hold that such activity amounts to manufacture.
Thus, we are of the considered opinion that the activity amounts to manufacture. The Commissioner (Appeals) for the subsequent period has set aside the demand of service tax observing that the activity amounts to manufacture of excisable goods. In view thereof, the demand cannot sustain.
In conclusion, the Tribunal set aside the impugned order, allowing the appeal with any consequential reliefs as per law.
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2024 (5) TMI 1340 - CESTAT CHENNAI
Non-payment of appropriate Service Tax - Club or Association Membership Services - Supply of Tangible Goods Services, Business Auxiliary Services and Renting of Immovable Property Services -No service provider and service recipient relationship between the association and its members.
Club or Association Services - HELD THAT:- The said taxable service is defined u/s 65(105)(zzze) of the Finance Act, 1994 to read as ‘any service provided or to be provided to its members, by any club or association in relation to provision of services, facilities or advantages for a subscription or any other amount’. The said definition was amended w.e.f. 16.05.2011 and reads as ‘any service provided or to be provided to its members, or any other person, by any clubs or association membership service in relation to provision of services, facilities or advantages for a subscription of any other amount’.
The relationship of a member with its association and vice versa is hit by the doctrine of mutuality. There is no service provider and service recipient relationship. The issue as to whether the subscription / entrance fees collected by the association from its members can be subjected to levy of service tax under the said category was considered by the Tribunal in the case of M/s. Ranchi Club Ltd [2012 (6) TMI 636 - JHARKHAND HIGH COURT] The Apex Court in the case of State of West Bengal Vs. Calcutta Club Limited [2019 (10) TMI 160 - SUPREME COURT] has also held that the demand of service tax cannot sustain.
Following these decisions, we are of the view that the demand under this heading cannot sustain and requires to be set aside. Ordered accordingly.
Supply of Tangible Goods Services - Appellant has provided transportation of goods to the oil companies. It cannot be considered as Supply of Tangible Goods Services. Even in the books, they have accounted the amount received by them as lorry freight. This indicates that the appellant has received freight charges for transportation and not hire charges. Further, the freight charges have been subject to service tax under the category of GTA services at the hands of the service recipients / oil companies. The Tribunal in the case of M/s. Erode Lorry Owners Association [2019 (3) TMI 43 - CESTAT CHENNAI] had considered the very same issue and held that the demand under Supply of Tangible Goods Services cannot sustain.
Thus, we are of the view that the demand under Supply of Tangible Goods Services cannot sustain and requires to be set aside. Ordered accordingly.
Business Auxiliary Services - The appellant is merely engaged in providing transportation of goods for the oil companies. The Show Cause Notice is not clear as to how this amount is to be treated as commission. We find that the demand under BAS cannot sustain and requires to be set aside. Ordered accordingly.
Renting of Immovable Property Services - For the reason of the taxable value under this category falls below the threshold limit is to be examined by the Adjudicating Authority. This issue is remanded to the Adjudicating Authority for the limited purpose of verification. In case, the amount is above the threshold limit, the appellant is liable to pay the service tax along with interest, and also the penalties in this regard for the respective period.
Thus, the impugned order is modified to the extent of setting aside of the demand of service tax, interest and penalties under Club or Association Services, Supply of Tangible Goods Services and Business Auxiliary Services. The issue with respect to Renting of Immovable Property Services is remanded to the Adjudicating Authority for verification as discussed above.
Appeal is partly allowed.
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2024 (5) TMI 1339 - CESTAT CHENNAI
Demand of service tax - Upfront charges collected towards Extended Warranty Scheme (EWS) as well as for the amounts collected for used car scheme - Classification of services under Works Contract Service Or Not - Activity of issuing EWS would fall under ‘Repair to Vehicle Services’ prior to 01.07.2012 - demand of service tax raised Period prior to 01.07.2012, u/s 65(105)(zo) and Period after 01.07.2012, u/s 65B(44) on the consideration received by the appellant for Extended Warranty Service (EWS) sustainable or not.
