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2023 (12) TMI 1158
Interpretation of statute (policy circular) - whether the Policy Circular Notice No. 22/2015-20 dated 29.03.2019 issued by the respondent No. 3 is applicable to the EPCG Authorisation issued prior to 5.12.2017 or not?
HELD THAT:- In terms of paragraph no. 1.03 of the FTP, power of DGFT is restricted only to lay down the procedure which is to be followed by the exporter or the importer. DGFT while exercising such powers, notifies the procedure to be followed by the exporter or the importer but there is no power to amend/update the FTP.
By the impugned policy circular, respondent No. 2 has in effect amended the FTP with retrospective effect to the EPCG Authorisation issued prior to 5.12.2017 under the guise of mere procedural changes for third-party exports. By amendment in paragraph no. 5.10(c), respondent No. 2 has taken away the benefit which was available to the petitioners under FTP 2009-14 and original FTP 2015-20 prior to 5.12.2017 inasmuch as prior to revision even in case of third party exports, full realised value of shipping bill was to be taken into consideration for the fulfillment of export obligation which was restricted to actual payment from third party exporter after 5.12.2017.
In facts of the case, under the guise of amendment in HBP with policy circular dated 29.03.2019, respondents nos.2 and 3 have tried to make changes in FTP so far as the application of such amendment in para 5.10 (c) of the HPB to the EPCG Authorisation issued prior to 05.12.2017- the date of amendment which is the exclusive domain of the Central Government.
The amendment in para 5.10(c) from 05.12.2017 can be made applicable to the EPCG Authorisation issued from the said date only and the date of issuance EPCG Authorisation under FTP cannot be ignored under guise of policy decision by applying the same to all third-party exports made after 05.12.2017. The respondents have jurisdiction to amend the HBP for availing the benefit under the EPCG Scheme in view of the revised FTP 2015-20 (mid term review) but such amendment cannot affect the conditions stipulated in the EPCG Authoristion already issued for the benefit under the EPCG Scheme framed under the provisions of FTDR Act and FTP 201520. Revised FTP 2015-20 would be applicable only from 05.12.2017 and hence any amendment made in 5.10 (c) of the revised HBP 2015-20 can apply to the EPCG Authorisation issued under the revised FTP 2015-20 only - The respondents were therefore not justified in the issuance of the circular dated 29.03.2019 to apply the amendment in para 5.10(c ) of the revised HBP to all exports made after 05.12.2017 ignoring the date of issuance of the EPCG Authorisation prior to 05.12.2017.
The impugned policy circular dated 29.03.2019 is therefore, beyond the jurisdiction of respondent no. 3 as respondents nos.2 and 3 have no power to deny the benefit under the EPCG Scheme under the original FTP 2015-20 in respect of the EPCG Authorisation issued prior to 5.12.2017 and such benefit of availing full value of shipping bill under the EPCG Authorisation issued prior to 5.12.2017 could not have been curtailed by respondent nos.2 and 3 by applying revised HBP 2015-20 either under the FTDR Act or FTP - amendment made in paragraph no. 5.10(c) of the revised HBP2015-20 read with policy circular dated 29.03.2019 is invalid so far as the same is made applicable to the Authorisation under the EPCG scheme issued prior to 5.12.2017.
Petition allowed in part.
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2023 (12) TMI 1157
Jurisdiction - power of designated offcer to issue SCN - HELD THAT:- The Petitioner needs to canvas such legal position as asserted in the present proceedings before the adjudicating officer, who as fairly pointed out on behalf of the respondents would certainly take into consideration all such contentions including the issues on the law as laid down by the Supreme Court in the case of Canon India Pvt. Ltd. vs. Commissioner of Customs [2021 (3) TMI 384 - SUPREME COURT] and pass appropriate orders on the show cause notice.
The petition is accordingly disposed of directing the Respondents to adjudicate the show cause notice as expeditiously as possible and in any event within a period of six months from today. As the show cause notice is issued about four years back, there cannot be any further delay on such adjudication.
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2023 (12) TMI 1156
Smuggling - Absolute confiscation of the seized gold of foreign marking - penalty under Section 112(b ) of the Customs Act, 1962 - prohibited item or not - denial of proper opportunity to present his case and no opportunity was granted to cross examine the witnesses - violation of principles of natural justice - HELD THAT:- The Act does not define the expression ‘restricted goods’, but the decisions referred to above, have interpreted the expression ‘prohibited goods’ under Section 2(33) so as to include restricted goods. In terms of the definition of ‘prohibited goods’ in Section 2(33) even prohibited goods could be imported or exported, subject to compliance with the terms and conditions as prescribed but if import is not done lawfully as per the procedure prescribed under the Customs Act or any other law for the time being in force, in that event the said goods would fall under the definition of ‘prohibited goods’. The necessary corollary is that goods being imported if not subjected to check up at the customs on their arrival and are cleared without payment of customs duty are treated as ‘smuggled goods’.
Since the conditions for import of gold as per the notification issued by DGFT and the restrictions imposed by RBI have been violated, the gold in question has to be treated as ‘prohibited goods’ under Section 2(33). Consequently, it would fall within the definition of ‘smuggling ‘ under Section 2(39) which will render such goods liable to confiscation under Section 111 or Section 113 of the Act.
Having come to the conclusion that the gold seized of which the appellant claimed to be the owner without any valid documents of purchase, has to be treated as ‘prohibited goods’ and gold falls under the category of ‘dutiable goods’ but the appellant failed to prove that the liability to pay the customs duty was discharged and by necessary implication the seized gold are ‘smuggled goods’, it is held that the seized goods are liable for confiscation under Section 111(d) whereby goods which are imported or attempted to be imported contrary to any prohibition imposed by or under the Act or any other law for the time being in force, would be liable for confiscation. Also absolute confiscation is justified in the facts of the present case where the trail of events show that the appellant is engaged in procuring gold of foreign origin in illegal manner and the multiple stands taken by him on the face of it were false as the alleged supplier M/s. Sai Buillion had denied having supplied any gold to the appellant after 08.12.2014 and also stated that on 29.01.2015, Shri Rahul son of the appellant approached his father for providing a bill for one Kg. gold, but they declined as they had not supplied any gold.
