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2023 (6) TMI 1105

Distribution of CENVAT credit - nexus between the invoices and utilisation of input service tax credit could not be established - Rule 9(1)(g) alongwith Rule 7 of CENVAT Credit Rules, 2004 - Banking service - construction service - extended period of limitation.

Whether it is a case of transfer of credit by ISD or it is a case of taking of credit on the strength of “invoice” not having the name of the concerned unit/recipient?

HELD THAT:- As per Rule 9(1), the cenvat credit can be taken by the manufacturer on the basis of certain documents like invoices, bill or challan etc. It can also be taken on the strength of invoice, bill, challan and issued by ISD (input service distributor) under Rule 4A of Service Tax Rules 1944. In this case, it is seen that while Department has claimed the Hyderabad office as “head office” and therefore in order to pass the credit, they should have taken ISD registration and should have also followed the statutory procedure for distribution, whereas the appellants are argues that documents like challan issued by banks are sufficient document under Rule 4A and hence on that strength that itself they can take credit.

ISD can be any office, where the invoices issued under Rule 4A are received and distributed. The invoices under Rule 4A of STR provides for issuance of a specific invoice bill or challan giving certain details etc. In fact, in the case of a bank company an invoice, a bill or challan, as the case may be, also includes any document by whatever name called, whether or not serially numbered and whether or not containing address of the person receiving taxable services but it should contain other information in such documents as required under the said subrule.

Whether the debit advice/invoice issued by the banks to their office in Hyderabad, can be considered as an “eligible documents” issued under the provisions of Rule 4A or otherwise? - HELD THAT:- It is a case where there is no need for any ISD distribution and the only issue which needs to be decided is whether the invoice/advise raised by the banks are sufficient to allow the Gumpam unit to take the credit - It is undisputed fact that such imports have taken place with reference to Gumpum unit only and the input service in issue is an eligible input service. It is also noted that in the case of provision of services by Bank etc, much latitude has been given regarding nature of documents which could be issued under Rule 4A. There is no allegation in the show cause notice that the raw materials were not received in the Gumpam unit. Therefore, nonmentioning of the name and address of the unit receiving such services despite having actually received and also have incurred expenses towards that, can not result in complete denial of credit. Thus, the challans/debit advice issued by bank, if correlatable to Bill of Entries in the name of Gumpum Unit, indicating payment of service tax, has to be as a treated as valid document for the purpose of taking credit under Rule 9(1) by the appellant.

In the case of LAXMI ORGANIC INDUSTRIES LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIGAD [2017 (5) TMI 665 - CESTAT MUMBAI], the Tribunal held that credit cannot be denied on the ground that either the invoice is not in appellant’s name but in the name of their Head office or that the Head office is not registered under the ISD.

The provisions under CCR provides for clearance of input or capital goods as such by reversing the credit taken originally on such inputs or capital goods. It is admitted that this provision has not been adhered to in the instant case, as the inputs were being cleared on stock transfer basis on the payment of central excise duty even when there was no manufacture involved, which is different then the mechanism provided for clearance of inputs as such, on which the credit has been take under.

Banking service - HELD THAT:- Here admittedly there has been stock transfer of such inputs on which they had taken credit initially and even though, they have paid central excise duty on the same, it cannot be considered as a method for reversing the credit for clearance of input as such. And to that extent, the inputs not used at Gumpum Unit cannot be considered to have been used in their factory - The co-relation of the invoice/challans issued by the bank and the Bill of Entries under which the inputs have been received by Gumpam unit needs to be done in detail as per the Appellants provide all the relevant documents to Original Authority. Thereafter, to the extent to which such inputs, not having been consumed in the Gumpam unit, the credit has to be denied on account of their having not been used in relation to the manufacture of the final product. The remaining credit is to be allowed. The interest and penalty applicable under section 15(2) of CCR 2004 read with Section 11AC (1)(c) of Central Excise Act 1944 would also be applicable on such ineligible credit.

