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2025 (2) TMI 1122
Smuggling of Gold - Entitlement to additional compensation from the Respondent after the confiscation and subsequent release of gold weighing 755.50 grams - applicability of Instruction No. 22/2022-Customs - HELD THAT:- Clause 3.1.1 of the Instructions provide for the determination of the value of the gold at the time of seizure by recording the average market price per 10 gms. based on the price reported in three National Economic Dailies. Clause 3.1.2(i) of the Instructions states that where the seizure is made in the customs area, the calculations shall be based on the value of gold on the date of such seizure.
Concededly and in terms of the orders passed by this Court, the Petitioner has received the value of confiscated gold. The grievance of the Petitioner is that, he has paid Rs. 3.14 lakhs approximately in excess in view of the difference in the value of customs duty. However, what the Petitioner has not taken into account is that the Petitioner has received an additional amount. Since, the difference in the rate of gold in these 10 years was approximately Rs. 370/- for 10 gms., the value for 755.50 gms. of gold would be approximately Rs. 2.8 lakhs. Given this fact, the contention that the Petitioner recovered 3.14 lakhs less is incorrect.
Conclusion - The Petitioner had already received the value of the confiscated gold and that the additional compensation claimed was not justified based on the valuation and customs duty calculations. The prayers in the present Petition stands satisfied in view of the fact that the payment for the seized gold has already been received by the Petitioner.
Petition disposed off.
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2025 (2) TMI 1121
Invocation of extended period of limitation - suppression of facts or not - importation of melting scrap without a proper inspection certificate - HELD THAT:- From the documents placed on record, it is found that the appellant, upon import, had filed various Bills of Entry right from 09.04.2003 and the last presentation of such Bills of Entry was dated 04.06.2003 though it is undisputed that the imports were made against different DEPB licenses. The date of Show Cause Notice, as noted supra, is 19.12.2005 which is clearly beyond two years, moreover in the SCN strangely, the Authority has only proposed to raise the demand under provisions of Section 28 (1) ibid.
Hence, the findings of the Original Authority in the Order--in--Original as well as the First Appellate Authority in the impugned Order-in-Appeal insofar as invoking of extended period of limitation is concerned is clearly beyond the SCN and hence, the impugned order cannot sustain.
Conclusion - The demand proposed in the Show Cause Notice is time-barred, as it was issued beyond the normal period for such demands.
The appeal stands allowed on limitation alone. The demand, if any, for the normal period stands confirmed. The appeal is disposed of.
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2025 (2) TMI 1120
Levy of penalty on appellant u/s 112(b) of the Customs Act, 1962 - alleged involvement in the smuggling of foreign-origin cigarettes - entire case upon appellant is based upon the statements recorded behind his back - opportunity of cross- examination of such persons who have given the statements, was not granted - violation of principles of natural justice - HELD THAT:- As per his own admission as well as the statements of different persons concerned like Sri Pravin Kumar Singh, Sri Srimonta Rakshit, Sri Man Singh, Sri Akhilesh Singh and Mr. Matin, Sri Santosh Kumar Prasad is the main link man of this smuggling racket. Shri Santosh Kumar Prasad arranged the CHA, the transporter, the godown and instrumental in the breaking open of the container. He arranged the declared stationery goods for repalcement, as per CTD for the containers GESU5984886 (40) and VMLU 3707024 (20').
The appellant submitted that he has retracted his statement vide his letter dated 28.07.2015. However, his statement was again recorded on 04.08.2015, wherein he has reiterated what he has stated in his earlier statements dated 23.05.2015 and 26.05.2015. Thus, it is observed that the retraction was only an after thought, which need not be taken cognizance as he has affirmed his earlier statements again in his subsequent statement after the retraction. Thus, the statements given by the appellant can be relied upon against him to establish his role in the offence. As the role of the appellant in the offence committed has been established based on his own admission as well as the statements of different persons concerned like Sri Pravin Kumar Singh, Sri Srimonta Rakshit, Sri Man Singh, Sri Akhilesh Singh and Mr. Matin, it is held that the appellant is liable for penalty as per Section 112(b) of the Customs Act, 1962.
Conclusion - The Appellant had knowingly or consciously involved himself in the alleged act of smuggling. Thus, the appellant has abetted the illegal smuggling activities and thereby connived with the smuggling racket for smuggling of cigarettes in to the country. Accordingly, the ld. adjudicating authority has rightly imposed penalty on the Appellant under Section 112(b) of the Customs Act, 1962. However, the penalty imposed on him is very high and it can be reduced to commensurate with the role played by him in the offence. Accordingly, the penalty imposed on the appellant in the impugned order is reduced from Rs.50,00,000/- to Rs.25,00,000/-.
Appeal disposed off.
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2025 (2) TMI 1119
Classification of imported goods - converter, charging socket, connection box - to be classified under CTH 8703 9000 as electric motor vehicles or under CTH 8708 9900 as parts and accessories of automobiles? - recovery of differential duty with interest and penalty - HELD THAT:- In the instant case, it is noted that the appellant have imported certain components of the E-Rickshaw i.e.converter. charging socket, connection box, On-off switch, digital speedometer, alarm system, throttle with left grip, controller, left right switch, hand brake with wire, handle T, lamp ear, shocker, arm rest and motor. Thus, it is seen from the components, an E-Rickshaw can be assembled, even though it might be in an incomplete E-Rickshaw.