The submission of the learned counsel that there was no proposal for absolute confiscation in the show cause notice stands nullified - it is the discretion of the adjudicating authority to decide with reference to the facts and circumstances and based on relevant considerations - the authorities below have rightly exercised the discretion in not granting provisional release of the seized goods in terms of Section 110 A read with Section 125 of the Act.
Violation of principles of natural justice - denial of proper opportunity to present his case and no opportunity was granted to cross examine the witnesses - HELD THAT:- Despite repeated summons the appellant did not appear before the Investigating Agency and merely sent a letter admitting his statement recorded under section 108, which during his life time (as he expired on 18.08.2018 during the pendency of the appeal) he never retracted the said statement. As per the settled law, the said statement is admissible in evidence and is binding on the appellant. The appellant during his life time had never asked for cross examination and hence no such plea can be raised at this stage.
Reliance is placed on the decision of the Supreme Court in COMMISSIONER OF C. EX., MADRAS VERSUS SYSTEMS & COMPONENTS PVT. LTD. [2004 (2) TMI 65 - SUPREME COURT], where it has been held that it is a basic and settled law that what has been admitted need not be proved. We therefore reject the contention as raised on behalf of the appellant as frivolous and baseless.
Lastly, the learned Counsel for the appellant submitted that request was made for retesting of the seized gold by melting purity because the contents of the Panchnama was not recorded correctly and the purity certificate was also issued without any basis but the same was not allowed - It is found from the records that on 29.01.2015, on the date of search itself, a Certified Jewellery Appraiser was called on spot who tested the recovered gold by touchstone method in the presence of two independent witnesses and certified the recovered gold - reliance placed on the decision of the High Court of Kerala in the case of MAMMU AND ANOTHER VERSUS ASSTT. COLLECTOR OF CENTRAL EXCISE [1981 (1) TMI 79 - HIGH COURT OF KERALA AT ERNAKULAM], where it has been held that, since no definite tests have been prescribed under law, whether an article is gold of particular quality and purity, it has to be borne in mind that the opinion of an expert on this point is relevant under Section 45 of the Evidence Act. The plea is of no significance but an attempt and tactics to delay the adjudication proceedings, particularly in view of the marking on the gold biscuits “AL Etihad, Dubai) and the statements recorded under Section 108 of the Act.
The issue of confiscation of seized gold under Section 11 upheld - the appellant for his acts of omission and commission have rendered himself liable to penal action under Section 112(b) of the Act - appeal dismissed.
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2023 (12) TMI 1155
Classification of imported goods - various parts and sub-parts or accessories of cellular mobile phones - to be classified under CTH 85177090 or under CTH 39209999? - demand of differential duty alongwith interest and penalty.
Can an exemption notification issued by the Government under Section 25 of the Customs Act determine the classification of the goods? - Can a scheme notified by the MeiTY determine the classification of the goods? - Is the differential duty recoverable from the appellant? - Is interest recoverable from the appellant? - Were the imported goods liable to confiscation under Section 111(m) (although they were not actually confiscated) because the classification of the imported goods in the Bill of Entry is, according to the Revenue, incorrect? Consequently, was the penalty under Section 112 imposed correctly? - HELD THAT:- As per Section 17 the importer or exporter has to self-assess duty and the proper officer can re-assess the duty. Both the self-assessment by the importer (or, as the case may be, the exporter) and the re-assessment by the proper officer fall under the definition of assessment as per Section 2(2). If the proper officer re-assesses the goods, unless the importer accepts the re-assessment in writing, he has to give a speaking order. Thus, the importer (or exporter) and the proper officer are competent to classify the goods and assess the duty payable on them - After the duty is assessed on the imported goods and the duty is paid, the proper officer clears the goods for home consumption under Section 46. Once this action is completed, they cease to be imported goods, they cease to be dutiable goods and the importer ceases to be the importer.
Assessment concludes the determination of the liability of the importer to pay duty and is similar to a decree under the Civil Procedure Code, 1908 - The Commissioner (Appeals) does not assess but either affirms, modifies or annuls the assessment order. In this process, the Commissioner (Appeals) may also decide the issue of classification of the goods.
A question which arises is if a Bill of Entry which is only self-assessed by the importer without any re-assessment can it also be appealed against to the Commissioner (Appeals) under Section 128. The larger bench of the Supreme Court held in ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [2019 (9) TMI 802 - SUPREME COURT] in the affirmative.
Demands under Section 28 - HELD THAT:- The power to assess duty lies with the importer and the proper officer. Classification, valuation and applying an exemption notification, are all part of the process of this assessment. Hence, the power to decide the classification lies with the importer during self- assessment, with the proper officer during re-assessment and while issuing an SCN under Section 28 and while adjudicating, with the Adjudicating Authority and with any appellate authority in the judicial hierarchy who deals with the appeals. Classification cannot be decided by anybody else (such as a MeITY in this case) for two reasons. First, they do not have the authority to assess under Section 17 nor have any appellate powers to modify the assessment. Second, their orders, letters, notifications, etc. are executive actions performed at the discretion of the government and are not quasi-judicial or appealable decisions. Therefore, any HSN code indicated against any goods in any policy of MeITY or any other Ministry cannot determine the classification of the goods under the Customs Tariff. Of the three grounds on which the classification is proposed to be changed in the SCN, the policy of MeITY as a ground cannot, therefore, be sustained.
Exemption notifications - HELD THAT:- The goods cannot be reclassified based on the exemption notification issued under Section 25 or on the basis of any policy of the Ministry. Notifications or policies can be issued, modified or withdrawn but the classification of the goods under the tariff will remain the same. Only if the tariff itself is amended can the classification change.
