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2025 (2) TMI 962
Condonation of 18 days delay in filing of the Appeal - Sufficient cause for delay or not.
Whether, when the condonable period of 15 days, as prescribed under Section 61(2) of the proviso, is falling on a day, on which the Appellate Tribunal is closed, whether the condonable period shall stand extended upto the date when Court re-opens? - HELD THAT:- This Tribunal referring to the judgment of the Hon’ble Supreme Court in Assam Urban Water Supply and Sewerage Board vs. Subhash Projects and Marketing Ltd. [2012 (1) TMI 412 - SUPREME COURT] clearly held that the period of one month under which the delay in filing the application should be condoned is not the period of limitation.
It is held that 15 days condonable period, even if it is coming to an end on a day, when the Tribunal is closed, the benefit of Rule 3 or Section 4 of the Limitation Act cannot be extended.
Whether for computing the 30 days period for filing the Appeal under Section 61, the limitation of 30 days period expiring on a day on which Tribunal is closed for, the period shall be excluded upto the period on which Tribunal re-opens, for computation of 30 days period for filing of the Appeal? - HELD THAT:- Rule 3 of the NCLAT Rules specifically provides that in computing the time, the day from which the said period is to be reckoned shall be excluded, and if the last day expires on a day when the office of the Appellate Tribunal is closed, that day and any succeeding day on which the Appellate Tribunal remains closed shall also be excluded. On reading Rule 3 of the NCLAT Rules, it clearly provides that when the last date expires on a day when the office of the Appellate Tribunal is closed, that day and any succeeding day on which the Appellate Tribunal remains closed shall also be excluded.
In the facts of the present case, the order was passed on 31.07.2024 and by giving benefit of two days for certified copy, 30th day when limitation was expiring shall be 01.09.2024. 31st August, 2024 and 1st September, 2024 being Saturday and Sunday, the Appeal could have been filed on 02.09.2024, which was the day when the Appellate Tribunal was to re-open.
Rule 3 of the NCLAT rules, which provides for exclusion of the period, which falls on day when the office of the Appellate Tribunal is closed. Hence, exclusion of the period is specifically provided in the Rules. The judgment of the Delhi High Court, which had only considered Section 4 of the Limitation Act had no occasion to consider the rule 3 of the NCLAT Rules, 2016. Hence, by virtue of Rule 3 the said judgment of the High Court cannot be held to be applicable in the facts of the present case - by virtue of Rule 3 of the NCLAT Rules, 2015, when last date for period of computation of limitation is falling on a day when office of the Tribunal is closed, the said period shall be excluded. Thus, in the present case, 30.08.2024, which was the 30th day for filing the Appeal and by giving two days for certified copy, 30th day will be 01.09.2024 and 31st August 2024 and 1st September, 2024 being Saturday and Sunday both the days have to be excluded for computing the period of 30 days of limitation. Hence, the last day for filing of the Appeal shall be 01.09.2024.
For computing 30 days period for filing the Appeal under Section 61, if the office of the Tribunal is closed on the 30th day, the period shall extend upto the date on which the Tribunal re-opens.
Whether the delay is within condonable period and sufficient cause has been made out to condone the delay? - HELD THAT:- The 30 days period when expiring on a day when the Court is closed, the said period also be excluded while computing the period of limitation. Reasons have been given by the Appellant in the application for explaining the delay of 15 days in filing the Appeal. The Appellant is an organization, which require approval at the organization level for filing an Appeal, which grounds have been pleaded in the application - there is sufficient ground given in the application, explaining the delay in filing the Appeal.
The delay condonation application filed within condonable period and there being sufficient cause being shown for condonation of the delay, the delay condonation application deserves to be allowed and the Applicant has made out sufficient cause for condonation of the delay. The delay in filing the Appeal is accordingly condoned.
Whether the delay in filing is within condonable period and sufficient cause has been made out to condone the delay? - HELD THAT:- Impugned order was passed on 31.07.2024 and the Appeal was e-filed on 17.09.2024. There is no material on record to indicate that certified copy was applied by the Appellant. The Appellant is, thus, not entitled for any exclusion on the ground of certified copy, which exclusion was available for the Applicant in Company Appeal (AT) (Ins.) No.1862 of 2024. The 30 days period shall come to an end on 30.08.2024, the Appeal filed on 17.09.2024 was beyond condonable period. 30th August, 2024 was not a holiday, the Appeal having been filed on 17.09.2024, i.e. beyond 15 days condonable period, IA No.6950 of 2024 deserves to be rejected. In result IA No.6950 of 2024 is dismissed.
Conclusion - The 15-day condonable period under Section 61(2) of the IBC cannot be extended by Rule 3 of the NCLAT Rules or Section 4 of the Limitation Act if it ends on a day when the Tribunal is closed.
The application for condonation of delay is allowed.