HSN Explanatory Notes is noted which categorically states that an incomplete or unfinished vehicle is classified as the corresponding complete or finished vehicle, provided it has the essential character of the latter. As per the HSN Explanatory Notes, even though parts of E-Rickshaw falling under CTH 8708 9900 were imported, on assembly, the said e-rickshaw is liable to be classified as complete or finished vehicle under CTH 8703 9000 provided it has the essential character of the latter - the appellant and has imported connection box for the e-rickshaw. The Connection box in an E rickshaw also known as junction box, is an electrical enclosure that protects wiring connections. It is an important safety feature that protects people from electric shock and the connections from environmental conditions.
It is noted that the Tribunal in Commissioner Of Customs (Import), Mumbai Versus Videomax Electronics [2010 (8) TMI 422 - CESTAT, MUMBAI], the CESTAT clubbed the consignments of two different importers namely M/s. Electronic Instrumentation and M/s. Videomax Electronics to come to conclusion that the parts imported by these two importers can be clubbed together and Law is made applicable to the assembled resultant product.
From the parts of E Rickshaw imported, it can be concluded that axles imported in these 10 consignments (Bills of Entry) are to supplement the other parts imported in the 8 each consignments ( Bills of Entry) meant for assembly of e-Rickshaws. It is noted that the impugned order has relied on the case law of Commissioner Of Customs (Import), Mumbai Versus Videomax Electronics which was upheld by Supreme Court in Electronic Instrumentation v. Commissioner [2011 (1) TMI 1517 - SC ORDER] while addressing the submissions made by the appellant.
The benefit of Sl. No. 526A of Notification No. 55/2017 dt. 30.06.2017 was not claimed by the Appellant at the time of filing of Bill of Entry. It is also noted that the impugned order has denied the benefit of the said Notification relying CESTAT Order in the case of Abhedya Industries Ltd. Versus Commr. Of C. Ex. & S.T., Hyderabad-III [2016 (7) TMI 1113 - CESTAT HYDERABAD].
Conclusion - The impugned components imported are essential components of the E-Rickshaw. Consequently, the correct classification of the impugned goods is CTH 87039000.
The appeal is dismissed.
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2025 (2) TMI 1118
Levy of penalty u/s 454 (3) of the Companies Act, 2013 read with Rule 3 of the Companies (Adjudication of Penalties) Rules, 2014 amended by the Companies (Adjudication of Penalties) Rules, 2019 - non compliance of the provision of Section 203 (4) of the Companies Act, 2013 read with Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 - whether the authority could have applied its discretion while adjudicating the default on the part of the petitioners?
HELD THAT:- In Apex Traders [2024 (5) TMI 1525 - CALCUTTA HIGH COURT] the Court interpreted the expression ‘liability’ used in Section 203 (5) of the Companies Act, 2013. The Court was of the opinion that the language of Section 203 (5) confirms discretion on the Registrar of Companies to impose penalty. Such discretion also includes the converse, that is, the discretion not to impose penalty or to impose lesser penalty. The liability has been found to be subject to adjudication by the Registrar of Companies. Such discretion associates with it, responsibility of the adjudicating authority to consider any mitigating or alleviating circumstances which might have visited the Company for not adhering to the statutory provision.
The Hon’ble Supreme Court in the matter of Chairman, SEBI [2006 (5) TMI 191 - SUPREME COURT] interpreted the words ‘shall be liable’ under the SEBI Act and the regulations framed thereunder and held the same as mandatory provision for imposition of monetary penalties for breaches or non-compliance with the provisions of the Act and the regulations - The Court clearly laid down that penalty is attracted as soon as the contravention of the statutory obligation contemplated by the Act and the regulations are established and intention of the parties committing such violation becomes wholly irrelevant. Once contravention is established, the penalty is to follow.
The Court was of the view that the power to impose penalty would be severely curtailed if the presence of mens rea is to be considered. The same would set the stage for various market players to violate statutory regulations with impunity and subsequently claim ignorance of law or lack of mens rea to escape imposition of penalty. Imputing mens rea against the plain language of the statute would frustrate the entire purpose and the object of the Act to secure strict compliance of the statutory provisions.
Whether the authority could have exercised discretion in fixing the quantum of penalty and whether the quantum of penalty imposed is proper or not? - HELD THAT:- Section 203(5) of the Companies Act, 2013 lays down that if the Company contravenes the provisions of the Section, the Company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees. Every Director in default shall be punishable with fine which may extend to fifty thousand rupees and where the contravention is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the contravention continues.
In the instant case, the contravention continued for years together. The adjudicating authority gave benefit to the Company for the COVID period and calculated the fine. The authority exercised its discretion in doing so. Such exercise of discretion does not appear to be illegal, erroneous or arbitrary, requiring interference. Hence, the Court is not inclined to interfere with the same.
Petition dismissed.
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2025 (2) TMI 1117
Maintainability of petition without exhausting alternative remedies under the Payment of Gratuity Act, 1972 - Gratuity and its Interplay with IB Code - whether Gratuity Fund come within the meaning of Assets of Corporate Debtor for distribution u/s 53 IBC or not - HELD THAT:- Since in many instances, liquidation results in the complete closure of the business of the ailing debtor, which results in the termination of the employment of the workers. In legal parlance, this discharge of workers amounts to their retrenchment i.e. the termination of service of workers by the employer for any reason other than punishment inflicted by way of disciplinary action. Naturally to protect the workers, funds such as pension fund, provident fund, and the gratuity fund are kept out of the liquidation distribution and to be used solely for the benefit of the workers.
