TMI Blog2021 (8) TMI 630X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of the transportation charges i.e. ocean freight of such vessel owner/operator are made by the overseas supplier in the CIF contract. The service of transportation of goods by vessel is thus received by the overseas supplier from the foreign going vessel owner/operator in the CIF contract. The title of Section 26 shows that the rule provided thereunder is the prima facie rule subject to the agreement otherwise between the parties. This is clearly indicated by the expression unless otherwise agreed with which the section begins. The parties to the contract are, thus, free to by-pass the prima facie rule provided in Section 26 by making agreement otherwise. The prima facie rule in Section 26 is that the goods remain at the seller s risk until the property in the goods is transferred to the buyer. But when the property in the goods is transferred to the buyer the goods are at the buyer s risk whether delivery has been made or not. When the Respondents have admitted that the importers in India are not persons receiving service of sea transportation, and that it is the Respondent s case that the Indian importers were indirectly receiving such service and hence were persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such person should be paid in cash - in view of this clear provision, the Respondent No. 2 ought to have directed the sanctioning Authority to refund the amount of the duty refundable to the petitioner in cash instead of credit in Cenvat Account. Appeal allowed. - EXCISE APPEAL No. 50148 of 2020 - FINAL ORDER No. 51724/2021 - Dated:- 6-8-2021 - Ms. RACHNA GUPTA, MEMBER (JUDICIAL) Mr. Mahesh Sharma, Advocate for the appellant Mr. Yashveer Singh, Authorized Representative for the Respondent ORDER The present appeal has been filed against the Order-in-Appeal No.182-19-20 dated 31.10.2019. The relevant facts for the adjudication of this appeal are as follows:- 1.1 The appellant, prior to Implementation of GST, was holding Central Excise Registration as they were engaged in manufacture of dry battery cells. The appellant was also holding service tax registration for the purpose of discharging service tax liability under reverse charge mechanism and was availing the benefit of Cenvat Credit on inputs, input services and capital goods under Cenvat Credit Rules, 2004 (hereinafter refer to as CCR 2004). 1.2 On 23rd October, 2018 appellants filed a refund clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilar view stands taken qua in GST regime also on import related to Ocean Freight, wherein it was held that the same is not legally payable by following decisions:- 1) Bharat Oman Refineries Ltd reported in 2020 (8) TMI 568 (Gujrat High Court) 2) MCPI P. Ltd. Reported in 2020 (3) TMI 725 (Calcutta High Court) 3.2 Ld. Counsel also mentioned that since the said service tax was paid and since no fraud, or suppression existed on part of the Appellant, no penalty was to be imposed on it. This means that the credit was otherwise legally available for any tax paid belatedly. However, on account of introduction of GST regime, the said credit was to be given as cash refund under Section 142 (3) of the CGST Act, 2017. At the same time, be that as it may, after introduction of GST regime, Section 142 (6) (a) of the CGST Act, 2017 is specifically enacted to provide for cash refund in case where any credit becomes due and available to an assessee after introduction of GST regime. The appellant referred to the following case law:- a) Oswal Castings P. Ltd. Reported in 2019 (24) GSTL 649 (Tri.- Chan) The order under challenge is, accordingly, prayed to be set aside and appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs Act shall be the person liable to pay service tax in respect of services provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India upto the Custom station of clearance in India. By virtue of Explanation-V so inserted, it would mean that the importer of goods would be liable for paying service tax on ocean freight in case where the service of transportation of goods in a vessel was provided by the vessel owner/operator to the overseas supplier-seller in CIF transactions. 5.3 By Notification No. 16/2017-S.T., Clause (EEC) of Rule 2(1)(d) of the Service Tax Rules has been substituted, and there also the importer as defined under Section 2(26) of the Customs Act is made liable to pay service tax on ocean freight in cases like CIF transactions. A new sub-rule i.e. sub-rule (7CA) has also been inserted in Rule 6 of the Service Tax Rules by this Notification, thereby providing that the value of the ocean freight may be calculated at the rate of 1.4% of the sum total of CIF for paying service tax thereon. Thus, the effect of the amendments vide the other Notificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontract are bill of lading, policy of insurance and an invoice. 