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2024 (5) TMI 143 - CESTAT BANGALORE
Levy of Penalty u/s 112 (a) and (b) and 114AA of the Customs Act, 1962 - Abetment in mis-declaration of goods and evasion of duty - imported items declaring them as sunglasses but on investigation, it was found to be readymade garments - Dummy IECS - The appellants were accused of being involved in a scheme using dummy Import Export Codes (IECs) - Stolen identity - Documents of ‘H-cardholder’ working for the Customs House Agent (CHA) used for carrying out illegal importation of goods - Denial of cross-examination of witnesses - violation of natural justice - Difference Of Opinion between learned members - Third Member Order -
Whether the evidence relied by the adjudicating authority regarding the WhatsApp messages retrieved during investigation can be considered as admissible evidence in view of the provisions u/s 138(c) of the Customs Act, 1962 read with Section 65(B) of the Evidence Act, 1872.
Whether the confession statement of first appellant u/s 108 of the Customs Act, 1962 which stood retracted is substantially corroborated by other independent and cogent evidences to sustain the allegation against first appellant.
Whether the findings of the adjudicating authority regarding role of second appellant in illegal import is sustainable considering the fact that during investigation, in spite of appearing before the investigating officer, no statement is recorded from the second appellant u/s 108 of the Customs Ac, 1962.
ORDER [Per : Ms. Sulekha Beevi. C.S] - HELD THAT:- Undisputedly, the WhatsApp messages have not been retrieved by complying the provisions of Section 138C of the Customs Act, 1962. The Tribunal in the case of Commissioner of Customs, Lucknow Vs Sanjay Soni [2022 (3) TMI 367 - CESTAT ALLAHABAD] had occasion to consider the admissibility of evidence in the nature of WhatsApp messages. It was held that messages retrieved from phone is not reliable or admissible in evidence if provisions of Section 138C of Customs Act, 1962 are not complied. Section 138C is pari materia to Section 36B of Central Excise Act, 1944. While analysing the issue of admissibility of evidence retrieved from electronic items, the Hon’ble Supreme Court in the case of Anwar PV Vs P.K. Basheer & Others [2014 (9) TMI 1007 - SUPREME COURT] had held that the compliance of conditions in Section 138C is mandatory.
Similar view was taken in the case of S.N. Agrotech Vs Commissioner of Customs, [2018 (4) TMI 856 - CESTAT NEW DELHI]. In a recent decision, the Mumbai Bench of the Tribunal in the case of M/s. Jeen Bhavani International Vs CC,[2022 (8) TMI 237 - CESTAT MUMBAI] had occasion to analyse similar issue and held that without complying with conditions of Section 138C of Customs Act, 1962, the contents retrieved from electronic items are not admissible in evidence. The evidence in the nature WhatsApp retrieved from phones cannot be considered in evidence without complying the provisions u/s 138C. The law contained in Section 36B of Central Excise Act, 1944, as well as Section 138C of Customs Act, 1962 are safeguards against arbitrary actions for the reason that it is very easy to fabricate or tamper with material contained in electronic items.
Though the statement recorded before the Customs Officer may be admissible in evidence, it has to be noted that in the present case all the noticees have retracted their statements at the earliest. Further, the statement of Sahil Moiz Zafar was not recorded at all. Even though he is a co-noticee the said appellant has been implicated on the basis of call records and the statement of other noticees. When the noticees have retracted their statement it was incumbent upon the adjudicating authority to allow cross examination when requested for by the appellants. The rejection of the request for cross examination has caused prejudice to the appellants as they were not able to bring out the credibility of the witnesses and statements recorded before Customs Officers.
The evidence in the nature of WhatsApp messages, call records cannot be relied in evidence unless the conditions u/s 138C of Customs Act, 1962 are followed. So also, the denial of cross examination has taken away the right from the appellant to establish their defence. Therefore, there is no independent corroborative evidence. In absence of independent corroborative evidence, the statement which has been retracted cannot be the sole basis to sustain the penalties against either of the appellants.
It has to be noted that in spite of appearing before the investigating officer no statement was recorded from him. The statement of the co-noticees having been retracted and cross examination of all other witnesses been denied, there is absolutely no evidence to uphold the confirmation of penalty on second appellant.
Thus, I agree with all the four points of difference as recorded by Member (Judicial).
Per R. BHAGYA DEVI : - Penalties imposed on Shri Dharaneesh Raju Shetty and Shri Shail Moiz Zafar is upheld. Accordingly, the impugned order is upheld and the appeals are dismissed.
Per: P. A. AUGUSTIAN - No presumption can be drawn that evidences brought on record by way of confession which stood retracted is substantially corroborated by other independent and cogent evidences. Thus, appeals are allowed. Penalty imposed on appellants are set aside.
MAJORITY ORDER - In view of the majority opinion, the penalties imposed on the appellants are set aside. Consequently, the impugned order is set aside and the appeals are allowed.
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2024 (5) TMI 142 - CESTAT CHENNAI
Misdeclaration in the quantity of goods imported - enhancement of the value - Transaction value - demand of duty - confiscation - Penalty - value enhanced by merely relying on NIDB data without supplying details to the appellant - No reasons stated in the order for rejection of the transaction value - whether there are sufficient grounds for rejection of transaction value, enhancement of value of goods - HELD THAT:- There is no discussion as to the details of the Bills of Entry which have been relied by the adjudicating authority. The place of import, the foreign supplier, quantity of the goods, the nature of the goods imported etc., would affect the value of the goods imported. These details are to be discussed by the adjudicating authority as well as the Commissioner (Appeals) to hold that there are sufficient grounds to reject the transaction value and for enhancing the value of the goods. We do not see such discussions either in the order passed by the adjudicating authority or the Commissioner (Appeals). Thus, we find that the enhancement of the value of goods cannot be sustained and requires to be set aside. Order accordingly.