This question was even dealt with by the National Company Law Appellate Tribunal (NCLAT) in Somesh Bagchi v. Nicco Corpn. Ltd. (Somesh Bagchi) [2018 (7) TMI 2362 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] as well SBI v. Moser Baer Karamchari Union (Moser Baer – NCLAT) [2019 (8) TMI 915 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] wherein the Appellate Tribunal had held that gratuity does not form a part of the liquidation estate.
In Moser Baer – NCLT, the Court further directed the liquidator that in cases there is any deficiency to the provident, pension or the gratuity funds; the liquidator shall ensure that the fund is available in these accounts, “even if their employer has not diverted the requisite amount” -
This order was impugned by the State Bank of India – a secured creditor of Moser Baer in SBI v. Moser Baer Karamchari Union, where the limited question that came before the NCLAT was whether the gratuity dues formed a part of the liquidation estate. Holding the answer in negative, the NCLAT decided not to interfere with the order of the NCLT.
In the present case, there is no such fund maintained by the company. Herein, the company never closed down nor did it go into liquidation.
The dues for the welfare of the workers is not permissible to be included in the liquidation estate and is to be utilized only for the payment of the dues of such workers in full - Admittedly the respondent joined in the post of Manager Technical Operations and is not a worker and any dispute raised by him is thus not an industrial dispute. But the claim herein is in respect of gratuity in respect of an ‘employee’ which is guided by the labour legislation, payment of gratuity act and applies to all employees.
Conclusion - i) All ‘employees’ are covered under the payment of gratuity act and the said act is a labour legislation. This answers the point of jurisdiction/determination. ii) Admittedly the company never closed down, as the petitioner-company was taken over by the new management under the CIRP and the company remained active. Thus the jurisdiction of the concerned authority has never been ousted. iii) There being no specific fund maintained for such purpose by the company, the controlling authority rightly held that the entire dues of the workers would not come under the ‘liquidation assets’ and a worker was entitled to his total dues from the assets of the company. Such claim was above the claim of other creditors.iv) The controlling authority thus had jurisdiction to decide the issue of gratuity as the company never closed down. CIRP is a recovery mechanism for creditors unlike liquidation which is a way to end a company’s life.
Petition dismissed.
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2025 (2) TMI 1116
Jurisdiction of NCLT to decide issues after the approval of the resolution plan - NCLT nullified the outstanding dues payable to the Appellant for the period prior to initiation of Corporate Insolvency Resolution Process.
Whether the NCLT has jurisdiction to decide the issue after the approval of the resolution plan? - HELD THAT:- Once the resolution plan is approved its binding on the Corporate Debtor, its employees, members, creditors including the Central Government, any State Government or any local authority to whom a debt in respect of payment of dues arising under a law for a time being in force, such authorities to whom statutory dues are owned, guarantors and other stakeholders involved in the resolution plan as per provisions of Sub-section (1) of Section 31 of IBC, 2016.
Whether the SRA is liable to pay past electricity dues of pre-CIRP period of the Corporate Debtor, even after approval of the resolution plan and taking over of the Corporate Debtor, is an issue directly arising from approval of the resolution plan and its successful implementation. The NCLT has jurisdiction to entertain or dispose of any application or proceeding by or against the Corporate Debtor arising out of or in relation to the insolvency resolution. This position has been reiterated in recent judgment of this Tribunal in the case of Damodar Valley Coorporation Vs. Mackeil Ispat & Forging Ltd. & Anr., [2025 (2) TMI 425 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB] - NCLT has jurisdiction to decide the issue relating to pre-CIRP outstanding electricity dues.
Whether the dispute regarding the demand for payment of arrears relating to the Corporate Debtor by the Successful Resolution Applicant, after the approval of the resolution plan, can be dealt only under the Electricity Act, 2003, and the Rules made therein, and cannot be adjudicated under the IBC, 2016? - HELD THAT:- This Tribunal in the case of Madhya Gujarat Vij Company Ltd. v. Kalptaru Alloys Pvt. Ltd., [2018 (9) TMI 1959 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] has held that in view of Section 238 of the IBC, 2016, the provisions of Gujarat Electricity Regulatory Commission (Electricity Supply Code and related matters) Regulations, 2015 cannot override the provisions of IBC, 2016 - The Hon’ble Supreme Court in the case of Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat Private Limited & Ors. [2023 (7) TMI 831 - SUPREME COURT] has held that the provisions of IBC, 2016 override the provisions of the Electricity Act, 2003.
In view of the provisions of Section 238 of IBC, 2016 and the guidelines given in the judicial decisions discussed above, it is held that provisions of the IBC, 2016 over ride the provisions of Electricity Act, 2003, and the issue of payment of pre-CIRP electricity dues of corporate debtor by the SRA is an issue which can be decided by the NCLT u/s 60(5)(c) of IBC, 2016
Whether the Successful Resolution Applicant is liable to pay the arrears of electricity dues for the pre-CIRP period of the Corporate Debtor, even though no claim is filed by the electricity company in CIRP and no such provision is made in the resolution plan? - HELD THAT:- The Successful Resolution Applicant has taken over the Corporate Debtor and its commitment made in the resolution plan does not include any payment towards the electricity dues of the Corporate Debtor. As per scheme of IBC, 2016 the creditors relating to pre-CIRP period are required to file claim before the Resolution Professional (RP) regarding the debt payable by the Corporate Debtor. In the present case, no claim was filed by the Appellant electricity company and there was no commitment in the resolution plan to pay any amount towards pre-CIRP electricity dues.