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2025 (2) TMI 961
Maintainability of Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) - no interest had ever been paid by the CD to the OC nor the interest component was ever recorded in the books of accounts - HELD THAT:- There is no dispute to the fact that out of total amount of Rs. 6,13,48,161.98/- Rs. 4,97,22,461.16 was towards the principal amount and Rs. 1,16,25,700.82/- was the interest. It is also not in dispute that Respondent No. 2 has claimed the interest only on the basis of invoice in which it has been mentioned that “in case of delay payment, interest will be charged @ 12% or as per the agreed terms” whereas no other document has been placed on record, much less, any purchase order or the agreement between the parties which can reflect the terms and conditions of the interest - The ledger account of the CD also reflects that principal amount claimed by the OC has been shown as nil which means that the principal amount has already been paid and has been accepted as such by the OC as the principal amount has been received without any murmur, therefore, the Tribunal is not correct to hold that the amount paid by the CD to the OC of Rs. 4,97,22,461.16 was adjusted towards interest at the first instance by making reference to the decisions in the case of Asset Reconstruction Company India Limited [2022 (8) TMI 70 - SUPREME COURT] and BHEL [2012 (10) TMI 1016 - SUPREME COURT].
Whether the amount of Rs. 1,16,25,700.82/- can be claimed even as an interest by the OC only on the basis of the boilerplate provision in the invoice in the absence of any agreement between the parties towards for the payment of interest or anything which may reflect it by way of email or purchase order etc.? - HELD THAT:- In the case of Prashat Agarwal (Supra) it was a condition in the invoice that “interest will be charged @ 18% plus GST P.A after due date of the bill” and the dispute was regarding the maintainability of the application filed under Section 9 in which the amount in question was less than Rs. 1 Cr. which is the minimum threshold prescribed under Section 4.
In the present case, condition prescribed in the invoice is that in case of delay in payment, interest will be charged at the rate of 12 @ as per the agreed terms. This clause in the invoice is totally vague because it does not specify the period within which the amount was to be paid unlike the case of Prashat Agarwal [2022 (7) TMI 835 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH] in which it was prescribed that interest will be charged after due date of bill. Secondly, it is mentioned in this clause that interest will be charged as per the agreed terms whereas no agreed terms have seen the light of the day to enable the OC to claim interest as a part of debt. In this regard, the observation has been made, in the case of Comet Performance [2025 (1) TMI 793 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB] by a three members bench of this Court, relying upon Rishabh Infra Through Hari Mohan Gupta Vs. Sadbhav Engineering Ltd., [2024 (11) TMI 1411 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] in which it has been held that “invoices with interest clauses which were not part of the formal agreement are unenforceable”.
Conclusion - i) Interest claims based solely on invoice provisions without a formal agreement or acknowledgment are not enforceable under the IBC. ii) The IBC is intended for the resolution of debts, not for the recovery of interest claims that lack a contractual basis.
The impugned order is set aside - the present appeal is allowed.
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2025 (2) TMI 960
Condonation of delay of 19 days in filing the present appeal - sufficient cause for delay or not - HELD THAT:- As per Section 61 of the Code the period prescribed for filing the appeal before the Appellate Tribunal is 30 days. However, in terms of the proviso to Section 61(2) the Appellate Authority has the jurisdiction to allow the appeal to be filed even after the expiry of prescribed period of 30 days if it is satisfied that there was sufficient reason for not filing the appeal within prescribed period but such period cannot be extended more than 15 days.
As per the decision of the Hon’ble Supreme Court in the case of National Spot Exchange Limited Vs. Anil Kohli [2021 (9) TMI 1156 - SUPREME COURT], the Appellate Authority does not have the jurisdiction to condone the delay beyond the period of 15 days in any case.
In the present case, the impugned order was passed on 14.06.2024. The Appeal was required to be filed by the appellant within the prescribed period of 30 days which has to be computed from 15.06.2024 in terms of the Section 12(1) of the Limitation Act, 1963. The period of 30 days counted from 15.06.2024 expired on 14.07.2024 - The period of 15 days provided in the proviso to Section 61(2) counted from 14.07.2024 expired on 29.07.2024. The appeal has been e-filed on 02.08.2024 i.e after the period of 4 days of expiry even of the period of 15 days on 29.07.2024.
Counsel for the Appellant has submitted that the Court should exclude the period of two days spent by the Appellant in obtaining certified copy of the impugned order which was applied on 01.07.2024 and was received on 02.07.2024 - Even if the aforesaid period of two days are excluded in view of Section 12 of the Act, the appeal would still be barred by two days.
Similarly, the holidays on 17.06.2024, 29.06.2024 and 13.07.2024 which fell before 14.07.2024 (during the prescribed period) is no help to the Appellant because it is not the case where the Appellant has filed the appeal just on the reopening of the Court when the prescribed period of limitation was to expire rather the appellant has filed the appeal after the expiry of 45 days i.e. 15 days prescribed as the extended period in proviso to Section 61(2) for which the Appellant has to show sufficient cause for condonation of delay and is not part of the prescribed period of limitation.
Conclusion - There is hardly any merit in the present application which calls for any interference as the appeal has been clearly filed after the expiry of period of 45 days and therefore, this Court does not have the jurisdiction to condone the delay.
Application dismissed.
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2025 (2) TMI 959
Seeking release of petitioner - illegality in the arrest of the petitioner or not - whether petitioner was not produced before the learned Special Court within 24 hours of his arrest as mandated in law? - HELD THAT:- There are no ground to interfere with the impugned order passed by the High Court. However, it is made clear that the impugned judgment will not stand in the way of the petitioner raising all the contentions while seeking an appropriate remedy in the manner known to law.