Construction Service - HELD THAT:- It is clearly not admissible and so to that extent the amount of Rs. 1,05,424/- out of total demand of Rs. 13,01,140/- as confirmed by the Original Authority and also upheld by Commissioner (Appeals) needs to be upheld. Thus, the extent of demand on account of credit of ineligible service i.e. construction service, the Order of Original Authority and Commissioner (Appeals) is upheld and for remaining amount of demand, the order is set aside for the purpose of redetermination of admissible credit.

Extended period of limitation - HELD THAT:- Since the admitted fact is that they have not correctly followed the procedure for clearing inputs on which credit was taken, as also the fact that appellant have not come out clean before the Department with all the relevant facts before the audit, it is not found, that sufficient grounds have been brought on record by appellants so to interfere with the observations of Commissioner(Appeals) on this issue. Therefore, the extended period has been rightly invoked in the facts of the case.

The appeal is partly allowed by way of remand for redetermination of amount of eligible credit out of total demand and for recovery of remaining amount, levy of interest applicable and imposition of penalty with reference to such ineligible credit, so determined.
2023 (6) TMI 1104

Denial of CENVAT Credit and order for recovery of same - denial of credit on the ground that credit taken was pertaining to the period prior to registration - denial also on the ground that the invoices issued by the ISD did not contain the particulars like name, address and registration number of the person providing the services - alleged also that CENVAT Credit distributed by the ISD was without excluding the credit attributable to the turnover of trading activities which is an exempted service - HELD THAT:- It is a little strange on the part of Revenue that while the appellant-ISD had distributed credit of Rs.44,78,255/- to its manufacturing unit at Pune and Rs.94,84,508/- to the appellant at Puducherry unit, the Revenue has accepted the distribution of above credit to its Pune unit. The Department has not accepted the distribution of credit by ISD in respect of the appellant’s Puducherry unit. A perusal of both the Show Cause Notice and the impugned Order-in-Original do not reveal anything as to why the appellant’s unit was cherry picked up just to deny credit.

Certificate of registration dated 24.01.2011 - HELD THAT:- It is clear from the same that the addresses of business premises of the ISD and that of two manufacturing units to which credit on input services was distributed or intended to be distributed is clearly reflected. The Revenue, on the other hand, is not disputing the validity of this certificate of registration.

Admittedly, transactions in the present case relate to the period prior to 01.09.2014 and therefore, the restriction which is applicable prospectively, cannot be applied retrospectively.

In the case of Hon’ble High Court THE COMMISSIONER OF CENTRAL EXCISE, O/O THE COMMISSIONER OF CENTRAL EXCISE, CUSTOMS & SERVICE TAX VERSUS M/S. PRICOL LTD. [2021 (2) TMI 495 - MADRAS HIGH COURT] has categorically held, following the judgement of the Hon’ble Gujarat High Court in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS DASHION LTD [2016 (2) TMI 183 - GUJARAT HIGH COURT], that there is nothing in the said Rules of 2005 or Rules of 2004 which would automatically and without any additional reasons, disentitle an input service distributor from availing credit unless and until such registration was applied and granted - Interestingly, the ratio of the decision was followed by Hon’ble Karnataka High Court in the case of THE COMMISSIONER OF CENTRAL EXCISE SERVICE TAX AND CUSTOMS BANGALURU-II, VERSUS M/S. HINDUJA GLOBAL SOLUTIONS LTD., [2022 (4) TMI 71 - KARNATAKA HIGH COURT] and later by various judicial fora.

Thus, the finding of the learned authority for denying credit on the ground that the credit taken was pertaining to the period prior to registration, cannot be approved.

Credit denial also on the ground that invoices do not have the details of person who provided the service - HELD THAT:- The invoices placed on record clearly reflect the service provider challans and corresponding invoices issued by ISD for distribution of credit. Hence, merely because the above invoices do not have the details of person who provided the service, the same is not a valid ground to deny the benefit of credit.

The supporting documents placed on record by the Revenue with regard to the allegations that are made in the Show Cause Notice as to the trading units, but it is also unfortunate that the adjudicating authority has also made a very vague observation in this regard. But it is also equally true that what is referred to in Show Cause Notice is trading unit and not trading activities. Hence, in the absence of any specific trading activity by the appellant, the finding of the authority that the IPR services and management, consultancy services are important component of trading activities, appears to be vague and baseless - consequent action of denying credit is clearly therefore illogical and unsustainable in the eye of law.