In the present case the Appellant had not even filed its claim before the RP and it cannot be permitted to benefit from of its failure to file the claim and yet be paid pre-CIRP dues for restoring the electricity. The SRA had made payment under protest only under the compulsion to get the electricity restored and to make the Corporate Debtor to restart its business, which is one of the primary aim of the IBC, 2016. The Appellant is barred from seeking arrears of the amount that stands extinguished by operation of law as pre-condition to restoring the electricity connection.
Conclusion - i) NCLT has jurisdiction to adjudicate disputes arising from insolvency resolutions, as per Section 60(5) of the IBC. ii) The provisions of the IBC, 2016 override those of the Electricity Act, 2003, as per Section 238 of the IBC. iii) Once a resolution plan is approved, it is binding on all stakeholders, extinguishing pre-CIRP dues unless claims are filed during the CIRP.
Appeal dismissed.
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2025 (2) TMI 1115
Revival of the appeal - Appellant’s case is that the Appellant is first pari pasu charge holder with State Bank of India of the assets of the Corporate Debtor which is in liquidation and in the liquidation e-auction was held - HELD THAT:- A perusal of judgment of this Tribunal in STCI FINANCE LTD. VERSUS IMP POWERS LTD. & ORS. [2024 (8) TMI 1529 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] indicates that this Tribunal did not entered into the issues raised in the appeal and relying on affidavit which was filed by the Liquidator where entire amount admitted of the Appellant was proposed to be distributed, appeal was closed referring to the affidavit, which has been noticed in Paras 4 and 5 of the order. In Para 6 of the order, it is clearly mentioned that “we are of the view that there is no necessity of considering any issue which has arisen in this appeal” and further this Tribunal clarified that “We make it clear that we have not entered into any issue on merits”. Due to subsequent events, which have been noticed above, especially the issue regarding distribution to other creditors being open for consideration, we are of the view that appeal deserve to be revived.
Conclusion - The appeal should be revived to address the unresolved distribution issues, and all parties, including the Appellant, other creditors, and the Liquidator, should be given an opportunity to present their arguments.
Appeal disposed off.
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2025 (2) TMI 1114
Money Laundering - scheduled offences in Part B of the Schedule - Section 44 of the PMLA - total value involved in the scheduled offences in the complaint subject matter of this appeal is less than Rs.30,00,000/- - HELD THAT:- The impugned judgment is set aside and the complaint bearing Criminal Miscellaneous Case No.295 of 2021 pending before the Special Court, PMLA at Lucknow, Uttar Pradesh is quashed.
Appeal allowed.
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2025 (2) TMI 1113
Dismissal of appeal on the ground that appellant/assessee has not complied with the amended provision of Section 35F as applicable to Service tax matters by virtue of Section 83 of the Finance Act, 1994 - HELD THAT:- As could be seen from the impugned order passed by the learned Tribunal dated 13.05.2015, the appeal filed by the assessee on 15.11.2014 challenging the order-in-original dated 9.12.2009 passed by the Commissioner of Central Excise and Service Tax, Siliguri Commissionerate was dismissed on the ground that appellant/assessee has not complied with the amended provision of Section 35F as applicable to Service tax matters by virtue of Section 83 of the Finance Act, 1994.
The learned Tribunal while dismissing the appeal for non-compliance of the statutory requirement under Section 35F of the Central Excise Act, relied upon two decisions of the Co-ordinate Bench of the Tribunal in the case of AI Champdani Industries Murlidhar Ratanlal Exports Limited VS. CCE [2015 (2) TMI 421 - CESTAT KOLKATA]. The contention of the appellant/assessee is that the appellant’s right to file an appeal continues to be governed by the appellate provisions of the Central Excise Act and as they existed on the date of the issuance of the show cause notice dated 25.09.2008, 19.03.2009 and 10.08.2009 and the provisions of Section 35F substituted with effect from August 06, 2015 has no application to the case of the assessee.
This issue is no longer res integra and has been settled in the decision Hindustan Petroleum Corporation Ltd. Vs. UOI, [2015 (11) TMI 959 - KARNATAKA HIGH COURT] High Court, Karnataka High Court – Central Excise. Among several other issues which were considered in the said matter the issue as to whether the amended provisions of Section 35F would have retrospective operation was also considered and it was held 'all cases not covered under the second proviso, the main amendment and main amended Section 35F would apply irrespective of as to when the lis has commenced. The date on which the lis has commenced in each case has no bearing on the amendment as it has retrospective effect and even if the lis has commenced prior to the date of amendment and it had not been filed on that date, even in such a situation the amended Section 35F would apply and a pre-deposit as per amended provision would have to be made.'
Conclusion - Section 35F of the Act has retrospective operation and applies to all cases except those covered under the second proviso.
The substantial questions of law which were admitted in this appeal are answered against the appellant/assessee and the appeal stands dismissed.