The regular bail application of the petitioner is pending before the High Court. The petitioner is at liberty to proceed with the bail application, notwithstanding the impugned order passed. The High Court is requested to expedite the hearing in the pending bail application.
SLP dismissed.
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2025 (2) TMI 958
Seeking grant of Regular bail - Money Laundering - extortion of a huge amount of cash - Section 483 of the Bhartiya Nagrik Suraksha Sanhita, 2023 - HELD THAT:- It is pertinent to mention here that the applicant has nowhere stated in the bail petition regarding source of amount i.e. Rs. 6,44,38,000/- cash seized by the Income Tax, gold jewellery worth Rs. 3,24,61,655/- as also Rs. 52,35,000/- which was recovered from applicant’s and his wife locker which clearly shows that the ACB/EOW has collected certain material against the applicant. The prosecution has collected the material against the applicant that he has purchased properties in the name of his family members and relatives but not disclosed the source from where it has been purchased. Thus, from perusal of FIR and the material available in the case diary, involvement of the applicant in commission of offence under Sections 7, 7A & 12 of the PC Act, which is economic offence, is prima facie reflected.
Hon’ble the Supreme Court while considering the gravity of economic offence in case of P. Chidambaram Vs. Directorate of Enforcement, [2019 (9) TMI 286 - SUPREME COURT] has held that 'Grant of anticipatory bail at the stage of investigation may frustrate the investigating agency in interrogating the accused and in collecting the useful information and also the materials which might have been concealed. Success in such interrogation would elude if the accused knows that he is protected by the order of the court. Grant of anticipatory bail, particularly in economic offences would definitely hamper the effective investigation. Having regard to the materials said to have been collected by the respondent-Enforcement Directorate and considering the stage of the investigation, we are of the view that it is not a fit case to grant anticipatory bail.'
Considering the FIR and other material placed on record, it prima facie shows involvement of the applicant in crime in question. As such, this is not a fit case where the applicant should be granted regular bail.
Conclusion - i) The economic offences, due to their deliberate nature and impact on national interests, require careful consideration in bail applications. ii) This is not a fit case where the applicant should be granted regular bail.
The instant bail application filed under Section 483 of the Bhartiya Nagrik Suraksha Sanhita, 2023 is liable to be and is hereby rejected.
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2025 (2) TMI 957
Denial of claim of exemption by Notification No. 24/04-ST dated 10.9.04 - Voluntary training and coaching services - it was held by High Court that the training provided by the assessee in this case amounted to “vocational training” within the meaning of the term under Notification No. 9/2003-S.T. - HELD THAT:- There are concurrent findings of fact recorded which do not call for interference as the said findings cannot be said to be either perverse or illegal. The findings are rendered in facts which are peculiar to the respondent.
Appeal dismissed.
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2025 (2) TMI 956
Levy of service tax or VAT - deemed sale - activity of renting out cinematographic equipment by the appellant - transfer of "right to use" the equipment - HELD THAT:- Under Section 66 of the Finance Act, 1994, there shall be levied a tax at the rate of 12% of the value of the taxable services referred to in subclause (zzzzj) of clause (105) of Section 65 of the Finance Act, 1994. The “taxable service” means any service provided or to be provided to any person, by any other person in relation to supply of tangible goods including machinery, equipment and appliances for use, without transferring right of possession and effective control of such machinery, equipments and appliances. Therefore, where right of possession and effective control is transferred, then it will not be a taxable service. Consequently, if it is not a taxable service, then certainly service tax is not leviable under Section 66 of the Finance Act, 1994.
There is not only a transfer of right of possession, but also effective control. The order-in-original has proceeded on an erroneous interpretation of the provisions of this agreement that possession and effective control has not been transferred to the hirer. This conclusion of the adjudicating authority not gareed upon. It is clear from the agreement that the equipments have been supplied for hire and possession and effective control has been transferred to the hirer.
The possession and effective control has been transferred. If it is not so, why will the owner reserve a right to inspect the equipments as and when required. If the possession and effective control is still with the owner, he would not need the hirers' permission to inspect. If effective possession and control has not been transferred, why the hirer has to make it known to the owner regarding loss or destruction or damage, after such loss or damage occurs - If possession and effective control is still with the owner or has not been transferred to the hirer, why would the hirer make a statement that he has taken inspection of the goods and he is satisfied with the condition thereof and the owner shall not be liable for any defects.
Conclusion - There shall be a deemed sale where there is transfer of the right to use any goods for any purpose – whether or not for a specified period, for cash, deferred payment or other valuable consideration. From the documents and particularly from the clauses reproduced above, it is quite clear that there has been a transfer of the right to use equipments for valuable consideration. Even in clause 29A of Article 366 of the Constitution of India, the only requirement is there should be transfer of the rights to use the goods for valuable consideration. Factually, there has been.
The order-in-original cannot be sustained, as it was without jurisdiction. The same is quashed and set-aside - Appeal disposed off.