On perusal of the records it is seen that in the bill of entry, packing list as well as other documents the quantity is declared in kilograms. However, payment of duty is on the basis of measurement in meters. On examination it was found that instead of 11,815 kilograms as declared by appellant, the total quantity imported is 11,900 kilograms. We note that the said difference in quantity is too low so as to allege intentional misdeclaration of the goods. There will be some variation in the quantity during the voyage of the goods. Taking into consideration these aspects as put forth by the Ld. Counsel for appellant, we hold that the allegation of mis-declaration of the goods cannot sustain. Consequently, the Redemption fine and penalty imposed are set aside.
In the result, the impugned order is set aside. The appeal is allowed with consequential relief if any.
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2024 (5) TMI 141 - CESTAT CHENNAI
Maintainability of appeal - non-prosecution of the case - matter adjourned beyond three times - Refund claim - rejection of appeal for non-compliance and non-replying to the ‘Deficiency Memo’ - HELD THAT:- Now before us the Appellant has not shown any urgency in having the matter heard and disposed of. Adjournments can’t be given for the mere asking without any serious reason backed with proof for non-appearance of the Appellant or his authorised representative.
Considering the statutory position and the views expressed by the Hon’ble Apex Court in the various judgments cited above, we find that no purpose would be served in continuing with this appeal and hence reject the same for default as per Rule 20 of CESTAT (Procedure) Rules, 1982. The appeal is disposed of accordingly.
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2024 (5) TMI 140 - NATIONAL FINANCIAL REPORTING AUTHORITY
Professional Misconduct by CA - Liability of the Engagement Partner (EP) with Audit Firm - Failure related to non-recognition of liabilities classified as Non-Performing Assets (NPAs) by the Lender Banks - Failure to evaluate the management's assessment of the entity's ability to continue as a Going Concern - Failure relating to Revenue Recognition - Failures relating to Audit Documentation - Failures relating to audit evidence for Inventory - Failure relating to forming opinion on Financial Statements without obtaining Sufficient Appropriate Audit Evidence - Lapses in fulfilling duties related to Engagement Quality Control (EQC) Reviewer - Failure to determine Materiality - Failures related to audit of Trade Receivables - Failures relating to communication with Those Charged With Governance - Failure to report non-compliances with provisions of the Companies Act 2013 - Penalty and Sanctions - Section 132 (4) of the Companies Act, 2013.
HELD THAT:- The Auditors have made a series of serious departures from the Standards and the Law, in their conduct of the audit of CMIL for FY 2019-2020, 2020-21 and 2021-22. Based on the above discussion, it is proved that the auditors failed to report in their audit report, the misstatement in the financial statements of CMIL. The poor quality of audit as reflected in failures related to fundamental aspects of audit like setting materiality, evaluation of going concern, carrying out external confirmation together with the incomplete documentation, further compound the professional misconduct of the auditors.
It is concluded that the Auditors have committed Professional Misconduct as defined under Section 132 (4) of the Companies Act, 2013 in terms of Section 22 of the Chartered Accountant Act 1949 (CA Act) as amended from time to time as follows:
i. The auditors committed professional misconduct in terms of by Section 132 (4) of the Companies Act, read with Section 22 and clause 5 of Part I of the Second Schedule of the Chartered Accountants Act 1949 (as amended from time to time), which states that an auditor is guilty of professional misconduct when he ':fails to disclose a material fact known to him which is not disclosed in a financial statement, but disclosure of which is necessary in making such financial statement where he is concerned with that financial statement in a professional capacity". This charge is proved as the auditors failed to disclose in their audit report the material non-compliances by the Company in the area of recognition of the liabilities towards banks/financial institutions beyond the NPA dates.
ii. The auditors committed professional misconduct as defined by Section 132 (4) of the Companies Act, read with Section 22 and clause 6 of Part I of the Second Schedule of the Chartered Accountants Act 1949 (as amended from time to time), which states that an auditor is guilty of professional misconduct when he 'Jails to report a material misstatement known to him to appear in a financial statement with which he is concerned in a professional capacity".
This charge is proved as the auditors failed to disclose in their audit report the material non-compliances by the Company in the area of recognition of the liabilities towards banks/financial institutions beyond the NP A dates.
iii. The auditors committed professional misconduct as defined by Section 132 (4) of the Companies Act, read with Section 22 and clause 7 of Part I of the Second Schedule of the Chartered Accountants Act 1949 (as amended from time to time), which states that an auditor is guilty of professional misconduct when he "does not exercise due diligence and is grossly negligent in the conduct of his professional duties". This charge is proved as the auditors failed to conduct the audit in accordance with the SAs and applicable regulations as well as due to their failure to report the material misstatements and non-compliances of the Company in its financial statements.
iv. The auditors committed professional misconduct in terms of by Section 132 (4) of the Companies Act, read with Section 22 and clause 8 of Part I of the Second Schedule of the Chartered Accountants Act 1949 ( as amended from time to time), which states that an auditor is guilty of professional misconduct when he ''fails to obtain sufficient information which is necessary for expression of an opinion or its exceptions are sufficiently material to negate the expression of an opinion". This charge is proved as the auditors failed to conduct the audit in accordance with the SAs and applicable regulations as well as due to their failure to report the material misstatements and non-compliances of the Company in the financial statements.
v. The auditors committed professional misconduct as defined by Section 132 (4) of the Companies Act, read with Section 22 and clause 9 of Part I of the Second Schedule of the Chartered Accountants Act 1949 (as amended from time to time), which states that an auditor is guilty of professional misconduct when he ''fails to invite attention to any material departure from the generally accepted procedure of audit applicable to the circumstances".