5.10 In Johnson v. Taylor Bros. 6, Lord Atkinson in the House of Lords explained the meaning of C.I.F. contract as under : when a vendor and purchaser of goods situated as they were in this case (Seller in Sweden and buyers in England) enter into a CIF contract, such as that entered into in the present case, the vendor in the absence of any special provision to the contrary is bound by his contract to do six things. First, to make out an invoice of the goods sold. Second, to ship at the port of shipment of goods of the description contained in the contract. Third, to procure a contract of affreightment under which the goods will be delivered at the destination contemplated by the contract. Fourth, to arrange for an insurance upon the terms current in the trade which will be available for the benefit of the buyer. Fifthly, with all reasonable dispatch to send forward and tender to the buyer these shipping documents, namely, the invoice, bill of lading and policy of assurance, delivery of which to the buyer is symbolical of delivery of the goods purchased, placing the same at the buyer s risk and entitling the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the logical inference that must necessarily follow is that the seller has not put on board goods conforming to a contract destination. 7. Reverting to the facts of the present case, it is observed that it is not the case of the Respondents that importers like the Petitioners have received services of sea transportation from the shipping lines. The Respondents have however pleaded that in case of the Indian importers receiving goods on the land mass of the country by virtue of CIF arrangements, they indirectly receive sea transportation service also; and therefore obligation to pay service tax can be shifted to them. 8. First, the Indian importers like the Petitioners have contracted for purchase and delivery of goods, and under CIF contract where the lump sum amount is paid for delivery of the goods on the land mass of the country; and what the importers receive in India is the goods, and not any service. Secondly, liability to pay tax cannot be fastened on a person if the charging provision does not charge or levy the tax; because a charging section has to be strictly interpreted, and not by way of inferences or presumptions about any indirect benefit to a person. 9. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplications, the lead matter being the Mohit Minierals Pvt. Ltd. v. Union of India and 1 Others [Special Civil Application No. 726 of 2018, decided on 23rd January, 2020] [2020 (33) G.S.T.L. 321 (Guj.)]. The Court in Mohit Minerals (supra) and allied petitions declared the Notifications as ultra vires the Integrated Goods and Services Tax Act, 2017 on the ground that the same lacked legislative competency. Both the Notifications referred to above were declared to be unconstitutional. 13. In view of the aforesaid discussion, the writ application succeeds and is hereby allowed. The Notification Nos. 15/2017-S.T. and 16/2017-S.T. making Rule 2(1)(d)(EEC) and Rule 6(7CA) of the Service Tax Rules and inserting Explanation-V to reverse charge Notification No. 30/2012-S.T. is struck down as ultra vires Sections 64, 66B, 67 and 94 of the Finance Act, 1994; and consequently the proceedings initiated against the writ applicants by way of show cause notice and enquiries for collecting service tax from them as importers on sea transportation service in CIF contracts are hereby quashed and set aside with all consequential reliefs and benefits. 13.1 Since the Notification under which the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various cess including Education Cess and SHE as well as KKC is concerned which is taken under Section 140(1) of the CGST Act, 2017. 13.6 That had it not been the case, there was no real reason to exclude Section 28(B) (1) and Section 28 (C) (1) of the CGST (amendment) Act, 2018 at all. 13.7 Accordingly, since as on date the transitional credit of E-Cess and SHE Cess and KKC is otherwise eligible under Section 140(1) inasmuch as the restrictive amendments have not yet been brought into force at all and sicne explanation 3 to Section 140 limits its operation to explanation 1 and 2 which do not deal with eligible duties for the purpose of Section 140(1) at all and since the term eligible duties it not defined for the purpose of Section 140(1) as on date. In any case, the entire discussion is utmost, academic, inasmuch as when Tax itself was not payable in the first place, as per the legal position as it exists, there is no reason why refund of such tax paid should not be allowed to the appellant. 13.8 At the same time, Be that as it may, after introduction of GST regime, Section 142(6)(a) of the CGST Act, 2017 is specifically enacted to provide for cash refund in case where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posed of. Say that since the Notification has been struck down as ultra vires, as a consequence of the same, the writ applicant seeks refund of the amount paid towards the IGST. 16. It is thus eminently clear from the aforesaid observations made in the impugned order that the duty, which was paid by the petitioner, which was otherwise not payable on the exported goods and therefore, rebate of such duty was not admissible in terms of Rule 18 of the Central Excise Rules. However, the duty, which was paid by the petitioner is held to be treated as voluntary deposit. As per Section 142(3) of the GST Act, every claim for the refund filed by any person before, on or after the appointed day i.e. 1-7-2017 for refund of any amount of Cenvat credit, duty, tax, interest or any other amount paid under the existing law, should be disposed of in accordance with the provisions of existing law and any amount eventually accruing to such person should be paid in cash. I am of the considered opinion that in view of this clear provision, the Respondent No. 2 ought to have directed the sanctioning Authority to refund the amount of the duty refundable to the petitioner in cash instead of credi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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