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2025 (2) TMI 955
Recovery of service tax with penalties - order issued without examining the relevant charging section of the Finance Act, 1994, particularly Section 66B - violation of principles of natural justice - HELD THAT:- In the present case, the adjudicating authority has held that the petitioner contravened the provisions of the Act and the Rules made thereunder with an intent to evade payment of service tax. So far as the case of Amadeus India Pvt. Ltd. [2019 (5) TMI 669 - DELHI HIGH COURT] is concerned, in the said case, the Hon’ble Delhi High Court was dealing with a case in which the SCN issued on 4th September, 2018 to the petitioner-company was challenged. The fact of the matter was that on 3rd October, 2018, the petitioner drew attention of respondent to the master circular dated 10th March, 2017 read with an instruction dated 21st December, 2015 issued by the CBEC in terms of which a pre-show-cause notice consultation was mandatory in cases involving demand of duty above Rs. 50 lakhs.
A reminder was again sent by the petitioner on 13th November 2018. When no response was received, the writ petition was filed in the High Court of Delhi on 13th December, 2018. It appears that Hon’ble Delhi High Court not only entertained the writ application but also rejected the contention of the respondent that since the SCN was preceded by a search that was conducted in the business premises of the petitioner and the petitioner also rendered itself liable for penal action ‘for suppression of facts and contravention of various statutory provisions with intent to evade payment of due service tax’ and other incidental levies, the SCN partakes of the character of an ‘offence related’ SCN and therefore falls within the exceptions carved out under para 5.0 of the master circular.
In the case of Cosmic Dye Chemical [1994 (9) TMI 86 - SUPREME COURT], the matter reached to the Hon’ble Supreme Court only after final adjudication by the Tribunal failed. The Tribunal in the said case had taken a view that regardless of intent, a mere suppression of facts or misstatement in the information statutorily required to be supplied to the Excise authorities attract the larger period of limitation.
Conclusion - All the issues which have been raised by learned counsel for the petitioner in the present writ application would essentially involve appreciation of facts emerging from the records which may be duly gone into by the appellate authority. It is not the case of the petitioner that he has no equally efficacious remedy, we would, therefore, refrain from exercising our extra-ordinary writ jurisdiction at this stage.
Application disposed off.
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2025 (2) TMI 954
Liability of sub-contrator to pay service tax, when main contractor has paid the service tax - Invocation of extended period of limitation - suppression of facts or not.
Whether in case the main contractor has paid the service tax, the appellants are required to pay service tax on the services rendered by the appellants being sub-contractor, or not? - HELD THAT:- Admittedly, the appellant is a service provider and they are required to pay service tax on the services rendered by them as clarified by CBEC Circular No.96/7/2007-ST dated 23.08.2007, wherein it has been clarified that for the services rendered by the sub-contractor, the sub-contractor is required to pay service tax - the appellant is liable to pay service tax as demanded.
Whether the extended period of limitation in the facts and circumstances is applicable or not? - HELD THAT:- Admittedly, without investigation, it could have been revealed that whether the appellants are providing man power services to the main contractor or not nor after investigation, it came to the notice to the Department that the appellant is providing man power services and entitled in not to pay service tax. It is a fact on record that the appellants did not take service tax registration also. In that circumstances, unless and until, there is a bonafide act on the part of the appellants, the extended period of limitation has rightly invoked.
Conclusion - The appellants are liable to pay service tax as demanded and that the extended period of limitation was rightly invoked.
There are no merit in the appeals filed by the appellants - appeal dismissed.
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2025 (2) TMI 953
Exemption from service tax - advisory services provided by the appellant to JCB UK - export of service under Rule 6A of the Service Tax Rules, 1994 or not - place of provision of service - HELD THAT:- In the instant case, it is not disputed that JCB (UK) is a company incorporated under the laws of United Kingdom and is located in United Kingdom. Therefore, the UK office of JCB would qualify as its business establishment where decisions pertaining to the company are taken. Consequently, the services rendered by the Appellant would be considered as received at the 'business establishment of JCB UK' in terms of Rule 2(i)(b)(i) of the POPS Rules. Accordingly, the ‘location of the recipient of service' for purposes of Rule 3 would be United Kingdom, which is outside the taxable territory of India.
The taxability of such transactions, where rendition of service resulting in business growth in India, stands decided in favour of the appellant by the Larger Bench of the Tribunal in the case of M/S. ARCELOR MITTAL STAINLESS (I) P. LTD (NOW KNOWN AS M/S. ARCELOR MITTAL DISTRIBUTION SOLUTIONS INDIA PRIVATE LIMITED) VERSUS COMMISSIONER SERVICE TAX MUMBAI-II [2023 (8) TMI 107 - CESTAT MUMBAI-LB] wherein the Tribunal held 'It is, therefore, clear that the recipient of service is the person at whose desire the activity is done in exchange for a consideration, i.e., the person who is obliged to make payment for the service. The recipient of service would, therefore, be a person at whose instance and expense the service is provided, whether or not he is the beneficiary of the service.'
From the above, in the context of the present case, it is noted that the recipient of the service is JCB, UK who is also the person at whose desire the activity is done in exchange of monetary consideration.
Conclusion - The services rendered by the appellant were exports, thus not subject to service tax.