Confiscation of goods under Section 111(m) and consequent penalty under Section 112 - HELD THAT:- The case of the Revenue in this appeal is that the classification of the goods by the importer was not correct. Even if the classification is not correct, it does not render them liable to confiscation under Section 111(m). Similarly, there could be cases where, according to the Revenue, the exemption notification claimed during self assessment will not be available to the imported goods. The importer self-assessing the goods must apply his mind when classifying the goods. Classification of the goods by the importer, even if it is not in conformity with the re-assessment by the proper officer or even if it is held to be not correct in any appellate proceedings does not render the goods liable to confiscation under Section 111(m) - no penalty can be imposed under Section 112 on the appellant for the alleged wrong classification. The appellant cannot be penalized for holding a different view than the proper officer.
Are the front cover, middle cover and back cover of cellular mobile phones imported by the appellant classifiable under CTH 85177090 (as claimed by the appellant) or under CTH 39209999(as held in the impugned order)? - HELD THAT:- Applying the first Rule of Interpretation, the front cover, middle cover and back cover cannot be classified under CTH 3920- the vapor deposition (lamination) takes it out of the description of CTH 3920 and thermoforming and CNC milling, being processes beyond printing and surface working take them out of the scope of chapter note 2(s). It is also found that a specific entry (parts of mobile phones) prevails over a general entry (articles of plastic) as per Rule 3(a) of Interpretation and the later entry (Chapter 85) in the tariff prevails over the earlier entry (Chapter 39) as per Rule 3(c). However, it is well settled legal principle that the Interpretative Rules must be applied sequentially. Once Rule 1 decides the classification, it is not necessary to go through the other Rules of Interpretation such as Rule 3(a) and 3(c).
The case of PR. PACKAGINGS PVT. LTD. VERSUS COMMISSIONER OF C. EX., NEW DELHI-II [2001 (10) TMI 142 - CEGAT, COURT NO. II, NEW DELHI] was based on Trade Notice No. 67/86 dated 30-9-1986 issued by the Bombay Collectorate which was in favour of the assessee and was binding on the officers. The question in HARIRAM GOVINDRAM VERSUS COLLECTOR OF CENTRAL EXCISE, BOMBAY [1997 (6) TMI 98 - CEGAT, NEW DELHI] was related to classification of the covers of the outer covers of the cassettes. Relying on Board‘s order dated 29-7-1994 issued under Section 37B of the then Central Excises and Salt Act, 1944, the classification was decided in favour of the assessee.
Thus, the rejection of the appellant’s classification of the front cover, middle cover and back cover of mobile phones under CTH 85177090 in the impugned order and their re-classification under CTH 39209999 cannot be sustained and needs to be set aside.
The impugned order is set aside - appeal allowed.
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2023 (12) TMI 1154
Revocation of Customs Broker License - forfeiture of security deposit - Violation of Advance Authorisation scheme - duty free import which were diverted in the local market illegally instead of using the same imported goods for manufacture of export goods - contravention of Regulations 10(d) and 10(n) of CBLR, 2018 - HELD THAT:- Sufficient and reasonable opportunity was given to the appellants before passing an order, in respect of charges framed against them and there is no infirmity of the impugned order in not following the principles of natural justice in this regard.
The appellants have duly filed the ex-bond bills of entry as per the documents given by the importers and they were not aware of the purported diversion of the imported goods. In the instant case, the violations was found by the department only on the basis of specific intelligence developed by DRI, KZU and communicated in their offence report dated 30.06.2021, much later after the clearance of ex-bond warehoused goods, and hence the appellants CB cannot be found fault for the reason that they did not advise their client importer to comply with the provisions of the Act. Further, as the purported diversion of imported goods was not known to the appellants, the non-compliance by the importer of license/Advance Authorisation conditions in respect of imported goods could not have been brought to the notice of the Deputy Commissioner of Customs (DC) or Assistant Commissioner of Customs (AC) by the appellants CB - violation of Regulation 10(d) ibid, as concluded in the impugned order is not sustainable.
Violation under Regulation 10(n) - HELD THAT:- Circular No. 9/2010-Customs dated 08.04.2010 clearly explains the provision of CBLR/CHA Regulations which require the Customs Brokers to verify the antecedents, correctness of Import Export Court (IEC) Number, identity of his client and the functioning of his client in the declared address by using reliable, independent, authentic documents, data and information. The said guidelines provide for the list of documents that is required to be verified and that are to be obtained from the client importer/exporter. it is also provided that any two documents of among such specified documents is sufficient for fulfilling the obligation prescribed under Regulation 13(o)/10(n) of CHALR, 2004/CBLR, 2018. In the present case, the appellants CB had obtained the KYC documents and submitted the same to the Customs Department - there are no legal basis for upholding of the alleged violation of Regulation 10(n) ibid by the appellants in the impugned order.
In the instant case, the suspension was continued during the inquiry proceedings for about 12 months till the completion of inquiry proceedings and revocation of CB license by the impugned order - the order of revocation of appellant’s CB license has been passed on 23.09.2022 i.e., about 14 months and 23 days from the date of offence report. Though the time lines indicated in the CBLR, 2018 provide for completion of the inquiry proceedings, if calculated from the date of receipt of offence report, would require such an order under Regulation 17(7) ibid to be issued within 270 days, we find that there is no case for inordinate delay as the adjudication was done within a reasonable period of time.
The appellants could have been proactive in fulfilling their obligation as Customs Broker for exercising due diligence, particularly when the import documents were obtained from the importers through an intermediary in ensuring that all documents relating to imports are genuine, the KYC documents given by the importer are also genuine and that these are not fake or fabricated. Thus, to this extent the appellants CB are found to have not complied with the requirement of sub-regulation 10(n) and thus imposition of penalty in not being proactive for fulfilling of regulation 10(n) of CBLR, 2013 alone, is appropriate and justifiable.
There are no merits in the impugned order passed by the learned Principal Commissioner of Customs (General), Mumbai in revoking the CB license of the appellants; and for forfeiture of entire security deposit, inasmuch as there is no violation of Regulation 10(d) of the CBLR, 2018, and the findings in the impugned order is contrary to the facts on record - in view of the failure of the appellants to have acted in a proactive manner in fulfilment of the obligation under Regulation 10(n) ibid, particularly when they had received the documents from importer through intermediary, it is justifiable to impose a penalty of Rs.10,000/-, which would be reasonable.