This charge is proved since the auditors failed to conduct the audit in accordance with the SAs but falsely reported in their audit report that the audit was conducted as per SAs.
The charges of professional misconduct enumerated in the SCN dated 04.12.2023 stand proved.
Penalty and sanctions - HELD THAT:- Section 132(4) of the Companies Act, 2013 provides for penalties where professional misconduct is proved. The seriousness with which proved cases of professional misconduct are viewed, is evident from the fact that a minimum punishment is laid down by the law.
Considering the proved professional misconduct and keeping in mind the nature of violations, principles of proportionality and deterrence against future professional misconduct, in exercise of powers under Section 132(4)(c) of the Companies Act, 2013, it is hereby ordered:
i. Monetary penalty of Rs 50,00,000/- (Rupees Fifty Lakhs) upon the Audit firm, M/s Krishna Neeraj & Associates.
ii. Monetary penalty of Rs 10,00,000/- (Rupees Ten Lakhs) upon CA Krishna Kr Neeraj.
iii. CA Krishna Kr Neeraj is also debarred for 2 (Two) years from being appointed as an auditor or internal auditor or from undertaking any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate.
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2024 (5) TMI 139 - SC ORDER
Jurisdiction of NCLT - Constitution of its Benches - Competency of Member of the Tribunal to function as a Bench - Admitting an application under Section 9 IBC 2016 - NCLAT observed that the Member (Judicial) has not been authorized by the President under Proviso Section 419(3) to exercise the powers of the Tribunal - Admission of application for initiation of CIRP -HELD THAT:- In exercise of power under proviso to Section 419(3) of the Act, the President has constituted a Special Bench at New Delhi for 13.02.2020 and 14.02.2020 comprising of Single Member (Judicial). The Member (Judicial) heard the application under Section 9 on 04.02.2020 and delivered the judgment on 17.08.2020.
It is apparent that the Appellate Tribunal did not have the benefit of the above referred notification dated 12.02.2020 before it arrived at its decision. The order impugned clearly notes that, “nothing has been brought to our notice during the course of hearing that the President of the Tribunal had issued any general or special order to give power to the single member (Judicial Member) to function as a bench”.
The civil appeal is allowed.
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2024 (5) TMI 138 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Admission of Section 7 application - Assignment Agreement - Proper stamping of the agreement - Existence of Debt and Default - Corporate Guarantee - Whether registered Assignment Deed could have been looked into by the Adjudicating Authority while admitting Section 7 application? - Failure to comply with the conditions of settlement agreement - HELD THAT:- Present is a case where the Assignment Agreement which is challenged by the Appellant is a registered document duly stamped for Rs.1,01,500 and it is submitted by the Respondent that the said stamp was paid as per the Maharashtra Stamp Act, 1958. Thus, present is not a case where document which is sought to be challenged is unstamped document. According to the own case of the Appellant, his complaint regarding insufficiency of stamp is pending adjudication before the Stamp Authority. Thus, as on date, there is no determination by any competent authority that the registered Assignment Deed is insufficiently stamped, therefore, the submission of the Appellant that the registered Assignment Deed could not have been looked into by the Adjudicating Authority while admitting Section 7 application, cannot be accepted.
No error has been committed by the Adjudicating Authority in relying on the Assignment Deed dated 07.08.2020 on basis of which the Respondent No.1 has filed Section 7 application.
The present is a case where the Corporate Debtor has given a guarantee. The Corporate Debtor having given Corporate Guarantee, both the Cooperative Bank (the original lender) and Respondent No.1 (the Assignee) were fully entitled to file Section 7 application against the Corporate Debtor. The judgment of Hon’ble Supreme Court in ANUJ JAIN VERSUS AXIS BANK LIMITED AND ORS. [2020 (2) TMI 1700 - SUPREME COURT] was on its own facts and there are distinguishing features in the present case with those of the Anuj Jain’s Case.
There are no reason to enter into issues raised by the Intervener in Company Petition filed under Section 241-244 of the Companies Act, 2013 nor at the instance of Intervener, the impugned order passed by the Adjudicating Authority admitting Section 7 application can be interfered with. More so, Appellant who is Suspended Director of the Corporate Debtor filed the appeal and raised all possible grounds to challenge the admission order.
There are no ground to interfere with the order passed by the Adjudicating Authority admitting Section 7 application against the Corporate Debtor - appeal dismissed.
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2024 (5) TMI 137 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Liquidation of corporate Debtor - Eligibility of the Appellant to submit the Resolution Plan under section 29 A of IBC - relevant time - commercial wisdom of the CoC regarding non consideration of the Resolution Plan submitted by the Appellant - resultant recommendation of the CoC for liquidation of the Corporate Debtor which was accepted by the Adjudicating Authority in the Impugned Order - HELD THAT:- The relevant date is the date of submission of the Resolution Plan and the Appellant was not eligible to submit the Resolution Plan on 12.05.2022, since he had already been declared as wilful defaulters by the Respondent No. 2 on 17.07.2021 and 04.10.2021. i.e., much prior to his submission of Respondent Plan. It is also fact that no judicial stay existed in favour of the Appellant on 12.05.2022 regarding his status as wilful defaulter. Hence, the Appellant was not eligible to submit the Resolution Plan and this was rightly adjudicated by the Adjudicating Authority.
There are no error in the Impugned Order dated 19.04.2023. The appeal devoid of any merit stand dismissed.