The impugned order is set aside - appeal allowed.
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2025 (2) TMI 952
Taxable service - retained portion of the freight collected from the oil companies - It is common ground that the freight charged for such activity was either exempted from tax or excluded for taxability in the respective tax regimes before and after 1st July 2012 - HELD THAT:- The essence of ‘business auxiliary service’ which is the intended target of tax, is the presence of a provider of service between a service/product belonging to one and required by another. The retained amount has been sought to be taxed by the fitment of carriage of cargo belonging to oil companies by vessel belonging to others as acting on behalf of oil companies, from contract, and causing receipt of service from vessel owners to oil companies. From a perusal of the impugned order, it would appear that the adjudicating authority has examined the contract, at least of a particular customer with the appellant herein and corresponding contract of appellant herein with owner of a vessel under on flag of Liberia.
The appellant as well as the oil companies are located in the territory of India with consequential location of the ‘provider of service’, which, in this case, is the appellant would render the tax liability to arise within the taxable territory of India; this aspect was never in dispute. However, ‘address commission’ is amount contractually withheld by the appellant and, while that may arithmetically be the difference between that received as ‘charter charges’ and paid as ‘charter charges’, is also the amount payable by the ‘vessel owner’ to the appellant as ‘commission’ for recourse to those vessels. It would, therefore, amount to consideration paid by the overseas entity to the appellant and either recompense for provision of service which was not considered by the adjudicating authority or unaccounted payment. In the haste to fall back on Place of Provision of Service Rules, 2012 for fastening liability, this aspect appear to have been overlooked.
Conclusion - In view of the inadequacy in the impugned order and such inadequacy precluding us from determining the tax liability to be legal and proper a fresh finding within the framework of the show cause notice and the contention of the noticee along with appreciation of legal authority for charging of tax under section 66 of Finance Act, 1994 and section 66B of Finance Act, 1994 in the respective periods is warranted.
Matter remanded back to the original authority for a fresh decision.
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2025 (2) TMI 951
Imposition of duty on plant and machinery imported from abroad - invocation of exended period of limitation - revenue neutrality - HELD THAT:- In the instant case the duty was paid of its own by the party in 2013 with interest. This conduct itself justifies that there was no intent to evade duty on the part of the appellant as has indicated by the learned advocate. Even on their discharge of the duty there were entitled to credit of the same and were allowed the department therefore they would have not benefitted in avoiding the taxes. He also pointed out that the taxes paid in 2013 were given credit of by the department of its own, as per law indicating that action resulting in S.C.N. was not an enforcement action. Revenue neutrality existed in the present case and delay in payment has been compensated by paying interest.
The extended period has been incorrectly invoked in the facts and circumstances of the matter. Therefore, on limitation the matter does not stand. The party become entitled to relief on limitation both for extended period as also for penalty. This court is not committing on merit of the case.
Appeal allowed.
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2025 (2) TMI 950
Maintainability of petition when efficacious statutory alternative remedy of appeal under section 35F of the Central Excise Act, 1944 is available to the petitioner - principles of natural justice - HELD THAT:- The Apex court in the case of Hindustan Coca Cola Beverage Private Limited Vs. Union of India and others, [2014 (9) TMI 585 - SUPREME COURT] has held that when a statute provides for statutory appeal, the said remedy is to be availed by the litigating parties.
In the case of Hameed Kunju vs. Nazim, [2017 (7) TMI 1414 - SUPREME COURT], the Apex Court has held that any petition under Article 227 of the Constitution of India should be dismissed in limine where there is statutory provision of appeal.
The Apex court in the case of Ansal Housing and Construction Ltd. Vs. State of Uttar Pradesh and others, [2016 (3) TMI 1435 - SUPREME COURT], has held that when statutory appeal is provided then the said remedy has to be availed.
In the present case, it is evident that sufficient opportunity of hearing through virtual mode was provided to the petitioner on 4.7.2022, 15.7.2022 and 10.8.2022 but neither the petitioner nor his authorised representative attended the personal hearings on the above dates. Thus, the contention of the petitioner with regard to non-grant of opportunity of personal hearing is contrary to the record and is hereby rejected.
Petition disposed off.
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2025 (2) TMI 949
Recovery of CENVAT credit under the CENVAT Credit Rules, 2004 - appellant is a recipient of distributed credit from an Input Service Distributor (ISD) - rule 7 of CENVAT Credit Rules, 2004 - HELD THAT:- By a special provision, viz., rule 7 of CENVAT Credit Rules, 2004 distribution of credit of service tax paid on input services by ‘input service distributor’, neither a manufacturer of excisable goods nor a provider of output service, is permitted and, therefore, from not being in a position to utilize the credit so taken. From this, it is apparent that the mechanism provided in rule 7 of CENVAT Credit Rules, 2004, governing the distribution of such credit, deems the credit so distributed to be eligible credit for the purpose of utilization. A harmonious reading of rule 3 and rule 4 of CENVAT Credit Rules, 2004 and the conditions prescribed in rule 7 alone would determine the extent of validity of the credit so distributed within the scheme of CENVAT Credit Rules, 2004. The whole of it operates on presumption that the objective of the scheme, viz., restricting the tax liability at each stage in the chain only to the taxable event as set out in section 3 of Central Excise Act, 1944 and section 66/66B of Finance Act, 1994, will be adequately achieved by such distribution.