Appeal allowed in part.
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2023 (12) TMI 1153
Oppression and Mismanagement - Regarding implementation of the Resolution Plan is pending for adjudication - Sections 388B, 397, 398, 401, 402 and 408 of the Companies Act, 1956 - HELD THAT:- There is no dispute that the Appellant has filed the application no. 03 of 2014 for seeking various reliefs which is already mentioned herein before but this is also not in dispute that while the application was pending, an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 filed by the Canara Bank as the financial creditor against M/s Deccan Chronicle Holdings Limited (Corporate Debtor therein) which was assigned CP No. 41/7/HDB/2017 has been admitted vide order dated 05.07.2017 and the Adjudicating Authority has initiated the CIRP proceedings. It is also not in dispute that the said CIRP proceedings have reached to the stage of consideration of Resolution Plan.
In such circumstance, once the Company against which the aforesaid application has been filed by the appellant on the allegation that there is mismanagement in the company and fraud has been played by the persons in control of the company, has gone into CIRP and, moratorium is imposed on Section 14 and the reins of the Companies are handed over to the IRP, the present application by itself does not survive as no relief be granted in the said application.
Thus, no error has been made by the Ld. Tribunal in dismissing the application as such. The appeal is thus found to be without merit and is hereby dismissed.
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2023 (12) TMI 1152
Restoration of the name of the Company in the Register maintained by the Registrar of Companies - HELD THAT:- Since the Company Agerson Telecommunications Pvt. Ltd. is having substantial assets and liabilities, it cannot be said that the Company is not carrying on any business for operations - In spite of present Order, the RoC shall be free to take any other steps, punitive or otherwise, under the Act for non-filing/late filing of statutory returns/documents against the Company and Directors.
The Impugned Order dated 24.09.2021, passed by the National Company Law Tribunal, New Delhi, Bench – V is set aside - The name of the Appellant Company is restored to the Register of Companies subject to the compliances imposed - appeal allowed.
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2023 (12) TMI 1151
Locus to maintain the appeal - Board of Directors of LITL illegally reconstituted in the absence of IDBI having attended the meeting - Appellants not heard before passing the Impugned directions - undergoing change in the management, pursuant to the approval of the Acquisition Plan - HELD THAT:- In the instant case LITL in whose name the Shares still stood, is a `person aggrieved’ as the admitted fact is that second tranche of consideration for the transfer of Shares remained unpaid. There are no hesitation to hold that the Appellant’s legal rights have been affected and hence, falls within the ambit of the definition of `person injured or damaged in a legal sense’. Therefore, it is observed that the Appellants Appeal is maintainable, specifically having regard to the fact that the Second Appellant M/s. KRS Erectors has purchased the First Appellant Company as a `Going Concern’ on an `as is where is basis’ and is a `person aggrieved’ as its `pecuniary interest’ is directly affected.
Appellants are aggrieved parties as the title of the CCPS still stands in their name and not hearing the Appellants and giving such directions would construe violation of Principles of Natural Justice. Needless to add, the Second Appellant/M/s. KRS Erectors Private Limited, which is the Company having acquired the First Appellant Company as a `going concern’ is an ‘aggrieved party’ and it has the locus to file this Appeal.
It is the main case of the Respondent that the subject 42,00,00,000 CCPS falls outside the scope of the approved Acquisition Plan. It is the case of the Appellants that Clause 5.10 of the Acquisition Plan makes it clear that unearned receivables pertaining to the period prior to the initiation of the CIRP other than those specified which are realised after the approval of the Resolution Plan shall be shared equally between the First Appellant and the stakeholder - It is not in dispute that in the Register of Members of the Sixth Respondent Company shows that 42,00,00,000 CCPS were held in the name of the First Appellant. The case of the Respondent that the second tranche of consideration was not paid as contemplated under the SPA dated 30.03.2012 only because the Appellant had failed to obtain the approval of the lenders and the payment was conditional to the approval, cannot be sustained as a ground for the said directions as the fact remains that the said Agreement was admittedly amended from time to time on account of non-approval of the lenders and the balance consideration for the said 42,00,00,000 CCPS was not paid and hence, the question of the contract having been concluded and the Shares thereafter being held in trust by LITL does not arise. If the terms of the Agreement have been adhered to, then the question of the Shares being held in trust by LITL would come into the picture.
The sum and substance of Clause 3.2(ii)(c) of the SPA is that LITL shall arrange the necessary approvals from the Lenders in whose favour such shares are pledged or Non-Disposal Undertaking is created; REPL shall accede under the terms of the financing documents as may be required by the Lenders and that LITL shall get dematerialisation of these shares, until such time, the said shares would be held in trust by LITL for REPL, however, in the books of the Company, the name of LITL shall continue as holder of these shares.
It is seen from the record that the subject CCPS do not form part of the Assets of the `Process Document’ and neither fall in the exclusions list and when the Shares are still in the name of the First Appellant Company which were required to be transferred to REPL subject to the amount received and receipt of approvals from the lenders of Lanco Anpara, we are of the view that the subject CCPS could not have been transferred without the payment being received and also without the consent of the Monitoring Committee of the Second Appellant Company - The conduct of the Respondents in transferring the shares during the pendency of the Appeal specifically when the matter was being heard at length due to the chequered history and the fact that the Impugned Order did not reflect the factual matrix, is not appreciated.
Though initially, it was opined that this matter be sent back to the Adjudicating Authority for hearing afresh, keeping in view that substantial time has been spent before this Tribunal in understanding the factual matrix of the matter and the matter was heard at length over a considerable period of time, and having regard to the fact that IBC is a time bound process, it is held that the Appeal itself be decided.
The Impugned Order passed by the Adjudicating Authority is set aside and any actions taken by the Respondents during the pendency of the Appeal are rendered otiose - appeal allowed.