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2024 (5) TMI 136 - CESTAT ALLAHABAD
Levy of service tax - Business Auxiliary Services - incentive received from M/s Pepsi to allegedly promote the sales of goods of Pepsi brand - HELD THAT:- The issue in the present appeal is no more res integra and this Bench of the Tribunal vide Final Order No.70040 of 2024 dated 30.01.2024 has allowed the appeal of the Appellant holding that 'From the activities undertaken by the appellant, it is evident that they have not acted towards marketing and promotion or sale of goods produced by their client. At best it can be said that they have participated in promotion of the brand name of 'Coca Cola', 'Pepsi' etc. Such activities cannot be brought under 'Promotion or Marketing or Sale of Goods Produced or Service Provided by the Client', appearing under 'Business Auxiliary Service'.'
The impugned order is set aside to the extent of confirmation of demand and penalties by the learned Commissioner (Appeals). The appeal filed by the Appellant is allowed.
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2024 (5) TMI 135 - CESTAT AHMEDABAD
Classification of services - Manpower Recruitment or Supply Agency service or not - executing works assigned as per the works order - appellant are job workers as well as principal manufactures.
SCN issued to M/s. Senor Metals Pvt Ltd and M/s. Rajhansh Metals, Pertains to period effective from 01.07.2012 under Serial No. 8 of the Notification No. 13/2012-ST dates 20.06.2012 which provides that in case of supply of the Manpower or supply Agency service, 25% of the Service Tax is payable by the person supplying the service where as 75% of the Service Tax was payable by the person receiving the service.
HELD THAT:- The issue is no longer res integra as this Tribunal in a case of SHRI DAYANAND MISHRA VERSUS COMMISSIONER OF CENTRAL EXCISE & ST, RAJKOT [2024 (4) TMI 233 - CESTAT AHMEDABAD] has already decided matter where it was held that 'the matter is no longer res-integra as this Tribunal in a similar case has held that the agreement is for execution of a particular work and not for providing any manpower. As per work contract the payment is paid for the work performed on the basis of per Kg of goods manufactured and therefore such an activity cannot be classifiable under the service category of Manpower Recruitment or Supply Agency Service. '
Thus, the service provided by the appellants does not fall under the category of Manpower Recruitment or Supply Agency service and therefore, the impugned Orders-In-Appeal are legally not sustainable and therefore set aside - appeal allowed.
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2024 (5) TMI 134 - CESTAT AHMEDABAD
Classification of service - Manpower Recruitment and Supply Agency Service or not - services received from the contractor M/s. A.M Enterprise who was engaged in undertaking various odd jobs including packing of loose Cement at the appellant plant - payment made to contractor - HELD THAT:- Reliance placed upon CBEC Circular No. 190/9/2015-ST dated 15.12.2015 and various case law most specifically on 2024 (4) TIM 233-CESTAT-AHMEDABAD in the matter of SHRI DAYANAND MISHRA VERSUS COMMISSIONER OF CENTRAL EXCISE & ST, RAJKOT [2024 (4) TMI 233 - CESTAT AHMEDABAD], which in turn relied upon the decision of ROOPSINH JODHSINH CHAUHAN AND NAVALSINH JADEJA VERSUS COMMISSIONER OF CENTRAL EXCISE & ST, RAJKOT [2023 (11) TMI 102 - CESTAT AHMEDABAD] which has held that when the contract between the service provider is admittedly a contract of manufacturing or any process thereof, then engagement of labour will not make it as manpower supply.
The matter is no more res integra and the impugned service cannot be held as Manpower Recruitment and Supply Agency Service simply because of the basis of making payment to the contractor.
Appeal allowed.
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2024 (5) TMI 133 - CESTAT CHENNAI
Levy of service tax - Construction of Residential Complex Service and Commercial / Industrial Construction Service - providing construction service of composite nature - HELD THAT:- The documents produced sufficiently established that the contracts are composite in nature. The decision laid down by the Tribunal in the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST & CENTRAL EXCISE, CHENNAI [2018 (9) TMI 1149 - CESTAT CHENNAI] would be squarely applicable. The said decision has been followed by the Tribunal in the case of M/S. JAIN HOUSING & CONSTRUCTION LIMITED VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI [2023 (2) TMI 1044 - CESTAT CHENNAI] and was upheld by the Hon’ble Apex Court in THE COMMISSIONER OF SERVICE TAX VERSUS M/S. JAIN HOUSING AND CONSTRUCTION LTD. [2023 (9) TMI 816 - SC ORDER], by dismissing the Department appeal.
The demand cannot sustain and requires to be set aside - appeal allowed.
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2024 (5) TMI 132 - CESTAT CHENNAI
Levy of service tax - subscription fees and entrance fees collected by the appellant from existing members and new members - Supply of Tangible Goods Services - appellant has received freight charges from M/s. BPCL for supply of Lorries for transport of petrol - Business Auxiliary Service - discount and commission accounted by the appellant - receiving reimbursement of Bank charges as well as commission of Demand Drafts from M/s. BPCL in respect of transactions with M/s. BPCL - amount received by the appellant for sale of fleet cards - Extended period of limitation - suppression of facts or not - Penalty imposed under Renting of Immovable Property Services and Mandap Keeper Services - service tax paid already.
Levy of service tax - subscription fees and entrance fees collected by the appellant from existing members and new members - HELD THAT:- The said issue as to whether subscription fee collected from members can be subject to levy of service tax prior to 01.07.2012 has been settled in the case of STATE OF WEST BENGAL & ORS. VERSUS CALCUTTA CLUB LIMITED AND CHIEF COMMISSIONER OF CENTRAL EXCISE AND SERVICE & ORS. VERSUS M/S. RANCHI CLUB LTD. [2019 (10) TMI 160 - SUPREME COURT]. Following the same, it is opined that the demand of service tax under this category cannot sustain and requires to be set aside.