The decision of the Tribunal, in re Clariant Chemicals India Ltd [2015 (10) TMI 2754 - CESTAT MUMBAI], was rendered on the limited issue of applicability of rule 6 in relation to ‘exempted services’ and owing to which, the Tribunal, finding absence of mechanism for recovery, fell back upon a singularity of the undertakings operated by that particular legal entity. The issue therein was not about the eligibility to take the credit under rule 3 of CENVAT Credit Rules, 2004 but the propriety of retention of the credit in terms of rule 6 of CENVAT Credit Rules, 2004.
The impugned order has confirmed the recovery of credit taken, and distributed under rule 7 of CNEVAT Credit Rules, 2004, by the ‘input service distributor (ISD)’ by subjecting it to scrutiny for eligibility thereof by reference to the activities undertaken by the appellant herein. The appellant herein has merely utilized the credit and, to the extent that rule 3(4) of CENVAT Credit Rules, 2004 has not been shown to have been breached, is not concerned with the source of the credit. The obligation under rule 3(1) of CENVAT Credit Rules, 2004 cannot be transferred to the recipient of credit under rule 7 of CENVAT Credit Rules, 2004.
Conclusion - i) The responsibility for verifying the eligibility of CENVAT credit lies with the ISD, not the recipient of the distributed credit. ii) The recovery proceedings against the appellant were without legal authority.
Appeal allowed.
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2025 (2) TMI 948
Classification of Printed Thermal Paper ATM rolls - classifiable under CETH 49019900 or under CETH 48119099 of Central Excise Tariff Act, 1985 or not - HELD THAT:- The process of printing on the Thermal rolls brings into the existence of the product ATM Rolls. Where an article is printed with materials, the primary purpose of the printing is to convey the message contained in the article and so would be more appropriately classifiable under the heading 49.01.
The CESTAT, Mumbai in the case of Alpha Carbonless Paper Manufacturing Co. Pvt. Ltd. vs. The Commissioner of Central Excise, Belapur [2014 (2) TMI 589 - CESTAT MUMBAI] had the occasion to examine a similar issue and classified ATM Rolls, Printed lottery ticket rolls and printed bus ticket rolls as products of the printing industry. The case also took into consideration the Amendment made to the Finance Act, 2012 by the insertion of note 14 under Chapter 48 and held that the same cannot have retrospective operation.
In Sai Security Printers Ltd. Vs. Commissioner of C. Ex., Faridabad [2006 (2) TMI 23 - APPELLATE TRIBUNAL, NEW DELHI] the Tribunal held that the Thermal papers that were imported printed, cut and slit to size were products of the printing industry. In Kayen Print Process (P) Ltd. Vs Commissioner of C. Ex., Bangalore [2006 (7) TMI 87 - CESTAT, BANGALORE], the Tribunal held that printing on paper sheet and paper board would come within the category of the printing industry.
In the present case, in addition to the black bar code, details of transactions, the sheet also contains instructions on keeping the ATM premises clean, instructions on use of ATM cards safely etc. This further strengthens the point that the product is not merely of incidental use but it is of primary use. The thermal paper cut rolls, printing of paper with logos / marks of customers are not merely incidental but essential to primary use, i.e. providing information of bank statements and receipts. The pre-printed matter and the matter to be printed by ATM are inter connected and constituted a single matter. Further, the existence of blank portions in printed forms do not take them out of “other printed products and articles”.
Conclusion - The printed thermal paper rolls were correctly classifiable under Chapter 49.
Appeal allowed.
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2025 (2) TMI 947
Interest on the refund deposited during investigation - rate of interest - relevant dates for calculation of interest - HELD THAT:- In view of the various decisions of the High Court and various Benches of the Tribunal, wherein, it has been consistently held that interest on refund of deposit made during investigation is required to be computed @ 12% per annum. It is found that the jurisdictional High Court of this Tribunal has already held that rate of interest applicable in such cases is 12% per annum as held in the cases of CCE, Panchkula Vs. Riba Textiles Limited [2022 (5) TMI 1531 - PUNJAB AND HARYANA HIGH COURT] Punjab and Haryana High Court and Sunrise Immigration Consultants Private Limited Vs. Union of India [2023 (6) TMI 411 - PUNJAB AND HARYANA HIGH COURT].
Reference also made to the decision of the Tribunal in the case of Indore Treasure Market City Pvt Ltd [2024 (5) TMI 367 - MADHYA PRADESH HIGH COURT] wherein the Tribunal after considering the various decisions of the Courts, has held that the assessee is entitled for interest on the amount of refund sanctioned @12% to be calculated from the date of payment till the date of disbursement.
Also, in the case of Raghuveer Metal Industries Ltd [2023 (12) TMI 371 - CESTAT NEW DELHI], the Tribunal has held that the appellant is entitled to receive interest at the rate of 12% from the date of deposit of the amount till the date of refund thereof.
Conclusion - The appellant is entitled to the rate of interest @ 12 % per annum on the amount deposited during investigation.