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2025 (2) TMI 1112
Exemption from service tax - Export of Services or not - invocation of extended period of limitation under Section 73(1) of the Finance Act, 1994 - suppression of facts or not - HELD THAT:- This Court finds that the Hon’ble Commissioner (Appeals) did not have the benefit of going through the decision in the matter of KONE ELEVATOR INDIA PVT. LTD VS. STATE OF TAMIL NADU [2014 (5) TMI 265 - SUPREME COURT (LB)] and developments prior to that in taxation specially from the point of view of limitation.
The matter therefore deserves to be remanded to Commissioner (Appeals) to consider the impact of KONE ELEVATOR INDIA PVT. LTD VS. STATE OF TAMIL NADU and see its effect on limitation based on the facts of this matter. In case it is found that now settled law, which earlier was following the predominance test between services and goods and later started following the aspect doctrine between service tax and taxability of goods clarified the position in relation to works contract around 2014 only, will need special consideration of Commissioner (Appeals).
The Learned Commissioner giving his decision will look into the decision of KONE ELEVATOR INDIA PVT. LTD and decide the limitation keeping in mind that the law came to be settled only around that time. Further, if appears that only some portion of limitation will survive if decided against the party, then question of penalty shall be accordingly decided. Party shall be free to support its stand on limitation with any case law or established facts.
Conclusion - Matter remanded to the Commissioner (Appeals) to consider the impact of the Kone Elevator India Pvt. Ltd. judgment on the limitation period and penalties.
Matter is remanded for Commissioner to pass a reasoned decision on limitation as well as to finally quantify the sustainable demand and penalty as per law - Appeal allowed by limited remand.
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2025 (2) TMI 1111
Entitlement to Cash Refund - Denial of refund of Cenvat credit of service tax paid on Ocean Freight under RCM after onset of the GST regime - applicability of Section 11B of the Central Excise Act, 1944 read with Section 142(3) and Section 174(2)(c) of the CGST Act, 2017.
Rejection of refunds on the grounds that Cenvat credit ceased to exist on 01.07.2017 and therefore, the service tax so paid is not admissible as Cenvat credit post 01.07.2017 and that service Tax paid in financial year 2018-19 for pre-GST regime cannot be considered for refund under Section 142(3) of the CGST Act because it deals with the refund of the amount of Cenvat credit paid as on 30.06.2017.
HELD THAT:- Reference made to the decision of the CESTAT, Hyderabad in the case of CAD Vision Engineers Pvt Ltd. Vs. Commissioner of Customs & Central Tax (Appeals-I) [2024 (5) TMI 72 - CESTAT HYDERABAD] wherein, identical issue was raised and decided by considering the various decisions of the Tribunal as well as the High Court of Jharkhand in the case of Rungta Mines [2022 (2) TMI 934 - JHARKHAND HIGH COURT] by the Ld. DR.
It was held in the said case that 'the provision of Section 142(3) does not entitle a person to seek refund where no such rights occur under the existing law or new CGST regime in terms of provision of CGST Act and the rules framed and notification issued thereunder. Meaning thereby, Section 142(3) does not confer a new right which never existed under the old regime to the manner of giving relief if the person is not entitled under the existing law.'
Conclusion - There was no provision under the existing law or the GST Act that entitled the appellant to a cash refund of unutilized Cenvat credit. The appellant's claims for cash refunds of service tax paid under RCM post-GST implementation rightly denied.
Appeal dismissed.
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2025 (2) TMI 1110
Reversal of CENVAT Credit - whether on removal of inputs to the premises of job worker, the CENVAT credit availed thereon, is required to be reversed under Rule 3(5) of the Rules of 2004, or, there is no requirement of any such reversal, in terms of Rule 4(5)(a) of Rules of 2004, as claimed by the appellants? - HELD THAT:- In the case in hand, the ‘CENVAT credit availed Smart-Cards’ were sent by the appellants to the STB manufacturer for the purpose of testing, pairing etc.; and that upon completion of the said process and assembly of the Smart-Cards into the STBs, the same were delivered in the various warehouses, belonging to the appellants. Thereafter, such STBs, were supplied to the DTH customers as a part of CPE, thereby the appellants were able to provide the output service of Broadcasting to their DTH customers. Considering the factual matrix, the case of the appellants, squarely falls under the first proviso clause appended to sub-rule (5) of Rule 3 ibid inasmuch as the Smart-Cards removed to the STB manufacturer were ultimately used by the appellants for providing the DTH Broadcasting services to their customers. Therefore, the adjudged demands confirmed in the impugned order, by taking recourse to Rule 3(5) ibid, ignoring the proviso appended thereto, does not stand the legal scrutiny.
Rule 4(5)(a)(i) of the Rules 2004 mandates that CENVAT credit on inputs ‘shall’ be allowed, even if the inputs ‘as such’ are sent out to a job worker for further processing, testing, repairing, reconditioning or for carrying out for any other purposes, and it is established from the records, challans or memos or any other document, evidencing that the said inputs are received back within the prescribed time frame - it is evident from the accounting records that the total numbers of Smart-Cards sent by the appellants to the STB manufacturer (job-worker) were received back in the form of Viewing Cards, in their premises for providing the taxable service under the category of ‘DTH Broadcasting’ to their customers. The learned adjudicating authority has not examined the accounting records maintained by both the parties and simply denied the benefit provided under Rule 4(5)(a) ibid, holding the ground of non-maintenance of records.