HELD THAT:- Period prior to 01.07.2012:- HELD THAT:- Definition of ‘Repairs to Vehicle Services’ which was introduced as a taxable service with effect from 16.07.2001 was amended with effect from 01.05.2011 by substituting the words ‘by an authorised service station‘ with the words ‘by any person‘.
Consequent to the amendment, the Department entertained the view that the appellant having collected charges for EWS they are liable to pay service tax under ‘Repair of Vehicle Services’ with effect from 01.05.2011 till 30.06.2012.
Tribunal in the case of M/s. Ford India Pvt. Ltd. Vs. Commissioner of Customs, [2023 (8) TMI 409 - CESTAT CHENNAI] wherein it has been held by the Tribunal that prior to 01.07.2012, the demand cannot sustain u/s 65(105)(zo) for the reason that repair to vehicle services involve both use of materials and rendition of service.
Following the same, we are of the considered opinion that for the period prior to 01.07.2012, the demand raised u/s 65(105)(zo) cannot sustain and requires to be set aside. Ordered accordingly.
Period after 01.07.2012:- From the definition of ‘service’ u/s 65B(44) of the Finance Act, 1994, it can be seen that post 01.07.2012, ‘service’ includes declared services. Section 66E gives the list of declared services and clause (e) of Section 66E speaks about ‘agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act’.
The main argument advanced by the appellant is that repair of vehicle involve replacement of spares / parts and as there is transfer of property in goods, such services are to be classified under Works Contract Services only.
As per the EWS certificate, the appellant undertakes to carry out the necessary remedial work (including replacement of parts / spares) necessitated by any mechanical / or electrical break down under normal use and maintenance, subject to terms and conditions. In essence, EWS is only a creation of an obligation to do an act. The consideration is paid by customer for this undertaking and is not paid for having done or for doing any remedial work instantly. EWS is a service in the nature of creating an obligation to do an act and then would fall under sub clause (e) of Section 66E which gives the list of declared services.
In the case of EWS, the appellant while receiving the consideration is for indemnifying risks for repair and replacement that may happen to the vehicle during the warranty period, subject to terms and conditions. The agreement is in the nature of a promise to do an act in the event of a contingency that may or may not happen in future and has to fall u/s 65E(e) as a declared service. The reimbursement of service charges to the dealer by appellant arises out of the separate dealership agreement. The EWS agreement is independent and entered by appellant with customer. There is no cause for double taxation.
The Ld. Counsel for the appellant has been at pains to argue that since the repair of a motor vehicle involves supply of parts / spares and is composite in nature, the same has to be classified only under WCS. We have no quarrel that when actual repair work is done, the activity would fall under WCS as defined u/s 65B(54). However, in the present case, it is only a promise to do the repair and the consideration is not for the actual repair. It has to be stated that in case there is an agreement to provide Works Contract Services (repair services), there is a specification as to what is the works that has to be executed and as well as the amount required for execution of such work. Both parties would be at consensus as to the nature of the work that has to be done as well as the consideration that has to be paid for the work. There is no element of risk involved to either parties. In other words, when there is a payment made agreeing to provide a service, both parties are well aware as to what is the service to be provided. In Extended Warranty Scheme, as already stated, the parties do not know whether the vehicle will require any repair or whether it will require only replacement of spares or whether it will require only services without replacement of spares or whether it will require both replacement and repair.
We say that Sub-clause (h) of Section 66E covers actual Works Contract Services executed and does not cover the assurance to provide repair services. In actual repair services, there is an element of sale which involve transfer of property in goods and therefore for post 01.07.2012 would be a Works Contract Services. In EWS it’s an assurance to provide repair service whereas, u/s 66E(h) it’s the agreement to provide or to be provided which becomes taxable. In fact post 01.07.2012 any activity carried out by a person for another for consideration is a service.
Thus, we hold that the issuing Extended Warranty Scheme is a service falling u/s 65B(44) read with Section 66E(e). The demand is therefore sustainable.