The denial of credit is clearly unwarranted - Appeal allowed.
2023 (6) TMI 1103

Wrongful availment of CENVAT Credit - manufacture of Emulsion Matrix (bulk explosive) - whether the disputed goods had been used for the purposes of manufacturing of BMD Vehicles and the Storage Tanks, without which, the Bulk Explosive cannot be prepared? - HELD THAT:- It is seen from the Appeal Paper Book that the Appellant has submitted copy of the Chartered Engineer’s Certificate specifying the usage of the inputs/capital goods in question. This Tribunal, in the Appellant’s own case M/S PRASAD EXPLOSIVE & CHEMICALS VERSUS COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX, RANCHI [2022 (10) TMI 514 - CESTAT KOLKATA] for the demand made for the period January 2013 to December 2013 has gone through the issue and dealt in detailed manner and has held I find that the ld.Adjudicating Authority has relied upon the Larger Bench decision of the Tribunal in the case of [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] for dis-allowance of cenvat credit as claimed by the Appellant, which is not at all applicable to the facts of the present case. I further find that the Hon’ble Chhattisgarh High Court M/S VANDANA GLOBAL LIMITED AND OTHERS VERSUS COMMISSIONER, CENTRAL EXCISE AND CUSTOMS, CENTRAL EXCISE [2018 (5) TMI 305 - CHHATTISGARH, HIGH COURT] has distinguished the decision of the Larger Bench of the Tribunal on the findings that it is not a good law and various other High Courts have also expressed similar views.

Since the issue is identical pertaining to the same Appellant, respectfully following the decision of this Bench, the present Appeal is allowed.
2023 (6) TMI 1102

Interest on Differential duty - appellant paid duty on the strength of supplementary invoices - stock transfers - sale of goods to the independent buyers as well as to their sister units - CENVAT Credit - Revenue Neutrality - HELD THAT:- The answer is that appellant is not liable to pay duty in terms of Rule 8 of Central Excise Valuation Rules, 2000. As differential duty was not payable in appeal mentioned at Sl.No.1, the question arises whether interest is payable by the appellant or not - similar issue was examined by the Hon’ble Gujarat High Court in the case of COMMISSIONER OF CENTRAL EXCISE & CUSTOMS, VADODARA-II VERSUS M/S GUJARAT NARMADA FERTILIZERS CO LTD [2012 (4) TMI 309 - GUJARAT HIGH COURT], wherein the Hon’ble High Court held The recovery of the unpaid or short paid duty would become time-barred. If the manufacturer does not pay it voluntarily, it would not be possible for the Department to recover the same. But if he does it voluntarily despite completion of period of limitation, he would, further be saddled with the liability to pay statutory interest. Surely, this was not the intention of the Legislature while sub-section (2B) was introduced in Section 11A of the Act.

As it is already held that as the appellant was not liable to pay duty in terms of Rule 8 of Central Excise Valuation Rules, 2000, therefore, no interest is payable by the appellant in view of the decision of the Hon’ble High Court in the case of CCE & C, Vadodara-II v. Gujarat Narmada Fertilizers Co.Ltd.

CENVAT Credit - revenue neutrality - HELD THAT:- It is the revenue neutral situation, no duty is payable by the appellant therefore whatever duty paid by the appellant Cenvat credit of the same has been availed by the sister unit, question of payment of interest does not arise.

Therefore, the impugned order is set aside and the appeal is allowed with consequential relief.
2023 (6) TMI 1101

Exemption to goods supplied to the United Nations or an international organisation for their official use or supplied to the projects financed by the said United Nations or an international organisation and approved by the Government of India - Benefit of Notification No.108/95-CE dated 28.8.95 - retrospective amendment of notification or not - time limitation - HELD THAT:- In accordance with the said Notification, on the basis of the project certificate issued mentioning the name of the contractor M/s Ketan Constructions Ltd., undisputedly 9 Nos. of tippers were cleared by the Appellant to the said contractor to be used in a project funded by the World Bank. After completion of the said project, on enquiry from the contractor about the use of said Tippers in other such eligible project, when denied, demand notice was issued to the appellant on the basis of insertion of Explanation-2 to the Notification No.13/2008-CE dated 1.3.2008 - The Explanation-2 was inserted with effect from 1.3.2008. Revenue sought to apply the said Notification retrospectively and demanded duty from the appellants alleging that after completion of the project, if the 9 nos. tippers which were used in the completion of project, later if withdrawn, even after completion of the project, they would not be eligible to the benefit of the said Notification.