The accounting records maintained by the appellants for sending of Smart-Cards to the job worker’s premises and their return together with the STBs to the warehouses of the appellants, after necessary processes, are adequate enough to validate the stand of the appellants that they had complied with the conditions laid down in Rule 4(5)(a) ibid. The Tribunal in the case of Southern Lubrication (P) Ltd. [2012 (1) TMI 106 - CESTAT BANGALORE] has held that the department cannot insist for reversal of CENVAT credit or cannot snatch away the rights provided under the CENVAT statute, if the assessee has duly complied with the laid down procedures therein.
On careful reading of the order passed by the Co-ordinate Bench of this Tribunal, in the case Non-Ferrous Industries [2002 (3) TMI 778 - CEGAT, KOLKATA], relied upon by learned Special Counsel for Revenue, we find that the said order was passed in context with Rule 57F(3) of the erstwhile Central Excise Rules, 1944. Since, the procedures prescribed under the said rule provided for regulating movement of the Modvat availed raw materials between the sender and a job worker were not followed, the Tribunal in the said case has rejected the appeal filed by the assessee, holding that compliance of the procedures laid down in the rule is not a mere technicality and the same has been prescribed with the objective of ensuring that the modvat availed goods sent from the factory were returned back from the job worker, after carrying out the required processes, so that the objective of the Modvat statute is achieved.
Conclusion - The case of the appellants squarely falls under the scope and purview of Rule 4(5)(a) of the Rules of 2004 and that for removal of the CENVAT availed Smart-Cards to the STB manufacturer, they are not required to pay equal amount of CENVAT credit availed on such goods.
There are no merits in the impugned order - appeal allowed.
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2025 (2) TMI 1109
Levy of service tax - payments made by M/s Modern Cargo Services Private Ltd to overseas logistics agents for handling cargo at the destination - inclusion of reimbursable expenses incurred by the service provider on behalf of the recipient in the taxable value - Scope for deploying of specific contingency in Finance Act, 1994, made operational by rule 2 of Service Tax Rules, 1994, Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 and Place of Provision of Service Rules, 2012 - HELD THAT:- The scope for valuation by service provider is limited to rule 3 of Service Tax (Determination of Value) Rules, 2006 as also rule 5 of the said Rules and the adjudicating authority could well have detailed its computation in terms of the said Rules without any contribution from the assessee. Even assuming that it was the responsibility of assessee to provide the information, which appears not in the light of stipulation that disaggregation of value should be in conformity with section 67 of Finance Act, 1994, the decision of the Tribunal in re Modern Cargo Systems Pvt Ltd [2022 (11) TMI 1544 - CESTAT MUMBAI] on non-taxability, in the light of the decision of the Hon’ble Supreme Court in re Intercontinental Consultants and Technocrats Ltd [2018 (3) TMI 357 - SUPREME COURT], of the domestic component puts to rest any lack of wherewithal for determination of the overseas component which alone remains in dispute. That tax liability does not arise on the service intended by section 65(105)(j) of Finance Act, 1994 when rendered outside India is not controverted in the impugned order. Consequently, the demand for the period upto 30th June 2012 does not sustain.
It would appear that a notice issued for a period prior to 1st July 2012 in the era of taxation of enumerated services, under the impression of overlap of ‘customs house agents service’ and ‘clearing and forwarding agents service’ on fact and law as also of impression of applicability to activity for which payment was effected to overseas entity, was sought to be deployed when the boundaries of service was no longer defined and a new framework for identifying rendition eligible for exemption from tax and procurement liable to tax was established in Finance Act, 1994 - The clear, and unambiguous, stand of the Central Government on handling of service of transportation of goods, which is central to the present dispute, was overlooked in fastening the liability for the period after 1st July 2012.
Conclusion - i) The upholding of demand of 11,97,047 for the period prior to 18th April 2006 in the impugned order is blatantly in breach of the legal provisions, stipulated judicially, that enable levy of tax on services procured from abroad only with effect from 18th April 2006. ii) The clear, and unambiguous, stand of the Central Government on handling of service of transportation of goods, which is central to the present dispute, was overlooked in fastening the liability for the period after 1st July 2012.
The impugned order is set aside to allow the appeal.
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2025 (2) TMI 1108
Non-payment of service tax on the amount of consideration and reimbursement of expenses received for his services during the period 2012–2013 - HELD THAT:- The short question to be answered as if service tax could be charged during the relevant period on the reimbursements of expenses received by the service provider and the answer is negative as per the judgment of the Supreme Court in Intercontinental Consultants [2018 (3) TMI 357 - SUPREME COURT] - The Supreme Court held that 'High Court was right in interpreting Sections 66 and 67 to say that in the valuation of taxable service, the value of taxable service shall be the gross amount charged by the service provider ‘for such service’ and the valuation of tax service cannot be anything more or less than the consideration paid as quid pro qua for rendering such a service.'
Conclusion - i) Reimbursable expenses not calculated for providing taxable services should not be included in the valuation for service tax. ii) The Commissioner (Appeals) committed a grave error in not following the judgment of the Supreme Court and upholding demand of service tax by including the reimbursable expenses received during 2012–2013 in the value of taxable services.
The impugned order is set aside - appeal allowed.