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2023 (12) TMI 1150
Violation of principles of natural justice - observations against the erstwhile Liquidator / the Appellant - Impugned Order was passed in the absence of appellant - whether the Adjudicating Authority was justified in making some observations against the erstwhile Liquidator / the Appellant herein, and directing the Registry to forward a copy of the Compliance Affidavit and report of the Court Commissioner to IBBI? - HELD THAT:- The chronology of dates and events establishes that the Appellant was present and heard on several dates specifically regarding the issue on hand. It is pertinent to mention that when the Advocate Commissioner was appointed to facilitate the handover of the documents and implement the Order of the Adjudicating Authority regarding the transition of the control and custody of the statements, records and assets of the Corporate Debtor Company, there was no whisper of protest by the Appellant herein or any bonafide submission before the Adjudicating Authority that the transition would be done within the time frame given by the Adjudicating Authority. The fact that one weeks’ time was given and thereafter, the Adjudicating Authority had directed both the parties to meet, cooperate and implement the Order is not denied - the Appellant was very much present for all previous hearings, relevant to the matter on hand, the Advocate Commissioner was appointed only on account of the situation which has arisen based on the non-handing over of the said documents to the new Liquidator / First Respondent, and therefore, his contention that Principles of Natural Justice was not adhered to, is untenable.
There are no illegality or infirmity in the Impugned Order - appeal dismissed.
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2023 (12) TMI 1149
Withdrawal of the application for approval of the Resolution Plan - breach of addendum dated 18.06.2021 and the conditions of LoI - Issuance of fresh Form G - forfeiture of performance guarantee - exclusion of the period in the CIRP.
Whether after approval of the Resolution Plan by the CoC, the Appellant- Successful Resolution Applicant has committed breach of addendum dated 18.06.2021 and the conditions of LoI? - HELD THAT:- The Resolution Applicant who was permitted to participate in the Resolution Process was on account of its net worth, its background and experience. It is on record that while examining the eligibility of the Resolution Applicant, its net worth was examined with reference to ‘Shoora Capital’ and in the net worth of Resolution Applicant’s, group was claimed in the Resolution Plan - it is clear that the Resolution Applicant has undertaken in the addendum to the Resolution Plan dated 18.06.2021 as well as by LoI dated 28.07.2021 that it shall not change its shareholding in directorship and constitutional pattern of the Resolution Applicant for a period of 5 years from the effective date and for changes if any. Approval of two leading Financial Creditors shall be obtained. Replies to emails received from the Resolution Applicant indicate that no approval was taken from the Financial Creditor for effecting any change in constitutional pattern of the Resolution Applicant and directorship - Adjudicating Authority after considering the submissions has rightly come to the conclusion that the breach was committed by the Resolution Applicant of the addendum dated 18.06.2021 and the conditions as included in the LoI dated 28.07.2021.
Whether in the facts of the present case, CoC was precluded from taking any decision to issue fresh Form G and to withdraw the Resolution Plan which was earlier approved? - HELD THAT:- Present is a case where in essence we may say it is a case of sale of Resolution Plan approved by the CoC to third party. CoC approves the Resolution Plan looking to the credentials of the Resolution Applicant and its credibility and finances. When very basis of Resolution Applicant is knocked out and it changes its constitution substantially the CoC cannot be faulted in view of breach of the conditions by the Resolution Applicant, application for approval of the Resolution Plan be withdrawn - it is concluded that the Resolution Applicant has violated the addendum of the Resolution Plan as well as undertaking as given in the LoI and the Adjudicating Authority has rightly returned the finding.
Whether the decision of the CoC dated 21.12.2022 forfeiting the performance guarantee of Rs.20 Crores given by the Appellant is not in accordance with law? - HELD THAT:- Regulation 36B (4A) provides that performance security shall stand forfeited if the Resolution Applicant of such plan, after its approval by the Adjudicating Authority, fails to implement or contributes to the failure of implementation of that plan. Regulation (4-A) comes in operation after approval of the Resolution Plan and it provides that ‘performance security shall stand forfeited’ - Present is not a case where CoC has passed Resolution dated 21.12.2022 in reference to Regulation 36B (4-A). The minutes of the meeting specifically refers to clause 13.2 of the RFRP. The action of the CoC is fully covered by clause 13.2 of the RFRP and there is no occasion to resort to Regulation 36B (4-A) of the Regulation. Regulation 36B (4F) only contemplate one contingency that where performance security shall stand forfeited but the said provision does not exclude forfeiture of performance security in other conditions as contemplated in RFRP. We, thus, are of the view that the decision of the CoC for forfeiting the performance security is in accordance with RFRP. It is to be noted that at no point of time, any provision of the RFRP was challenged and Resolution Applicant has undertaken to abide by all terms and conditions of the RFRP.
Whether the Adjudicating Authority was not entitled to grant exclusion of the period in the CIRP? - HELD THAT:- The exclusion of the time granted by the Adjudicating Authority was consequent to decision taken to allow the application for withdrawal of the Resolution Plan. The order passed by the Adjudicating Authority granting exclusion of time is consequential to the order passed in IA No.985 of 2023. The Adjudicating Authority in its impugned order has made observations in paragraph 32(ix) and (x) as extracted above that the Corporate Debtor Company is a going concern and there is buoyancy in the market for its products of non-ferrous metals. It is well settled that the object and purpose of the IBC is to revive the Corporate Debtor and when the Adjudicating Authority has taken decision to issue fresh Form G by excluded the period from 05.02.2021 till passing of the order, no exception can be taken to said direction - there are no error in the order of the Adjudicating Authority excluding the period from 05.02.2021 till passing of the order in the CIRP and issuing direction to issue fresh Form-G.
Appeal dismissed.
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2023 (12) TMI 1148
Challenge to direction to Resolution Professional and CoC to move an application before the Hon’ble Supreme Court for seeking clarification in context of the order dated 21.11.2013 passed by Hon’ble Supreme Court - HELD THAT:- There is no dispute that resolution plan has been approved with 100% CoC and the same has also received approval by the Adjudicating Authority by the impugned order.
On looking into the order dated 21.11.2013 a direction was to Sahara Group of Companies not to part with any movable and immovable properties until further orders. Direction to Sahara group of companies not to part with movable and immovable properties can have no bearing with resolution plan submitted by Successful Resolution Applicant for consideration by the Adjudicating Authority. The order dated 21.11.2013 cannot be read as any kind of restraint order in the CIRP process of the Corporate Debtor Baghauli Sugar & Distillery Ltd. & Anr. which is also a Sahara group of company.