We find that the appellant has adopted the classification under WCS for the period post 01.07.2012 and have discharged service tax by availing the abatement which is permissible if the activity is to be classified as WCS. This shows that appellant was under bonafide belief that the EWS falls under WCS and had no intention to suppress facts to evade payment of tax. There is no positive act of suppression of facts established against the appellant. Further the issue being classification of service is purely interpretational in nature. For these reasons, we hold that the demand raised invoking the extended period requires to be set aside. For these same reasons, the penalties for the period post 01.07.2012 also requires to be set aside. Ordered accordingly.
In the result, the impugned order is modified - Appeals are partly allowed.
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2024 (5) TMI 1338 - CESTAT BANGALORE
Refund claim - time-barred - tax paid under protest - liability to pay Service Tax under reverse charge mechanism for the Consultancy Services received from abroad - HELD THAT:- The respondent in his written submissions filed before the bench has submitted that the respondent had deposited the service tax, interest and penalty on 05.12.2016, 27.12.2016 and 02.01.2017 respectively. Thereafter, refund claim was filed on 06.10.2017 which is within one year time period from the date of deposit of tax and well within the time period prescribed u/s 11B of the Central Excise Act, 1944.
He also observed that they have neither informed the audit Commissionerate nor the jurisdictional division/Range office that the payments were made under protest, and concludes that in the absence of any evidence to prove that payments were made under protest holds the claims were time bar. Therefore, there being no appeal against this finding of the Commissioner (A) by the respondent, the issue with regard to time bar stands settled and cannot be reopened.
It is an admitted fact that the respondent had paid the service tax amount based on audit letter dated 16.11.2016 on consulting charges paid in foreign currency to M/s. Aluforms Korea Co. Ltd., Korea under reverse charge mechanism. The respondent vide their letter dated 03.04.2017 had intimated the Assistant Commissioner of Central Excise and Service Tax “in terms of the provisions of Section 73(3) of Chapter V of the Finance Act, 1994, we request that the demand show-cause notice may not be issued to us since we have discharged the service tax liability along with the applicable interest and penalty at 15% on the service tax amount”. Therefore, there is no question of duty being paid under mistake of law or to be held ultra vires.
Thus, the tax being paid under service tax category under the relevant provisions and there is nothing declared unconstitutional or under mistake of law, the amount is necessarily to be considered as tax and refund has to be sanctioned as per the provisions specified u/s 11B of the Central Excise Act, 1944.
The Appeal is allowed.
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2024 (5) TMI 1337 - PUNJAB AND HARYANA HIGH COURT
Recovery of refund granted twice - grant of refund again by suppressing fact of suo moto availment of credit - Levy of penalty u/s 11AC - existence of mens rea or not - HELD THAT:- A bare reading of Section 11AC of the Act, 1944 shows that where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, for any reasons other than the reason of fraud or collusion or any willful mis-statement or suppression of facts or contravention of any of the provisions of the Act or of Rules made thereunder with intention to evade payment of duty, he shall be liable to pay penalty. Meaning thereby that there should be an intention to evade the payment of duty and in the present case, the mens rea of the appellant is proved from his conduct since it took the benefit of refund twice by suppressing fact of suo moto availment of credit.
There are no error much less perversity in the order impugned, warranting intervention by this Court - appeal dismissed.
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2024 (5) TMI 1336 - CESTAT ALLAHABAD
Abatement of appeal - adjournment of matter beyond three times - HELD THAT:- In case of ISHWARLAL MALI RATHOD VERSUS GOPAL AND ORS. [2021 (9) TMI 1301 - SUPREME COURT] condemning the practice of adjournments sought mechanically and allowed by the Courts/Tribunal’s Hon’ble Supreme Court has observed that 'Considering the fact that in the present case ten times adjournments were given between 2015 to 2019 and twice the orders were passed granting time for cross examination as a last chance and that too at one point of time even a cost was also imposed and even thereafter also when lastly the High Court passed an order with extending the time it was specifically mentioned that no further time shall be extended and/or granted still the petitioner – defendant never availed of the liberty and the grace shown.'