The issue of retrospective applicability of Explanation-2 to the Notification was considered by this Tribunal in the case of L & T Komatsu Ltd. [2016 (7) TMI 290 - CESTAT BANGALORE] holding amendment to the original Notification No.108/95-CE dated 28.8.1995 made by Notification No.13/2008-CE dated 1.3.2008 would have prospective operation and the demand against the appellants can be sustained only for one year period which is within the period of limitation.

Time Limitation - HELD THAT:- The appellant availed the exemption under Notification No.108/95-CE dated 28.8.95 on the basis of Certificates issued by the Project Authority from time to time and the clearance of tippers by availing the benefit of Notification declared in their monthly ER-1 returns, hence no fact was suppressed from the knowledge of the department - It is held by the Hon’ble Supreme Court in J.K. SPINNING AND WEAVING MILLS LTD. AND ANOTHER Vs. UNION OF INDIA AND OTHERS [1987 (10) TMI 51 - SUPREME COURT] and followed in a series of judgments that extended period of limitation cannot be invoked in demanding duty on the basis of applying an amendment retrospectively, which is squarely applicable to the facts of the present case.

The impugned order is not sustainable, consequently, the same is set aside - Appeal allowed.
2023 (6) TMI 1100

Maintainability of Review petition - error apparent on the face of the record - HELD THAT:- There is no error apparent on the face of the record, warranting reconsideration of the order impugned.

The Review Petitions are, accordingly, dismissed.
2023 (6) TMI 1099

Exemption from U.P. Trade Tax Act - PVC coated cotton fabrics - to be included in Entry 53 or under Chapter 59.03? - HELD THAT:- This Court has independently considered the reasoning of the High Court and concurs with it. The reliance placed by the appellant on the classification in the Central Excise Tariff, is of little consequence since the terminology used in Chapter 59 under the relevant heading is different. Chapter 59 is far more nuanced than Entry 53 of the U.P. Trade Tax Act.

In these circumstances, having regard to the express terms of Item 53 which is in question in the present case, this Court is of the opinion that no cause for interference has been shown.

SLP dismissed.
2023 (6) TMI 1098

Amount of penalty for compounding the offence - grant of right to the applicant to be treated as registered dealer eligible to claim input tax credit and/or collect tax on sales - Section 53 of the Goa Value Added Tax Act, 2005 - HELD THAT:- The grievance of the petitioner with regard to penalty of Rs. 1,00,000/- being imposed by the impugned order would be required to be accepted being ex facie contrary to the provisions of the Act. Even assuming as to what has been stated on behalf of the Revenue that a penalty of Rs. 25,000/- would be maximum penalty under Section 44 of the Act or even if the petitioner is right in his contention that the maximum amount of penalty would be Rs. 10,000/- under notification dated 2 February, 2012 issued by the State Government on either of the Counts, the impugned order which orders a penalty of Rs. 1,00,000/- cannot be sustained.

Insofar as the petitioner’s grievance with regard to the wording of the operative part of the order as noted above, the grievance raised by the petitioner is quite correct, although such observation may be clarificatory in nature, it has some consequence, more particularly when the substantive appeal itself is pending before the Appellate Authority assailing the Assessment Order.

It would be in the interest of justice that the impugned order dated 30 July, 2021 is required to be set aside. It is accordingly set aside directing the Commissioner of State Tax to hear the petitioner afresh on the issue of penalty and de hors pass a fresh order in accordance with law - Petition disposed off.
2023 (6) TMI 1097

Classification of imported goods - re-rollable plate & pipes material scrap - Non-reasoned order in appeal - violation of principles of natural justice - Tribunal accepted the contention of the Importer - HELD THAT:- Conclusion is not equivalent to logical articulation required for arriving at the conclusion. The Appellate Tribunal is a final fact-finding body and therefore, should have examined the facts as well as the legal position before pronouncing the final outcome.