The clarification which was given by the Hon’ble Supreme Court by the aforesaid order clearly indicate that Hon’ble Supreme Court was of the view that on the strength of the order dated 21.11.2013 no proceedings before National Consumer Dispute Resolution Commission can be stopped. Hon’ble Supreme Court categorically made it clear that order dated 21.11.2013 shall not prevent the National Consumer Dispute Redressal Commission from proceeding and passing order in accordance with law. The aforesaid clarification is also relevant with regard to CIRP Process of the Corporate Debtor and the intent and purpose of the order dated 21.11.2013 is very clear as clarified in order dated 27.04.2016.
The order dated 21.11.2013 passed by the Hon’ble Supreme Court has no fetter in the CIRP process of the Corporate Debtor nor it can fetter the approval of the resolution plan by the Adjudicating Authority which has been approved by 100% CoC - Adjudicating Authority committed error in putting a condition in the order approving the resolution plan that Resolution Professional and CoC to obtain a clarification from the Hon’ble Supreme Court with regard to order dated 21.11.2013.
Appeal allowed.
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2023 (12) TMI 1147
CIRP - Termination of Development Agreement and Supplemental Agreement and Power of Attorney executed between Kolkata Municipal Corporation and ‘Bengal Shelter Housing Development Limited’- Respondent No.1 - The Respondent No.1 engaged Respondent No.2- ‘Barnaparichay Book Mall Pvt. Ltd.’, a wholly owned subsidiary of Respondent No.1 for implementing the said Development Agreement. An Application under Section 7 was filed by ‘Asset Reconstruction Company India Ltd.’ against Respondent No.2 (herein after referred to as Corporate Debtor) on which application by an order dated 09.08.2019 CIRP commenced under the order of the Adjudicating Authority.
HELD THAT:- From the materials on record, it is clear that the Appellant who was owner of the premises and only right for development of the premises was given to Respondent No.1. Respondent No.1 having failed to carry out the development as per the terms and conditions, Kolkata Municipal Corporation has every jurisdiction to cancel the agreement. The cancellation of the agreement being outside the insolvency process, Respondent No.3 could not have brought issue of cancellation of the agreement before the Adjudicating Authority by filing the application IA No.138 of 2022. Respondent No.1 whose Development Agreement was cancelled was free to take such legal proceeding against the Appellant as may be permissible. It is relevant to notice that no proceedings were initiated by Respondent No.1 questioning the termination of agreement dated 17.01.2022.
The Kolkata Municipal Corporation who is owner of the premises by Development Agreement gave right of development of the premises to the Respondent No.1 and Respondent No.1 has unauthorisedly without prior approval of the Appellant as alleged Assignment Agreement dated 06.03.2008 has given to the Corporate Debtor. The possession of the premises has to be of Respondent No.1 who was given possession by the Appellant. In event, the Respondent No.1 illegally transferred the possession to Respondent No.2 contrary to the Development Agreement for protection of such possession, Section 14(1)(d) cannot be relied on.
The Adjudicating Authority has come to a wrong conclusion that the Assignment Agreement dated 06.03.2008 is lawful and valid without looking to the terms and conditions of the Development Agreement which was made by the Kolkata Municipal Corporation in favour of the Respondent No.1 dated 24.02.2006. No valid right could flow to Respondent No.2 in pursuance of the Arrangement Agreement dated 06.03.2008, hence, no right or interest created by Corporate Debtor by virtue of Arrangement Agreement dated 06.03.2008 which was neither obtained with the consent of the Appellant nor the said Arrangement Agreement even communicated to the Appellant by Respondent No.1. The Corporate Debtor had no right to be in possession of the premises nor its possession was lawful.
The Respondent No.1 has brought its 100% subsidiary, Respondent No.2 without there being any consent or permission of the Appellant and in the CIRP of the Respondent No.2, the assets are sought to be included whereas the assets premises are not the assets of the Corporate Debtor - The premises, in question, cannot be subject matter of the CIRP of the Corporate Debtor. Adjudicating Authority committed error in directing the Appellant to handover the possession of the premises to the Resolution Professional. The order passed by the Adjudicating Authority setting aside the order dated 17.01.2022 terminating Development Agreement, Supplemental Agreement and Power of Attorney cannot be sustained.
The order dated 17.11.2022 passed by the Adjudicating Authority is set aside - appeal allowed.
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2023 (12) TMI 1146
CIRP - Direction to pay the interest due and payable from the date of termination of the electricity i.e. March 01, 2016 connection in the name of the Corporate Debtor, till the date of adjudication of the present application - the grievance of the applicant is that the interest of the security deposits is not being paid which according to the regulation the respondent was entitled.
HELD THAT:- The issues which are sought to be raised in this application were not before the Adjudicating Authority in this appeal.
Recording the statement of counsel for the respondent (who is applicant here) that the appellant may consider in accordance with the application rules and regulations the appeal was disposed of. In event, the said consideration is not favourable to the applicant it is always open to the applicant to file appropriate application before the Adjudicating Authority for relief, if any.
The said issues cannot be entertained in this application nor adjudicated by this Tribunal in this appeal - application disposed off.
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2023 (12) TMI 1145
Jurisdiction of CESTAT under GST Act, 2017 - Refund order passed u/s 142 of the Central Goods and Services Tax Act, 2017 - appealable before the Customs, Excise and Service Tax Appellate Tribunal or not - the issue that has been referred to the Larger Bench of the Tribunal is as to whether the order passed under section 142 of the CGST Act is appealable before the Tribunal.