Appeal allowed.
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2025 (2) TMI 946
Process amounting to manufacture or not - alteration of MRP on the imported goods - entitlement to claim CENVAT Credit on the duty paid at the time of importation of goods - Seizure and Confiscation of the Goods - Extended Period of Limitation - interest - penalty.
‘Manufacture’ in terms of Section 2(f)(iii) of the Act - HELD THAT:- The process of affixing MRP by the appellant on the goods in question i.e. various electrical home appliances, which are covered under Third Schedule, there is no manner of doubt that the activity carried out by the appellant amounts to manufacture. Apart from that, in the statement recorded under Section 14 of the Act, Shri A.K Jindal, the General Manager of the company had categorically admitted that he understands that their products were covered under the Third Schedule of the Act and that the processes carried out by them in their company amounts to ‘manufacture’ in terms of Section 2(f)(iii) and they were liable to pay excise duty which they actually paid. In view of their own admission accepting that the activity amounts to manufacture and is leviable to excise duty, the issue stands concluded against them and in favour of the Revenue.
Eligibility to CENVAT Credit - HELD THAT:- Reliance placed on the decision of Delhi High Court in Global Ceramics Pvt. Ltd. versus Commissioner Central Excise, Nagpur [2019 (5) TMI 1432 - DELHI HIGH COURT], where it has been held that the amendment to Rule 4(1) of CCR prescribing a time limit for claiming CENVAT Credit will not apply to the consignments, where the import took place prior to the date of the amendment and the deemed manufacture took place when the MRP was altered, which also happened prior to the amendment. The facts of the present case are quite identical with the facts of the case before the Delhi High Court and, therefore, there are merit in the submission of the learned Counsel that the appellant having paid appropriate duty at the time of import has to be considered as an ‘input’ for the purpose of CENVAT Credit Rules. Here the Bill of Entries considered were for the period 2011–12 to 2015–16 and, therefore, on the analogy drawn by the Delhi High Court, the amendment w. e. f. 01.09.2014 prescribing the time limit for making the CENVAT Credit claim shall not apply to imports covered prior to the said date. Moreover, once the activity has been held to be manufacture, exigible to excise duty, the Credit on CVD paid by the appellant on the goods imported is available.
Seizure and Confiscation of the Goods - HELD THAT:- The action of seizure of the goods lying in the premises is unjustified, more so when the daily stock status as on 5.10.2016 was made available by the appellant to the Central Excise Officers and the goods were duly recorded - It is also relevant to refer the decision of the Mumbai Bench in Nakoda Enterprises versus Commissioner Central Excise, Mumbai–V [2016 (12) TMI 1679 - CESTAT MUMBAI], where all the goods were covered under the SSI exemption, except few and therefore, they were under bonafide belief that since the unit is eligible for SSI exemption, they were not required to obtain any registration. It was held that just because the exemption notification is not applicable on one of the products, the goods lying within the factory should not be confiscated and it cannot be equated with the case of attempt to clear the goods clandestinely. Therefore, in the present case, the seizure and confiscation is unsustainable.
Extended Period of Limitation - HELD THAT:- From the statements recorded under Section 14 during the course of investigation, it is apparent that the appellant was unaware of the fact that the activity of affixing MRP on the imported goods amounts to manufacture and the consequent duty liability. The appellant bonafide believed that they were into the trading activity and were, therefore, registered with the VAT Department and were paying the VAT regularly. Had they known that the activity amounts to manufacture under the excise law, they would have registered themselves with the Excise Department and availed the benefit of CENVAT Credit - There is no reason to doubt the statement made by Shri A. K. Jindal or by Shri Rajesh Mohan and on the other hand, Revenue has not produced any further evidence to show that non-registration and non-payment of excise duty was deliberate and wilful to evade payment of duty. In view of the fact that all the records/books of accounts were properly maintained and duly reflected in the balance sheet, it cannot be said that there was any misstatement or suppression of facts with intent to evade payment of duty. Therefore, the demand of excise duty is justified only qua the normal period i.e., 01.03.2015 to 05.10.2016.
Interest and Penalty - HELD THAT:- As the activity has been held to ‘manufacture’ and, therefore, leviable to excise duty, the appellant is liable to pay interest on the delayed payment of duty. The liability to interest is mandatory and automatic which the appellant cannot escape - The levy of penalty under Rule 25 read with Section 11 AC is not sustainable as we have already held that extended period of limitation is not invokable in the absence of any mis-statement or willful suppression of facts. The penalty under Section 11 AC is mandatory only when duty is confirmed by invoking the extended period of limitation.
Personal penalty imposed on Director of the appellant company under Rule 26 of the Rules - HELD THAT:- The personal penalty imposed on Shri Rajesh Mohan under Rule 26 of the Rules is also not sustainable as the penalty under Rule 26 can be imposed for actions related to goods which were rendered liable for confiscation. In this case, the confiscation of goods is set aside. Hence, there is no reason to impose penalty when the goods itself were not to be confiscated. The second situation in which penalty under Rule 26 can be imposed is where invoices are issued without supplying goods so as to enable the recipient to avail ineligible CENVAT Credit, which is also not the case here.