Levy of service tax - Supply of Tangible Goods Services - appellant has received freight charges from M/s. BPCL for supply of Lorries for transport of petrol - HELD THAT:- As per the Show Cause Notice, it is seen that the appellant has collected only freight charges. The appellant has not collected any amount as hire charges in addition to the freight charges. Further, the service tax on the freight charges has been paid by M/s. BPCL who is the service recipient - The Tribunal in the case of M/S. ERODE LORRY OWNERS ASSOCIATION VERSUS THE COMMISSIONER OF G.S.T. & CENTRAL EXCISE, SALEM COMMISSIONERATE [2019 (3) TMI 43 - CESTAT CHENNAI] had considered the issue on very similar set of facts and held that the demand of service tax under Supply of Tangible Goods Services cannot sustain. Following the said decision, the demand cannot sustain and requires to be set aside.
Levy of service tax - Business Auxiliary Service - discount and commission accounted by the appellant - HELD THAT:- The amount received is only the difference in the price rate of fuel sold by the appellant. It is found that the demand cannot sustain and requires to be set aside.
Levy of service tax - receiving reimbursement of Bank charges as well as commission of Demand Drafts from M/s. BPCL in respect of transactions with M/s. BPCL - HELD THAT:- These are nothing but reimbursable expenses and cannot be subject to levy of service tax prior to 2015. The issue stands decided by the decision in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [2018 (3) TMI 357 - SUPREME COURT], where it was held that 'only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax' - demand set aside.
Levy of service tax - amount received by the appellant for sale of fleet cards - HELD THAT:- The appellant has sold the fleet cards to customers on behalf of M/s. BPCL. However, they have not received any mark-up or profit on the fleet cards. The fleet carts were sold on the amount as reimbursed by M/s. BPCL. The appellant has not been given any consideration for sale of fleet cards, it is found that the actual amount received from M/s. BPCL for sale of fleet cards cannot be subject to levy of service tax. The demand under this head is set aside.
Extended period of limitation - suppression of facts or not - HELD THAT:- The Department has not established any positive act of suppression on the part of the appellant. The entire figures have been obtained from the accounts maintained by the appellant. This apart, most of the amounts do not fall under the category of taxable service. For this reason, the invocation of extended period cannot sustain.
Penalty imposed under Renting of Immovable Property Services and Mandap Keeper Services - service tax paid already - HELD THAT:- The appellant has already discharged service tax on these amounts. They are also registered for these services. For these reasons, the penalty imposed under Renting of Immovable Property Services and Mandap Keeper Services required to be set aside - However, the demand of service tax or the interest thereon on Renting of Immovable Property as well as Mandap Keeper Services is not interfered and only the penalty in this regard is set aside.
The impugned order is modified to the extent of upholding the demand and interest in regard to Renting of Immovable Property Services and Mandap Keeper Services and setting aside the demand, interest and penalty in respect of all other services - Appeal allowed in part.
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2024 (5) TMI 131 - CESTAT CHENNAI
Demand of interest on irregular CENVAT Credit merely taken in the books but have not been utilized - entire CENVAT credit of capital goods was availed instead of 50% as stipulated under Rule 4(2)(a) of CCR, 2004 - availment of credit on Customs Cess - availment of CENVAT Credit by the appellant on the basis of various invoices / documents is in order or not in terms of Rule 9 of CENVAT Credit Rules, 2004 - invocation of extended period of limitation - penalty.
Demand of interest on ireegular availed credit - 100% availment of CENVAT Credit on capital goods in the first year itself and the availment of credit on Customs Cess - HELD THAT:- The appellant though has taken the credit in their books has not utilized the credit taken towards payment of any duty / tax. Whether interest is demandable or not on irregular CENVAT Credit availed but not utilized, the issue is no more res integra as it has been held by various higher judicial fora that when CENVAT Credit was merely taken in the books but not utilized would not involve any payment of interest or penalty.
The issue of unutilized CENVAT Credit was a subject matter before the Hon’ble Supreme Court in the case of UOI AND ORS. VERSUS IND-SWIFT LABORATORIES LTD. [2011 (2) TMI 6 - SUPREME COURT] and the decision was considered by the Hon’ble High Courts and co--ordinate Benches of the Tribunal in COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE VERSUS M/S BILL FORGE PVT LTD, BANGALORE [2011 (4) TMI 969 - KARNATAKA HIGH COURT] where it was held that 'it is only when the assessee had taken the credit, in other words by taking such credit, if he had not paid the duty which is legally due to the Government, the Government would have sustained loss to that extent. Then the liability to pay interest from the date the amount became due arises under Section 11AB, in order to compensate the Government which was deprived of the duty on the date it became due. Without the liability to pay duty, the liability to pay interest would not arise. The liability to pay interest would arise only when the duty is not paid on the due date. If duty is not payable, the liability to pay interest would not arise.'
In the case of J.K. TYRE & INDUSTRIES LTD. VERSUS ASST. COMMR. OF C. EX., MYSORE [2016 (11) TMI 911 - CESTAT BANGALORE - LB], Tribunal Large Bench has come to the conclusion that interest liability would not arise when the assessee had merely availed credit and had reversed the same before utilizing the availed credit for remittance of duty.
Thus, the recovery of interest is not legally justified and not maintainable.
Availing CENVAT Credit on ineligible documents, contravening the provisions of Rule 9 of the CENVAT Credit Rules, 2004 - HELD THAT:- The appellant is a Government owned company and it has got different circles, operational areas and divisions, as such discrediting these documents for the purpose of availment of CENVAT Credit is not legal and proper. Unless there is an allegation that the capital goods are diverted or not installed in the appellant’s premises, it has to be held that the appellant is eligible for the CENVAT Credit availed.