There are no justification for adjourning the matter beyond three times which is the maximum number statutorily provided - The Appeal is dismissed for non prosecution in terms of Rule 20 of CESTAT Procedure Rules, 1982.
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2024 (5) TMI 1335 - CESTAT BANGALORE
Levy of penalty on other co-noticee - Clandestine manufacture and clearance of the finished goods - whether after acceptance of application of the main applicant under SVLDRS, 2019 regarding the duty liability and penalty imposed, the personal penalty imposed on other notices can survive? - HELD THAT:- This issue has been dealt by the Tribunal in the case of M/S JPFL FILMS PRIVATE LIMITED, JALAN JEE POLYTEX LTD., KAVITA INTERNATIONAL AGENCY, KULDEEP SINGH, DP SINGH, R KNITFAB, PERFECT DESIGNER, VK KALRA, RELIANCE INDUSTRIES LIMITED, KANPUR WOOL INDUSTRIES, SWASTIK TRADING CO., APEX CORPORATION AND MANSA TRADERS VERSUS COMMISSIONER OF CENTRAL EXCISE, LUDHIANA [2023 (12) TMI 304 - CESTAT CHANDIGARH] has held that 'the benefit of the Scheme cannot be denied to the appellants just because they did not file the declaration under SVLDR Scheme.'
There are no reason not to follow the aforesaid precedent of this Tribunal. Consequently, the appeal filed by the appellant deserves to be allowed and accordingly the same is allowed.
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2024 (5) TMI 1334 - CESTAT ALLAHABAD
Classification of Colour Television Sets in SKD condition - classifiable under sub-heading No.8528.00 of CETA or not - confirmation of demand with interest and penalty - HELD THAT:- The issue is no more res integra and is squarely covered by the decision of the Tribunal in the case of M/S. L.G. ELECTRONICS INDIA PVT. LTD., SHRI S.N. RAI AND SHRI ATUL TANDON VERSUS COMMISSIONER OF CENTRAL EXICSE, NOIDA-II [2022 (8) TMI 873 - CESTAT ALLAHABAD]. In the above matter the Tribunal has decided that the parts and Sub-assembling cleared without all the critical components cannot be classified as CTVs. The Tribunal further held that unless all the critical parts of CTVs i.e. CTPs and PCBs also, are removed together, till then Rule 1 of the Rules of Interpretation to the Tariff is applicable and Rule 2(a) of the same Rule has no application and accordingly, the classification of such parts/Sub-assemblies will fall under 85.29 of the Tariff. The Tribunal set aside the adjudication order which applied Rule 2(a) in similar case where also CTPs were not removed by the supplier with other parts/Sub-assemblies.
The aforesaid order of the Tribunal was assailed by the Department before the Supreme Court in COMMISSIONER OF CENTRAL EXCISE, NOIDA II VERSUS M/S. LG ELECTRONICS INDIA PRIVATE LIMITED ETC. [2023 (4) TMI 1326 - SC ORDER] and the Civil Appeal was dismissed holding that 'on closer scrutiny of the unique facts of this case, it is our view, the goods of the appellant may not be said to be ‘parts’ as per Section Note 2 to Section XVI of the Tariff. The appellant not only used to assemble all parts of the Television Receivers and make complete television sets, but the said Television Receivers were also operated in the manufacturing unit of the appellant and thoroughly checked and only upon it being confirmed that the Television Receivers were complete in all respects, they were disassembled and along with relevant material and individual serial numbers, sent to the various satellite units.'
The impugned order passed by the Commissioner is set aside - Appeal allowed.
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2024 (5) TMI 1333 - CESTAT MUMBAI
Attachment of immoveable property owned by the appellant and his brothers jointly - recovery of dues, of which 80% share stands in the name of persons who have nothing to do with the government recovery - levy of interest and penalty - HELD THAT:- The order of attachment of immovable property has been done under the Rules of 1995, which were made in exercise of the powers conferred by Section 156 r/w. Section 142 of the Customs Act, 1962. Rule 2(vi) of the said Rules of 1995 defined ‘defaulter’ as any person from whom Government dues are recoverable under the Act. Chapter II of the said Rules deals with the procedure for the attachment of property. The issuance of certificate under rule 3 of chapter II is for the dues not paid by the defaulter to the government and the amounts specified as the amounts due from ‘such person’. Such person can only be the ‘defaulter’ as defined u/r. 2(vi) and no one else. Rule 10 is very relevant for the situation herein as it stipulates that “where the property to be attached consists of the share or interest of the defaulter in property belonging to him and another as coowners, the attachment shall be made by a notice to the defaulter prohibiting him from transferring the share or interest or charging it in any way”.