HELD THAT:- Section 142 deals with Miscellaneous Transitional Provisions. Sub-section (3) provides that every claim for refund filed by any person before, on or after the appointed day, for refund of any amount of CENVAT credit or any other amount paid under the existing law, shall be disposed of in accordance with the provisions of the existing law and any amount eventually accruing to him shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of section 11B of the Central Excise Act. However, no refund shall be allowed of any amount of CENVAT credit where the balance of the said amount as on the appointed day has been carried forward under the CGST Act - appellant had deposited the short payment of service tax under Chapter V of the Finance Act in respect of import of service on 08.12.2017. Refund of CENVAT credit could have been claimed under rule 4(7) of the CENVAT Rules, which had been framed under section 37 of the Excise Act and section 94 of the Finance Act.
Section 173 of the CGST Act provides that save as otherwise provided in the CGST Act, Chapter V of the Finance Act, shall be omitted. Section 174(1) of the CGST Act provides that save as otherwise provided in the CGST Act, on or from the date of commencement of the CGST Act i.e. 01.07.2017, the Excise Act shall stand repealed. Upon repeal of the Excise Act, the CENVAT Rules automatically stood repealed. The appellant, therefore, could not have claimed refund under rule 4(7) of the CENVAT Rules.
Before examining whether an appeal would lie to the Tribunal against an order passed under section 142 of the CGST Act, it would be appropriate to examine whether an appeal would lie to the Appellate Tribunal constituted under the CGST Act.
Whether the Tribunal would have the jurisdiction to entertain an appeal filed against an order passed under sub-section (3) of section 142 of the CGST Act? - HELD THAT:- There is, therefore, no manner of doubt that an appeal against an order passed under section 142 of the CGST Act would lie to the Tribunal - This view also gains support from the fact the legislative intent could not have been to deprive either an assessee or the Revenue from the right of an appeal since an appeal against an order passed under section 142 of the CGST Act would not lie to the Appellate Tribunal constituted under the CGST Act.
In the present case, the service tax was paid under the provisions of Chapter V of the Finance Act and refund was claimed under sub-section (3) of section 142 of the CGST Act, under which the claim was required to be disposed of in accordance with the provisions of the existing law. Therefore, even if the service tax had been deposited by the appellant after 01.01.2017, nonetheless the refund of any amount of the CENVAT credit could be claimed only under sub- section (3) of section 142 of the CGST Act and against this order an appeal will lie to the Tribunal.
Thus reference answered as:- An appeal would lie to the Customs, Excise & Service Tax Appellate Tribunal against an order passed under section 142 of the Central Goods and Services Tax Act, 2017.
The papers may now be placed before the Division Bench of the Tribunal for deciding the appeal.
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2023 (12) TMI 1144
Levy of service tax - Site Formation & Clearance, Excavation & Earth Moving & Demolition Services - difference between Balance Sheet & Service Tax Return figures.
In respect of dropping of demand of Rs.11,64,74,435/- - HELD THAT:- The services rendered by the assessee both in terms of the scope of the relevant statute as well as judicial pronouncements cannot be considered as Site Formation and Clearance, Excavtion and Earth Moving and Demolition Services for the period from 16.6.05 to 31.5.07. According to me the valuation against Site formation etc. arrived at by ICWAI does not affect this inference because determination of value of a part of a service in no way affects the character of the service as given under agreements. The agreements do not mention any separate consideration for overburden removal or site formation.
In respect of dropping of demand of Rs.2,09,43,980/- - HELD THAT:- Due cognizance given to the certificate issued by the statutory auditor of the company C.Ghatak & Co which in effect had completely reconciled the difference of Rs.19,32,74,085/- by which the balance sheet figure exceeds the figure covered under bills raised on mining clients, and on which service tax demand of Rs.2,09,43,980/-has been raised in the impugned SCN.
Dropping of penalties under Section 78 - HELD THAT:- In consonance with the Board’s Circular No.137/167/2006/CX-4 dated 03/10/2007 read with provisions of Section 73(3) of the said Act, it is found the issues of the instant case are squarely covered by such provisions and clarifications in so far as the demand of Rs.26,01,36,069/- is concerned. As a sequel to the above reasons, it is opined that for conclusion of all proceeding in respect of the demand for the aforesaid period against the assessee in terms of Section 73(3) of the Act read with Board’s Circular. In the circumstances, there are no justification for imposing penalties against this amount.
The Adjudicating authority has considered all the factual details and statutory provisions and case law for coming to his considered decision - there are no reasons to differ with his findings - appeal of Revenue dismissed.
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2023 (12) TMI 1143
Service of SCN - Whether the provision of rule 776 of the Manual was adhered to and any notice under section 74-A(1) was given before passing the order? - HELD THAT:- Once the initiation of the proceedings itself is bad, the consequential proceedings automatically fails in the eyes of law. Matter requires consideration.
Learned ACSC may file counter affidavit within a period of four weeks from today. Rejoinder affidavit, if any, may also be filed one week thereafter - List immediately thereafter.
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2023 (12) TMI 1142
Seeking rectification of alleged mistakes - No finding has been recorded on the appellant’s submission contesting imposition of 100% penalty under section 11AC read with Rule 25 of Central Excise Rules, 2002 - interpretation of Exemption NN 12/2012 dated 17.3.2012 - Extended period of limitation - HELD THAT:- The appellant contested the impugned order on three grounds- (a) that it was eligible to the benefit of the exemption notification; (b) extended period of limitation was wrongly invoked in the confirming the demands; and (c) if the matter is decided against it, CENVAT credit on inputs may be allowed. Insofar as the extended period of limitation is concerned, the appellant listed the findings of the Commissioner and contested them.
In the final order, the confirmation of demands by the Commissioner were upheld. The question of the CENVAT credit was addressed in the Miscellaneous order dated 30.9.2022. Since the confirmation of the demands by the Commissioner were upheld, it was stated in the miscellaneous order dated 30.9.2022 that penalty under section 11AC also needs to be upheld. The ground which is now sought to be raised that since the demands which were confirmed were within the normal periods of limitation, despite the finding of the Commissioner that there was wilful suppression of facts, penalty under section 11AC cannot be invoked was not part of the appeal. The appellant cannot, in the second application for rectification of mistake, now raise a new ground which was not part of the appeal.