Extended period of limitation - HELD THAT:- It is informed that the Show Cause Notice was issued on 30.09.2013 which is well beyond the actual cutoff date for the issue of the Show Cause Notice i.e., 25.04.2011 / 25.10.2011, as the case may be and contended that extended period could not be invokable - reliance placed upon the decision rendered in the case of INDIAN OIL CORPORATION LTD. VERSUS COMMISSIONER OF C. EX., AHMEDABAD [2013 (9) TMI 310 - CESTAT AHMEDABAD] wherein it was held that Public Sector Undertaking, cannot have mala fide for non-discharge of duty and there cannot be an allegation of intention to evade duty - the demand notice issued is time barred and there is no justification for invoking the extended period of limitation in the facts of this case. Thus, the appellant succeeds on limitation also.
The demand notice issued is time barred and there is no justification for invoking the extended period of limitation in the facts of this case. Thus, the appellant succeeds on limitation also.
The impugned order passed by Commissioner of Central Excise and Service Tax cannot sustain and so, ordered to be set aside - appeal allowed.
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2024 (5) TMI 130 - CESTAT NEW DELHI
CENVAT Credit - Availment of CENVAT credit on input services - availment of CENVAT credit on inadmissible documents - non-payment of amount under rule 6(3)(i) of CENVAT credit rules - non-payment of service tax on manpower recruitment or supply agency services.
Availment of credit on certain input services - HELD THAT:- The term input services is very wide and cannot be restricted to any specific type and nature of input services. However, with the introduction of exclusion clauses A to C, it is clear in no uncertain terms that CENVAT credit can be availed on all the input services which are used by the service provider for providing output services as well as services that are covered and defined in the inclusive part of the definition with the specific exclusions - the meal vouchers being provided to the employees, prior to 1.4. 2011, the same is a welfare activity - Tribunal in the case of ANDRITZ TECHNOLOGIES PVT. LTD. VERSUS COMMISSIONER OF CENTRAL TAX, BANGALORE [2019 (12) TMI 122 - CESTAT BANGALORE] has held that 'As far as Food coupons/sodexo coupons are concerned, I find that these services are in the nature of welfare service and purely for personal consumption of employees as these are perquisites allowed to the employees. Further, I find that Commissioner (Appeals) has given reasons for denying the Cenvat credit on sodexo coupon and I do not find any fault in that and uphold the same.'
For the period post 1.4.2011, there is a specific exclusion provided under clause C to Rule 2(I) that outdoor catering service, if used for personal use or consumption of any employee is not considered to be input service. Therefore, there are no infirmity in the impugned order in this regard.
Credit availed on the accommodation provided to staff - HELD THAT:- The service of accommodation was necessary for the purposes of providing the service of consulting engineering services and is integrally connected with the same. Perquisites are generally meant for the comfort, convenience and welfare of the employees. Even though it has been argued that perquisites do fall within the scope of input service, the benefit of Cenvat credit still cannot be allowed, as any activity for the comfort, convenience and welfare of its employees cannot be treated as having been done in course of furtherance of business - Bombay High Court in the case of CCE VERSUS MANIKGARH CEMENT [2010 (10) TMI 10 - BOMBAY HIGH COURT] held that 'in the present case, in our opinion, rendering taxable services at the residential colony established by the assessee for the benefit of the employees, is not an activity integrally connected with the business of the assessee and therefore, the tribunal was not justified in holding that the services such as repairs, maintenance and civil construction rendered at the residential colony constitutes 'input service' so as to claim credit of service tax paid on such services under Rule 2(1 ) of the CENVAT Credit Rules, 2004.' - there is no infirmity the findings of the adjudicating authority in the impugned order in this regard.
Availment of credit on inadmissible documents - HELD THAT:- All the services for which input credit was taken had actually been received by the appellant and the incidence of Service Tax had been borne by the appellant. Not mentioning certain particulars in the invoice is only a procedural error, and the availment of CENVAT credit is a substantive benefit which cannot be denied on procedural grounds - as per the proviso to Rule 9(2) of the Credit Rules, as long as all the critical details mentioned therein are available on the invoice, the same would be a valid document for taking credit. No evidence has been brought forward by the Department to state that the inputs were not duty paid. Merely for the said discrepancies, Cenvat credit cannot be denied as held in catena of judgments, some of which have been cited by the Learned Counsel, so long as it is not in dispute that the service tax was paid by the service provider. In fact the appellant has produced an affidavit from the seller of the goods that the duty tax had been paid. Accordingly, the Commissioner had erred in disallowing the credit on such invoices.
Non-payment of an amount under Rule 6(3)(i) of the credit rules for providing consulting engineer service in Jammu and Kashmir for the period 2009–10 to 2012–13 - HELD THAT:- The impugned order has held that the credit reversed by the appellant for the period October 2013 to March 2014 does not pertain to the period in dispute. It has been argued that the detailed calculation was for the Cenvat credit reversal for the period 2008-09 to 2012-13. It is noted that in several decisions, it has been consistently held that when proportionate credit has been reversed the department cannot fasten liability under Rule 6(3)(i) of the Credit rules - The Tribunal in the case of RESPONSIVE INDUSTRIES LTD. AND AXIOM CORDAGES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, THANE-II [2022 (8) TMI 639 - CESTAT MUMBAI] had examined the above issue in respect of the appellant who had reversed the Cenvat credit in respect of exempt services, by holding that inasmuch as the quantum or method adopted by the appellant was not questioned by the department, the demand of Cenvat credit cannot be sustained - the appellants have reversed the credit attributable to the inputs/inputs services alleged to have been used in the provision of exempted service - the demand on account of the said issue is liable to be set aside.
Taxability of services under “manpower recruitment of supply agency services” - HELD THAT:- In view of the decision of the Supreme Court in C.C.,C.E. & S.T. – BANGALORE (ADJUDICATION) ETC. VERSUS M/S NORTHERN OPERATING SYSTEMS PVT LTD. [2022 (5) TMI 967 - SUPREME COURT], it has to be held that the demand can be confirmed for the normal period only and the demand for the extended period cannot be sustained.