Whether the duty amount with interest and penalty which has become due and payable by the defaulting firm, could be recovered by attaching the entire property in which the appellants’ personal share is on 20%? - HELD THAT:- The answer to this question should be in the negative. A partnership firm under the Indian Partnership Act, 1932 is not a separate legal entity and the liability of the partners is joint and several u/s 25 ibid - Here the share of the appellant in the attached personal property is merely 20% whereas 80% of the share therein is that of his brothers who have nothing to do with the defaulting firm or their activities - In the absence of any specific provision under the Rules for recovery of the dues by attaching the personal property of some other partnership in which the majority of the shareholders have nothing to do with the recovery of the government dues, the notice of attachment of said property is bad in law.
Interest imposed u/s 11AB of Central Excise Act, 1944 is applicable when the duty became payable before the enactment of the said section - HELD THAT:- The interest has been imposed under section 11AB of Central Excise Act, 1944. Here it is interesting to note that duty demand has been made and confirmed for the goods cleared during the year 1993 and the show-cause notice was issued on 04.03.1994. Admittedly during the period Section 11AB ibid was not brought into force by the legislature as the same has been introduced w.e.f. 28.09.1996 - there is no whisper about charging of interest u/s 11AB ibid in the show-cause notice. Not only that, sub-section (2) of interest under Section 11AB stipulates that the provisions of sub-section (1), which provides for charging of interest on excise duty, shall not apply to cases where the duty became payable before the date on which the Finance (no.2) Bill, 1996 receives the assent of the President.
As the duty and penalty on M/s Turbo Micro System has been satisfied by the appellant along with personal penalty, the attachment of the immovable property in issue herein is set aside. Accordingly, the impugned order is also set aside - Appeal allowed.
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2024 (5) TMI 1332 - CESTAT ALLAHABAD
Recovery of CENVAT Credit with interest and penalty - reversal of cenvat credit of the service tax availed on any services in relation to inputs received in the factory and part quantity of which was cleared to another factory - no provision in the Credit Rules or any other statute, which provides for reversal of such cenvat credit - HELD THAT:- The issue is no more res integra and has been decided by the Tribunal in the appellant’s own case for the subsequent period i.e. from July 2015 to February 2016 and September 2014 to June 2015.
The Tribunal vide Final Order No. 71087-71088 of 2018 dated 03.05.2018 passed in Excise Appeal No.70301 and 70302 of 2018 allowed the appeals filed by the appellant by holding that 'I observe that no specific provision of Cenvat Credit Rules requiring reversal of proportionate input Service Tax credit involved in the inputs cleared as such has been invoked. In fact, there is no such provision in the law. The requirement under Cenvat Credit Rules 2004 is that when the inputs are cleared as such the Central Excise duty involved in the inputs which is availed as Cenvat credit needs to be reversed.'
It has been the interpretation and understanding that such credit is already consumed till the inputs received and further there is no legal provision exists requiring the reversal of such credit, thus, the demand is not to be raised. The following allegation in the show cause notices based on which the demand was proposed has not legal backing.
This court finds that the view as expressed by the Tribunal is strictly in conformity with the Rules. Rule 2(k) of the Rules defines ‘input’, whereas Rule 2(l) defines ‘input service’, meaning thereby both the terms have been defined independently. Rule 3 defines the term ‘Cenvat credit’, which includes duty paid under various enactments and also the service tax leviable under Section 66 of the Finance Act, 1994. Rule 3(5) of the Rules only talks about the Cenvat credit taken on inputs or capital goods - Once the rule-making authority has defined the terms specifically and used the same in different provisions consciously, the argument of learned counsel for the Revenue that merely by analogy even if in one provision both the terms have been used, the same should be read in the other provision as well, where it has not been specifically mentioned, has no legs to stand, as the tax cannot be levied merely by inference or presumption. It is not possible to assume any intention or governing purpose of the statute more than what is stated in the plain language.