Extended period of limitation - HELD THAT:- It needs to be pointed out that while demands for extended period of limitation cannot be confirmed where there is no fraud, collusion, wilful misstatement or suppression of fact, demand for a short period of say, one year, can be confirmed even when these elements of fraud, collusion, wilful misstatement or suppression of facts, etc., are present Nothing prevents confirmation of demands for shorter period even if these elements are present. Having found that these elements were present in the case (as recorded by the Commissioner and reproduced in the appeal), if demands are raised or confirmed for a shorter period, it does not mean that these elements are not established.
There are no error apparent on record - this application for rectification of mistakes is rejected.
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2023 (12) TMI 1141
Maintainability of appeal - non-prosecution of the case - Matter has been listed quite a number of times in the past and appellant has been abstaining from attending the hearing or seeking adjournment - HELD THAT:- Today the matter on request has been listed for E-hearing as per the request made by the appellants on 06.11.2023. Appellants has abstained without any request for adjournment.
There are no justification for adjourning the matter any further as these appeals have been adjourned more than the prescribed maximum number statutorily provided.
The Appeals are dismissed for non prosecution in terms of Rule 20 of CESTAT Procedure Rules, 1982.
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2023 (12) TMI 1140
Maintainability of appeal - availability of alternative remedy - Recovery of the Drawback sanctioned u/r 18 of Duty Drawback Rules, 2017 - levy of penalty u/s 17 of the Customs Act, 1962 - HELD THAT:- Undisputedly, the issue involved in the present case is in relation to the goods imported as baggage - From the Section 129A(1) of the Customs Act, 1962 it is evident that the appeal in the present case against the order of Commissioner (Appeals) would not lie before this Tribunal. Accordingly, this appeal is not maintainable before this Tribunal.
Appeal is dismissed as non maintainable - Appellant may pursue the appellate remedy as provided in law.
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2023 (12) TMI 1139
CENVAT Credit - input services - Catering Service, House Keeping services, Interior Decoration services and Garden Maintenance services used in the manufacturing plant - services such as Catering Service, House Keeping services, Interior decoration services and Garden maintenance service, Construction Service, Repair and maintenance service etc used in guest house and Employee Township - HELD THAT:- The definition of “input service” read as a whole makes it clear that the said definition not only covers services, which are used directly or indirectly in or in relation to the manufacture of final product, but also includes other services, which are integrally connected with the business of the manufacturer. Thus, the definition of 'input service' has a wide ambit and extends to all services used in relation to the business / activities relating to business.
In the instant case, the housekeeping services, catering services and interior decoration services are availed at the plant/factory and hence denial of the credit in respect of the said services is not justified.
Housekeeping services - HELD THAT:- These services are very necessary and vital for keeping the factory in good condition. Hence the expenses incurred towards housekeeping services qualify as ‘input service’ under CENVAT credit Rules, 2004 - reliance can be placed in the case of COMMISSIONER OF CENTRAL EXCISE, DELHI-III VERSUS M/S PRICOL LTD. [2015 (12) TMI 1486 - CESTAT NEW DELHI] and BALKRISHNA INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., AURANGABAD [2010 (3) TMI 375 - CESTAT, MUMBAI].
Catering services - HELD THAT:- The factory of the Appellant is in the remote area and thus the Appellant had to supply food to the workers. Therefore, the service of catering as availed by Appellant is in relation to manufacturing activity, since without food it will not be possible for the employees to work in the factory - reliance can be placed in CCE, NAGPUR VERSUS ULTRATECH CEMENT LTD., [2010 (10) TMI 13 - BOMBAY HIGH COURT].
Interior decoration services - HELD THAT:- The appellant has incurred expense towards interior decoration of various office buildings & canteen within the factory premise which is essential for smooth carrying of day to day business activities. Thus, such expenses incurred by the company also qualify as ‘input service’ under CENVAT credit Rules, 2004.
Garden maintenance services - HELD THAT:- In the instant case the Appellant had availed services for maintenance of garden which is essential for the proper functioning and efficiency of a factory, and hence they are eligible for credit as input services - reliance can be placed in BALKRISHNA INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., AURANGABAD [2010 (3) TMI 375 - CESTAT, MUMBAI].
Manpower services - HELD THAT:- In the instant case the Appellant had availed services for manpower service which is essential for the cleaning, organizing canteen of workers, work related to dispensary within the factory to provide instant medical treatment to the worker when required etc. Thus, these activities certainly have nexus with the business of manufacture - reliance can be placed in M/S. JAYPEE SIDHI CEMENT PLANT VERSUS CCE, BHOPAL [2014 (10) TMI 90 - CESTAT NEW DELHI].
Thus, the impugned order denying the Cenvat credit availed on the 'input services' Catering Service, House Keeping services, Interior Decoration services and Garden Maintenance services used in the manufacturing plant, is not sustainable.
Cenvat credit availed on the input services used in relation to the guest house and township situated within the factory premises - HELD THAT:- The Appellant incurred the expenses on account of construction of guest house and township for their employees within the premise of the plant. Due to location of the plant, they are under statutory obligation to provide a colony to the workers of the factory, to maintain the continuity of activity of manufacturing. Thus, having colony within the factory premise became indispensable. Similarly, to accommodate business delegates, consultants who used to visit time to time for verification and inspection of the plant, the guest house facility became necessary - the Cenvat availed by the Appellant were not related to any services acquired for its employees’ personal use, instead those were availed by the Appellant for proper functioning of the factory.
Reliance can be placed in the case of COMMISSIONER OF CUS. & C. EX., HYDERABAD-III VERSUS ITC LIMITED [2011 (11) TMI 516 - ANDHRA PRADESH HIGH COURT] - The Appellant is eligible for the Cenvat credit availed on the input services such as Catering Service, House Keeping services, Interior decoration services and Garden maintenance service, Construction Service, Repair and maintenance service etc used in guest house and Employee Township situated within the factory premises. Accordingly, the impugned order denying such credit to the Appellant is not sustainable.
The Appellant is eligible for the Cenvat credit availed on the 'input services' which are disputed in this appeal - the demand confirmed in the impugned order is set aside. Since the demand itself is not sustainable, the question of charging interest and imposing penalty does not arise - Appeal allowed.
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