Interest and penalty - HELD THAT:- The demand for interest upheld by relying on Supreme Court judgment, in the case of PRATIBHA PROCESSORS VERSUS UNION OF INDIA [1996 (10) TMI 88 - SUPREME COURT], wherein the Hon’ble Supreme Court held that the levy of interest is compensatory and automatic.
Penalties imposed under Sections 76, 77, & 78 - HELD THAT:- The department has not been able to establish the ingredients of malafide intention of the appellant to evade payment of service tax. Hence, the penalties imposed on the appellant is set aside.
Appeal allowed in part.
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2024 (5) TMI 129 - CESTAT CHENNAI
Levy of Service tax - commission accounted by the appellant in their books account - amount collected for installation and activation of TV connection is inclusive of service tax or not - HELD THAT:- The appellant provides installation and activation of Sun DTH TV connection. The activation charges collected from customer by M/s. Sun DTH TV is inclusive of service tax. The appellant does not collect any further amount from customer. The commission for providing the service to the customer thereafter is paid to the appellant by M/s. Sun Direct TV. It is clear that the amount collected from the customer includes the service tax as well as the commission charges paid to the appellant.
The very same issue was considered by the Tribunal in the case of M/S. KUMAR’S ELECTRONICS VERSUS COMMISSIONER OF CENTRAL EXCISE [2019 (6) TMI 852 - CESTAT CHENNAI] where it was held that 'It is true that the appellant is providing services to the DTH operators and is getting commission for such services. If the appellant had paid service tax on such commission, the main DTH operator could have availed Cenvat credit of the same thereby proportionately reducing the amount paid in cash by the DTH operator. Therefore the entire exercise is also revenue-neutral.'
The facts in the case are identical to the facts in the case of Kumar’s Electronics - The facts being identical, the decision squarely applies.
The impugned order is set aside. The appeal is allowed.
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2024 (5) TMI 128 - CESTAT CHENNAI
Levy of service tax - Construction of Residential Complex service - payments received where number of units are 12 or less than that - land owner shares - composite contracts or not - HELD THAT:- The definition of Construction of Residential Complex does not apply to constructions in the nature of composite contracts which involve both providing services as well as use of goods and materials. The services which involve composite contracts fall under the definition of Works Contract Services which was brought forth from 01.06.2007. Therefore in cases where there is provision of services of composite nature, the demand can be raised only under WCS. The demand under Construction of Residential Complex would not apply as this definition deals with service simplicitor.
The Tribunal in the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST & CENTRAL EXCISE, CHENNAI [2018 (9) TMI 1149 - CESTAT CHENNAI] had considered this issue and held that the demand under Residential Complex Services / CICS / CCS cannot sustain prior to 01.07.2012 for the reason that these services do not apply to composite construction services. The decision in the case of Real Value Promoters Pvt. Ltd. was followed by the Tribunal in the case of Jain Housing & Construction Limited which has been sustained by the Hon'ble Apex Court.
Further, this Tribunal in the case of M/S. SRINIVASA SHIPPING & PROPERTY DEVELOPERS LTD. VERSUS THE COMMISSIONER OF GST & CENTRAL EXCISE, CHENNAI [2023 (12) TMI 1003 - CESTAT CHENNAI] on similar set of facts and issue had held that the demand under Residential Complex Services cannot sustain.
The demand raised under Construction of Residential Complex Services cannot sustain - the impugned order is set aside - Appeal allowed.
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2024 (5) TMI 127 - CESTAT CHENNAI
Non-payment of service tax - Renting of Immovable Property services - Management, Maintenance and Repair services - Business Auxiliary Services.
Levy of service tax - Renting of Immovable Property services - whether the demand of service tax cannot be sustained for the reason that the premises has been let out by appellant for conduct of guest rooms/accommodation? - HELD THAT:- The lease deed clearly shows that the premises is to be exclusively used for guest rooms and connected facilities like kitchen, dining room, parking spaces only. The demand of service tax cannot sustain when the premises is rented out for the purpose of accommodation and related activities. It is therefore held that the demand cannot sustain and requires to be set aside - demand set aside.
Levy of service tax - Business Auxiliary Services - nature of activity - sale or service - transfer of percentage of holding to joint venture partner - HELD THAT:- The transaction is nothing but sale of shares and there is no situation of providing services to M/s. Ascott (Mauritius) .The Tribunal in the appellant's own case M/S. RATTHA HOLDING CO. PVT. LTD. VERSUS COMMISSIONER OF CENTRAL SERVICE TAX, CHENNAI [2018 (9) TMI 1722 - CESTAT CHENNAI] had considered the very same issue and held that the demand cannot sustain as there is no provision of services - the demand under Business Auxiliary Services requires to be set aside.
Levy of penalty - appellant has paid the service tax along with interest before passing the adjudication order - Management, Maintenance and Repair services - HELD THAT:- Taking note of the submission made by the Ld. Counsel for the appellant that the amount of service tax under this category along with interest has been paid before passing of the adjudication order, the penalty imposed in this regard is set aside.
The impugned order is modified to the extent of setting aside the demand, interest and penalties imposed under Renting of Immovable Property and Business Auxiliary Services as discussed above. The demand and interest under Management, Maintenance and Repair Service is upheld. The penalty on this count is set aside. The appeal is partly allowed.