The impugned order cannot be sustained and is accordingly set aside - Appeal allowed.
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2024 (5) TMI 1331 - CESTAT ALLAHABAD
CENVAT Credit - inputs used for fabrication of support structures - Explanation 2 to Rule 2(k) of the CENVAT Credit Rules, 2004 - period 2005-06 to August 2008 - extended period of limitation.
Denial of credit on the grounds that the credit on inputs utilized for construction of support structures for plant and machinery is not admissible in terms of exclusion clause in Explanation 2 to Rule 2(k) of Cenvat Credit Rules.
HELD THAT:- From the perusal of the circulars dated 2-4-2012 and 18-5-2012, it comes out that these circulars have been issued in the changed context of the definition of [Rule] 2(k) of Cenvat Credit Rules, 2004 and both circulars have no concern for the period in issue. Thus, the reliance placed by the Revenue in this regard has no substance.
The Madras High Court in M/S. INDIA CEMENTS LTD. VERSUS THE CUSTOM, EXCISE AND SERVICE TAX & THE COMMISSIONER OF CENTRAL EXCISE, [2015 (3) TMI 661 - MADRAS HIGH COURT] noticed VANDANA GLOBAL LTD. VERSUS CCE [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] but relied upon the Apex Court judgment in COMMISSIONER OF CENTRAL EXCISE, JAIPUR VERSUS M/S RAJASTHAN SPINNING & WEAVING MILLS LTD. [2010 (7) TMI 12 - SUPREME COURT], wherein the Apex Court has considered an issue of steel plates and MS channels used in the fabrication of chimney for diesel generating set and after considering it, the Apex Court allowed the Cenvat credit on MS Rod, sheets, MS Channel, MS Plate, etc., used for fabrication of structures to support various machines/capital goods.
In M/S. THIRU AROORAN SUGARS, M/S. DALMIA CEMENTS (BHARAT) LTD. VERSUS CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, THE COMMISSIONER OF CENTRAL EXCISE [2017 (7) TMI 524 - MADRAS HIGH COURT], a Division Bench of the Madras High Court held that irrespective of whether ‘user test’ is applied, or the test that they are an integral part of the capital goods is applied, all such items fell within the scope and ambit of both Rule 2(a)(A) and 2(k) and, therefore, Cenvat credit was to be allowed on such goods.
The impugned order cannot be sustained and is accordingly set aside. The appeal filed by the Appellant is allowed.
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2024 (5) TMI 1330 - CESTAT ALLAHABAD
Determination of duty liability of the manufacturer with penalty - new retail sale price - manufacture of Pan Masala and Pan Masala containing Tobacco called ‘Gutkha’ - Rule 17 of Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Rules, 2008 - Applicability of retrospective amendments to Rule 8 of the PMPM Rules.
HELD THAT:- As per the observations made by the Revenue in the said appeal to the effect that 1st proviso to Rule 8 of the Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Rules, 2008 is applicable only w.e.f. 13.04.2010 whereas the show cause notice adjudicated and disposed by the Adjudicating authority relates to the period prior to 13.04.2010 is contrary to this - there are no merits in this contention made in this appeal.