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2025 (2) TMI 1107
Benefit of a specific notification regarding duty payment on goods transferred for job work - whether the concept of revenue neutrality based on CENVAT Credit could exempt the appellant from paying duty? - revenue neutrality - HELD THAT:- All the three authorities, i.e., the adjudicating authority, the appellate authority and the Tribunal have concurrently found that the appellant was not entitled to any relief based on the plea sought to be raised pertaining to the fact that as claimed the moulds, which were cleared without payment of duty for getting the job work done, were returned back and consumed in the appellant's factory and on account of the purported revenue neutrality. Exhaustive discussions and reasons have been indicated for negating the plea as raised by the appellant.
Once the goods leave the factory even for job work, the Notification had no applicability. The finding recorded in this regard cannot be faulted inasmuch merely because the goods in question, which were cleared without payment of duty, were again used by the appellant for production of finished goods, the fact that the same could be finished goods also cannot be ruled out and, therefore, the submissions made in this regard have rightly been negated.
Revenue neutrality - HELD THAT:- Plea of revenue neutrality, based on the fact that the appellant would be entitled to CENVAT Credit, has also rightly been denied by the Tribunal, as accepting the said proposition would negate the very scheme of CENVAT Credit as every assessee for non payment of duty would claim that on account of entitlement to claim CENVAT Credit, the duty was not paid. Once the plea raised pertains to revenue neutrality, the same plea is sufficient for holding the appellant guilty inasmuch there was no reason in the given case not to pay the duty at the time of clearance of the goods when they were being sent for job work, as required under the law.
Conclusion - i) Specific notifications and credit schemes should not be used to circumvent duty payment obligations. ii) Once the plea raised pertains to revenue neutrality, the same plea is sufficient for holding the appellant guilty inasmuch there was no reason in the given case not to pay the duty at the time of clearance of the goods when they were being sent for job work, as required under the law.
There are no reason to interfere with the well reasoned order of the Tribunal upholding the concurrent findings recorded by the adjudicating authority and appellate authority - appeal dismissed.
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2025 (2) TMI 1106
Classification of the goods manufactured - Collar Band - Chest Band - Classifiable under Central Excise Tariff Sub-Heading (CETSH) 49090090 or under CETSH 4818 5000 of first schedule of Central Excise Tariff Act, 1985 or not - Printed Fabric Folder and Swatch Cards - to be classified under CETSH 4901 1020 or under CETSH 4820 3000? - suppression of facts or not - extended period of limitation.
Classification of Collar Band and Chest Band - HELD THAT:- These are rightly classified by the respondent under CETSH 48185000, since the CETSH 48185000 specifically reads 'articles of apparel and clothing accessories' and are chargeable to duty at the rate 16% at the relevant time.
Classification of printed fabric folder and swatch cards - HELD THAT:- It is found that the Heading 4820 clearly indicates that the goods covered therein are all items of stationary and as known in the market. The product being manufactured by the appellant is totally different and not comparable to the goods 'folder' as contemplated in the CETSH 48203000. Accordingly classification of the same under CETSH 48203000 is unsustainable.
Time limitation - suppression of facts or not - HELD THAT:- It is an admitted fact that, if there is no proper classification prescribed under the statues to classify the goods, adopting similar classification as adopted by the appellant cannot be considered as suppression of facts to allege illegality. The issue regarding invoking the extended period of limitation is well settled as per the judgment of the Hon’ble Supreme Court in the matter of Continental Foundation Jt. Venture Vs. Commr. Of C. Ex., Chandigarh-I [2007 (8) TMI 11 - SUPREME COURT], wherein it is held that as far as fraud and collusion are concerned, it is evident that the intent to evade duty is built into these very words. So far as mis-statement or suppression of facts are concerned, they are clearly qualified by the word ‘wilful’, preceding the words “mis-statement or suppression of facts” which means with intent to evade duty. The next set of words ‘contravention of any of the provisions of this Act or Rules’ are again qualified by the immediately following words ‘with intent to evade payment of duty.’ Therefore, there cannot be suppression or mis-statement of fact, which is not wilful and yet constitute a permissible ground for the purpose of invoking penal provisions - the Appellants cannot be charged with willful mis-statement or suppression of facts with intent to evade tax, for invoking extended period of limitation in this case.
Conclusion - i) Collar Band and Chest Band are rightly classified by the respondent under CETSH 48185000. ii) The printed fabric folder and swatch cards are righly classifiable under CETSH 4901 1020 iii) The Appellants cannot be charged with willful mis-statement or suppression of facts with intent to evade tax, for invoking extended period of limitation in this case.
The confirmation of the demand by invoking extended period of limitation is unsustainable. Since entire demand is barred by limitation, the impugned order is set aside - appeal allowed.
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2025 (2) TMI 1105
Seizure of Gold bars - stolen property linked to fraudulent transactions involving M/s. Globe International - Conviction of Accused No. 3 (Nandkumar Babulal Soni) under Sections 120B and 411 of the IPC - Acquittal of the Accused - HELD THAT:- In the case at hand, the Trial Court has held in para 120 that whether the gold bars which were sold by M/s. CN to Mr. Mukesh Shah of M/s. Globe International are the same or not has not been proved beyond reasonable doubt. It is held by the Trial Court that the distance between may and must is very vast and prosecution has to cover that distance to reach the destination of must, however, the prosecution in this case could not achieve that level of proof. With this finding of the Trial Court, it is surprising as to how the appellant can be convicted for committing offence under Sections 120B and 411 of the IPC. Once the courts below have found that the seized gold bars, (Article 2) are not the same gold bars, conviction under Sections 120B and 411 of the IPC cannot be sustained.