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2024 (5) TMI 126 - CESTAT AHMEDABAD
Benefit of nil rate of duty in terms of Notification No. 23/1998-CE dated 01.08.1998 as amended - clearance of newsprint - Non-compliance with the conditions of Notification No. 23/1998-CE dated 01.08.1998 - clearance of goods to the unregistered depots which cannot be defined as “place of removal” - finished goods have not been cleared against purchase order as required under the Notification - HELD THAT:- The first requirement is that the subject goods must be intended for newspapers. It is not the case of the department in the show cause notice that the goods are not intended for printing of newspapers - all the conditions of chapter heading 4801 of note 4 to chapter 48 and notification issued thereunder i.e. 23/1998-CE dated 01.08.1998 stands complied with. Therefore, merely because first the goods were cleared from factory to godown and then to newspaper, the conditions of the notification does not stand contravened.
Similar issue has been considered by this Tribunal in the case of SRI VENKATESA PAPER & BOARDS LTD. VERSUS COMMISSIONER OF C. EX., MADURAI [2008 (7) TMI 169 - CESTAT, CHENNAI] where it was held that 'The expression “supplied against a purchase order placed upon such manufacturer by a newspaper” does not necessarily mean that the manufacturer should supply newsprint directly to a newspaper. What was intended by the amendment was that the supply of newsprint to a newspaper must be against a purchase order placed by the latter. It could either be direct or through a depot.'
It is also observed that the factory is the place of removal as per Section 4 of Central Excise Act, 1944, however, at the same time any other place from where the goods is sold after removal from the factory, the said place is also a place of removal. Therefore, whether the goods are sold from the factory or from any other place from where the goods were sold, both are statutorily considered as place of removal. Therefore, the goods sold from godown to newspaper after clearance from the factory will not take a different colour as far as the classification of goods under 4801 read with Notification No. 23/1998-CE.
Thus, nil rate of duty is rightly and legally available to the appellant - the impugned order is set aside - appeal allowed.
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2024 (5) TMI 125 - CESTAT NEW DELHI
Short payment of Central Excise Duty - mis-declaration of value of the goods cleared to BSE - clearance of some used capital goods on commercial invoices without paying the central excise duty - confirmation of demand on the wrong presumption that central excise duty is to be levied on the amounts received - HELD THAT:- The constitutional mandate of the Union to levy excise duty and also the charging section under the Central Excise Act clearly provide for levy of excise duty only on goods manufactured or produced in India. The measure of tax could be based on the quantity or value and in most cases, it is based on the value.
Duties of excise become payable on removal of goods (Rule 2 of the Central Excise Rules, 2002) and have to be paid by the sixth day of the following month (Rule 8). This payment is not contingent on the receipts for the goods removed and sold. The amounts may be paid in that month, in advance or much later. Regardless of when the payment is received or not received, duty becomes payable on removal and has to be paid by the sixth day of the following month - Form 26AS is system generated by the Income tax portal as a compilation of all the amounts paid by various persons and the TDS deducted from the assessee during the financial year.
There is no contrary overriding provision in the Central Excise Act. Therefore, section 102 of the Evidence Act applies and in case of Show Cause Notices issued under Central Excise Act, the burden of proof lies on the Revenue because if no evidence is provided by either side, the SCN fails. Therefore, it was not for the appellant to reconcile the documents and produce evidence but it was for the Revenue to establish that some excise duty escaped assessment and has to be paid.
This demand of central excise duty on the capital goods sold by the appellant (which were not manufactured by it at all) is beyond the scope of the charging section 3 of the Central Excise Act and also beyond the legislative powers of the Union as per entry 83 of List 1 of the Seventh Schedule of the Constitution - the SCN, the OIO and the impugned order were issued under the incorrect understanding of law that central excise duty could be levied on payments received (whether or not they were related to the excisable goods manufactured or produced and sold) and on goods sold through commercial invoices (even if they were not manufactured or produced).
The impugned order, therefore, cannot be sustained and needs to be set aside - Appeal allowed.
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2024 (5) TMI 124 - CESTAT MUMBAI
Refund of unutilized input credit - inputs and/or input services used in the export of goods or services as provided under Rule 5 of CENVAT Credit Rules, 2004 read that Notification No. 5/2006-C.E. (N.T) dated 14.03.2006 - period January, 2009 to March, 2009 - HELD THAT:- In view of the detailed examination of the all five conditions of Rule 5 of the CENVAT Credit Rules, 2004 read with Notification No. 5/2006-C.E. (N.T) dated 14.03.2006, in the context of factual matrix of the case, it is found that the appellant is eligible for refund of Cenvat credit of inputs availed during the quarter January, 2009 to March, 2009 after adjusting/deducting for the Cenvat credit utilized, thereby arriving at the correct amount of Cenvat credit on inputs which could not be utilized for payment of tax or duty as Rs.3,44,804/- (Rs.23,32,780/- minus Rs.49,87,976/-). Further, the amount of Cenvat credit of input services which could not be utilized and by restricting the same to the extent of ratio of export turnover to the total turnover as per the prescribed formula, the eligible Cenvat credit for refund is arrived at Rs.77,754/-. Thus, the total eligible amount of Cenvat credit refundable to the appellants is worked out as Rs.4,22,558/-, out of the total refund claim filed for an amount of Rs.13,37,072/-.
There are no merits in the impugned order dated 21.08.2018, insofar as the adjudged demands were confirmed on the appellant by the learned Commissioner (Appeals), upholding the order of the original authority and by rejecting the appeal filed by the appellant.
The adjudged demands confirmed on the appellants being ineligible refund of Cenvat credit and rejection of eligible refunds, in the impugned order dated 21.08.2018 is liable to be set aside. The eligible refund of Cenvat Credit in terms of Rule 5 of CENVAT Credit Rules, 2004 read with Notification No. 5/2006-C.E. (N.T) dated 14.03.2006 is re-determined as Rs.4,22,558/- - the impugned order is set aside - appeal allowed.
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