In the case of COMMISSIONER OF CENTRAL EXCISE KANPUR VERSUS M/S. TRIMURTY FRAGRANCES (P) LTD. [2015 (11) TMI 320 - ALLAHABAD HIGH COURT] it is held that 'in terms of this retrospective amendment effective from 13th April, 2010 made by Section 101 of the Finance Act, 2014, when a manufacturer in a particular month manufacturers Gutkha of different RSPs on the same machines, his duty liability in respect of that machine would be at the rate applicable to the highest RSP. In our view, this retrospective amendment is in accordance with the 6th proviso to Rule 9 and is also in accordance with the provisions of Rule 5 and this retrospective amendment to Rule 8 of PMPM Rules, shows that it was not the intention of the Government that in a case where in a month a particular machine is used to produce Gutkha pouches of more than one RSP, each RSP is to be treated as separate machine for the purpose of charging duty, but the intention was to charge duty in such a situation at the rate applicable to the highest RSP. '
Learned Commissioner has referred to the decision of the Tribunal in the case of M/S. KAY PAN SUNGANDH (P) LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR [2017 (4) TMI 982 - CESTAT NEW DELHI] wherein the Tribunal relied on the decision in case of Trimurti Fragrances holding that the said amendment though made from 13.04.2010 but the same is applicable for the period prior to that, i.e. from the date of enforcement of the Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Rules, 2008. Tribunal in this case observed 'In the case in hand, it is not disputed that in mid of September 2008, under intimation to the department, the appellant had manufactured gutkha pouches with RSP Rs. 1.00 on the 12 machines which they were using for manufacture of gutkha with RSP Rs. 1.50. It is also not in dispute that they have discharged the duty liability on the production capacity of these 12 machines based on the calculation that they are going to manufacture gutkha with RSP Rs. 1.50.'
There are no reasons to interfere with the impugned order and the same is sustained. The appeal filed by the Revenue is dismissed.
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2024 (5) TMI 1329 - CESTAT ALLAHABAD
CENVAT Credit - sale of scrap generated from working capital goods, without paying an amount equal to the duty leviable on the said transaction value - non-maintenance of any record/ inventory in respect of production generation and clearance/ sale of waste & scrap arisen out of Capital goods separately nor paid due duty thereon - contravention of the provisions of Rule 3 (5A) of the Cenvat Credit Rules, 2004 - suppression of facts or not - HELD THAT:- Revenue has not produce an iota of evidence to prove the contrary. Both the lower authorities have stated that the burden to prove is on the appellant. The said contention of the authorities is contrary to the law of evidence. The burden to prove the fact lies on the person who asserts the fact. Revenue asserts that the these waste and scrap has arisen from the Cenvated Capital Goods, then the burden is on revenue to establish the same. Only once it is established by the revenue then the burden to prove the contrary will shift on the appellant. Appellant has vide letter dated 11.01.2010 taken the stand that the waste and scrap sold by them has arisen out of the Capital Goods on which no Cenvat Credit was taken.
Revenue authorities should have investigated the matter to establish to the contrary. Instead of doing so the show cause notice has been issued stating that it is immaterial whether the CENVAT Credit on the capital goods has been taken or not. Once Commissioner (Appeal) concluded that Rule 3 (5A) is applicable only to the Cenvated Capital goods, he should have dropped the proceedings initiated by this show cause notice.
Delhi bench has in the case of KARNAL CO-OPERATIVE SUGAR MILLS LTD. VERSUS COMMR. OF C. EX., PANCHKULA [2010 (11) TMI 268 - CESTAT, NEW DELHI] held that 'Admittedly the appellants were not able to produce documents on the ground that they relate to very old period. However, the submissions of the learned Advocate that prior to the amendment dated 16-5-05 to Rule 3 of Cenvat Credit Rules introducing sub-rule 5A no amount is payable on waste and scrap arising out of capital goods even if the credit had been taken requires to be accepted.'
The decision of Hon’ble Supreme Court in the case of MYSORE METAL INDUSTRIES VERSUS COLLECTOR OF CUSTOMS, BOMBAY [1988 (5) TMI 42 - SC ORDER], relied in the impugned order is in respect of the claim to an exemption made by the party. It is settled position in law that any person who claims an exemption needs to establish that he is entitled to the said benefit. However in the present case we are not dealing with the claim of an exemption but with the contravention of provision of Rule 3 (5A) of the Cenvat Credit Rules, 2004. The burden to prove the contravention of the provisions of taxing statute is always on the revenue. This decision is distinguishable.
There are no merits in the impugned order - appeal allowed.
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