The High Court impliedly held that witnesses connected with M/s CN have failed to identify the seized gold. However, in the opinion of the High Court, the same is not relevant because the appellant has failed to prove lawful acquisition of gold. It is failed to understand, when the prosecution has failed to prove the identity of seized gold as being the same gold which were sold by M/s. CN to M/s. Globe International, how the appellant is liable to prove lawful acquisition of gold visà- vis the stolen gold.
In Mohan Lal vs. State of Maharashtra [1979 (4) TMI 178 - SUPREME COURT], this Court held that the prosecution has to prove that the accused was in possession of property which he had reason to believe that it was stolen property.
Conclusion - In view of the fact that the identity of the seized property being the stolen property has not been established, Vijaya Bank is not entitled to the possession of the seized gold.
Appeal dismissed.
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2025 (2) TMI 1104
Violation of the appellant's right under Article 22(1) of the Constitution of India - appellant was not informed of the grounds for his arrest - offences under Sections 409, 420, 467, 468 and 471 read with Section 120-B of the Indian Penal Code - HELD THAT:- As far as Article 22(1) is concerned, compliance can be made by communicating sufficient knowledge of the basic facts constituting the grounds of arrest to the person arrested. The grounds should be effectively and fully communicated to the arrestee in the manner in which he will fully understand the same. Therefore, it follows that the grounds of arrest must be informed in a language which the arrestee understands - Once a person is arrested, his right to liberty under Article 21 is curtailed. When such an important fundamental right is curtailed, it is necessary that the person concerned must understand on what grounds he has been arrested. That is why the mode of conveying information of the grounds must be meaningful so as to serve the objects stated.
The requirement of informing the person arrested of the grounds of arrest is not a formality but a mandatory constitutional requirement. Article 22 is included in Part III of the Constitution under the heading of Fundamental Rights. Thus, it is the fundamental right of every person arrested and detained in custody to be informed of the grounds of arrest as soon as possible. If the grounds of arrest are not informed as soon as may be after the arrest, it would amount to a violation of the fundamental right of the arrestee guaranteed under Article 22(1). It will also amount to depriving the arrestee of his liberty. The reason is that, as provided in Article 21, no person can be deprived of his liberty except in accordance with the procedure established by law - In a given case, if the mandate of Article 22 is not followed while arresting a person or after arresting a person, it will also violate fundamental right to liberty guaranteed under Article 21, and the arrest will be rendered illegal. On the failure to comply with the requirement of informing grounds of arrest as soon as may be after the arrest, the arrest is vitiated. Once the arrest is held to be vitiated, the person arrested cannot remain in custody even for a second.
The grounds of arrest must exist before the same are informed. Therefore, in a given case, even assuming that the case of the police regarding requirements of Article 22(1) of the constitution is to be accepted based on an entry in the case diary, there must be a contemporaneous record, which records what the grounds of arrest were. When an arrestee pleads before a Court that grounds of arrest were not communicated, the burden to prove the compliance of Article 22(1) is on the police - When an arrested person is produced before a Judicial Magistrate for remand, it is the duty of the Magistrate to ascertain whether compliance with Article 22(1) has been made. The reason is that due to non-compliance, the arrest is rendered illegal; therefore, the arrestee cannot be remanded after the arrest is rendered illegal. It is the obligation of all the Courts to uphold the fundamental rights.
Conclusion - i) Non-compliance with Article 22(1) will be a violation of the fundamental rights of the accused guaranteed by the said Article. Moreover, it will amount to a violation of the right to personal liberty guaranteed by Article 21 of the Constitution. Therefore, non-compliance with the requirements of Article 22(1) vitiates the arrest of the accused. Hence, further orders passed by a criminal court of remand are also vitiated. ii) When a violation of Article 22(1) is established, it is the duty of the court to forthwith order the release of the accused. That will be a ground to grant bail even if statutory restrictions on the grant of bail exist. The statutory restrictions do not affect the power of the court to grant bail when the violation of Articles 21 and 22 of the Constitution is established.
Appeal allowed.
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2025 (2) TMI 1103
Invocation of constitutional writ jurisdiction of this Court under Articles 226 and 227 of the Constitution of India with a prayer to quash multiple FIRs - offence under Sections 420, 467, 468 and 471 of the IPC - HELD THAT:- In the instant case, it is the case of the prosecution that the petitioner collected huge amount of money from the intending purchasers without even purchasing the plots of land for construction of flats. The intending purchasers paid their money entrusting the petitioner that they would get their home but said money was misappropriated. Even from the investigation made by the ED, it is revealed that with the help of the money collected from the market, the petitioner purchased flats on his own money.
Collection of money without the permission of RERA and purchasing and identifying the plot prima facie suggests that from the very beginning of transaction, the petitioner had a dishonest intention of deception and false inducement on the basis of which money was collected.
Conclusion - The allegations of fraudulent intent and misappropriation of funds in real estate transactions can constitute criminal offences, even if they arise from contractual relationships. Multiple FIRs can be justified when each pertains to a separate transaction.
There are no reason to quash the FIRs instituted against the petitioner. As a result, the instant writ petition is dismissed on contest.
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