Conclusion - i) The activity of affixing MRP on the imported goods, which are covered under Third Schedule amounts to manufacture in terms of Section 2(f)(iii) of the Act and are exigible to excise duty along with interest. ii) Since the activity amounts to manufacture, the appellant is entitled to CENVAT Credit. iii) Seizure and confiscation of the goods is unsustainable. iv) Extended period of limitation is not invocable in the facts of the present case. v) Penalty under Rule 25 cannot be imposed on the appellant. Penalty under Rule 26 cannot be imposed on Director of the appellant company.
Matter remanded to the Adjudicating Authority for limited purpose of computation of the duty liability along with interest and entitlement of CENVAT Credit - The appeals are, partly allowed in above terms, by way of remand.
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2025 (2) TMI 945
Refund of utilization Cenvat Credit on account of clearance to 100% EOU without any payment of duty - rejection of refund on the ground that the same were filed after expiry of one year, i.e. time limit prescribed under Section 11B of Central Excise Act, 1944 - HELD THAT:- Reliance placed on the decision of M/s Kumaraswamy Mineral Exports vs CCE & ST – Belgaum [2019 (2) TMI 1378 - CESTAT BANGALORE] in which the decision of Hon’ble Madras High Court in GTN Engineering Industries [2011 (8) TMI 960 - MADRAS HIGH COURT] was also considered and same was distinguished in view of specific relevant date having been given in the Notification itself which aspect, the Hon’ble Bench considered was not taken into consideration by Hon’ble Madras High Court.
In view of the stated position and the case of GTN Engineering, having been distinguished the party becomes entitled to the refund on the basis of cited decisions of Tribunal. Same is therefore, allowed, as per law.
Appeals are allowed.
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2025 (2) TMI 944
Refund of accumulated CENVAT Credit - denial of refund on the ground that Rule 5 ibid deals with the situation of grant of refund in case of non-utilization of CENVAT Credit on the inputs, which were used for manufacture of the final products exported by the assessee - HELD THAT:- The issue arising out of the present dispute is no more res integra, in view of the order of this Bench of the Tribunal passed in the case of M/S. ATV PROJECTS INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX, RAIGAD [2023 (9) TMI 802 - CESTAT MUMBAI] where it was held that 'In the case in hand, though the factory of the appellant was nonoperational for quite a long time, but it had continued to file the statutory returns before the authorities and finally surrendered the registration certificate. Immediately thereafter, since the accumulated cenvat balance lying in the books was claimed as refund, in my considered view, it cannot be said that such claim is barred by limitation of time. In other words, availment of cenvat credit is an indefeasible right of an assessee and such right conferred under the statue cannot be taken away on the ground of limitation.'
By placing the reliance on the order passed in the case of M/s ATV Projects India Ltd., co-ordinate Bench of the Tribunal in the case of M/s Kinol Lubes Pvt. Ltd. Vs. Commissioner of Central GST & Central Excise, West Delhi [2024 (10) TMI 1254 - CESTAT NEW DELHI], has allowed the refund benefit in respect of unutilized CENVAT Credit available in the books of account on closure of the manufacturing unit.
Conclusion - The denial of the refund application based on the understanding of Rule 5 of the CENVAT Credit Rules was not justified, and the appellants were entitled to the refund of the accumulated CENVAT Credit balance despite the suspension of production activities.
There are no merits in the impugned order, insofar as it has upheld confirmation of the adjudged demands on the appellant. Therefore, the impugned order is set aside and the appeal is allowed in favour of the appellants.
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2025 (2) TMI 943
Challenge to search and seizure proceedings conducted in the appellants’ Firm by the Taxation Authorities, in exercise of powers conferred under Sections 74 (3) and 74(4) of the Assam Value Added Tax Act, 2003 - main contention raised by the appellants before the Writ Court was that the respondent authorities had conducted the aforesaid search and seizure proceedings without following the due process of law - HELD THAT:- The learned Single Judge, while taking into consideration the provisions of the Code of Criminal Procedure, 1973 in Sections 46, 47, 51 and 100, has come to the conclusion that while conducting the search and seizure proceedings, the respondent authorities ought to have followed the procedure laid down under Sections 47 and 100 of the Code of Criminal Procedure, because detail procedure for search and seizure has not been provided in the Assam Value Added Tax Act, 2003. At the same time, the learned Single Judge has not interfered with the search and seizure proceedings effected way back on 03.09.2014, while observing that since much time had already elapsed after conducting the search and seizure proceedings, it may not be necessary to make any further observation except to hold that if any cause of action still survives, the appellants will be at liberty to approach the appropriate forum. It is to be noticed that while passing the impugned order on 05.11.2019, no one appeared on behalf of the appellants before the learned Single Judge.
Since in the order dated 05.11.2019 passed in WP(C) No. 6363/2014 and WP(C) No. 6364/2014 and orders dated 25.01.2021 passed in I.A. (Civil) No. 956/2020 and I.A. (Civil) No. 1262/2020 the learned Single Judge has kept it open for the appellants to challenge the validity of the assessment order and the notice of demand issued during the pendency of the writ petitions, or after disposal of the writ petitions, no further order is required to be passed in these writ appeals.
Appeal dismissed.
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