The impugned order [2018 (4) TMI 1953 - CESTAT AHMEDABAD] is set aside with an order to remit to the Appellate Tribunal to decide the same in accordance with law - appeal disposed off.
2023 (6) TMI 1096

Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - time limitation for submission of Enquiry report - enquiry report dated 7th December 2015 had been submitted on 16th December 2015 before the relevant authority, much beyond time - Section 130 of the Customs Act, 1962.

JUDGEMENT PER: I. P. MUKERJI, J. (Oral), (08/06/2023):-

HELD THAT:- Section 130 of the Customs Act, 1962 empowers this Court to hear an appeal from the above order passed by the tribunal only if a substantial question of law is involved.

On the question whether the time period of 90 days granted to the enquiry officer to submit his report is directory or mandatory, there are, as brought to our notice, innumerable decisions of the High Courts, some opining that the direction is mandatory, as in M/S. KTR LOGISTICS SOLUTIONS PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS, THE INQUIRY OFFICER/DEPUTY COMMISSIONER OF CUSTOMS [2019 (12) TMI 22 - MADRAS HIGH COURT] and others which include a pronouncement of our court in ASIAN FREIGHT (UNIT OF ESAN FREIGHT & TRAVEL PVT. LTD.) AND ORS. VERSUS THE PRINCIPAL COMMISSIONER OF CUSTOMS (AIRPORT & ADMINISTRATION) , CUSTOMS HOUSE AND ORS. [2016 (8) TMI 1362 - CALCUTTA HIGH COURT] which lay down that the stipulation is directory.

The first thing to be noticed in this stipulation is that there is no consequence for breach of the time limit prescribed. The regulation does not say that if a report is not furnished within 90 days, no notice is to be taken of the enquiry report. Neither is there any procedure prescribed for extension of time to file the report if it is not filed within time - the only intention that can be ascribed to the makers of the regulation is that it is supposed to be an administrative instruction to the enquiry officer to complete the investigation or enquiry within a stipulated time period. If the enquiry report is delayed, that would not affect the proceedings but steps may be taken against the officer for breach of the administrative instruction.

Whether the tribunal was right in not accepting the enquiry report filed beyond time? - HELD THAT:- The requirement to file the report within 90 days was not mandatory at all. Even if filed on 21st December 2015 well beyond 90 days, it had been taken on record by the adjudicating authority - However, it was the discretion of the tribunal as to what weight it would put on the enquiry report. The tribunal, presided over by a retired High Court Judge, had on consideration of the conduct of the appellant and the manner in which the enquiry had been conducted including the time taken to submit it, decided not to attach any weight to it at all, and rejected it.

The licence of the respondent was suspended eight years ago and such suspension is continuing. Even if the respondent is adjudged guilty of illegal exportation of contraceptives to Bangladesh, eight years’ suspension of licence has been proportionate punishment - This appeal is dismissed.

JUDGMENT PER : BISWAROOP CHOWDHURY, J. (23/06/2023):-

The charge of violation of Regulation 11(e) comes into operation when information is given by Customs Broker to his client and there is allegation that the information given is false. When there is allegation that the Customs Broker did not advise the client to comply the provisions of the Act there is no question of giving information to client which is not true, when there is no allegation by the client/exporter. Thus there is no breach of the said provision - the findings of the enquiry officer cannot be sustained as it is based on the statement of sole witness Bappa Biswas who could not be cross examined and the enquiry officer did not put questions to obtain material particulars with regard to his statement and the facts of the case, and relied fully on the statement of Shri Biswas before Assistant Commissioner of Customs.

As the respondent could not cross examine the witness nor he could adduce evidence it was incumbent upon the Licensing Authority to consider the materials on record including representation to the show cause notice issued upon the respondent. It appears that Pr. Commissioner of Customs (Airport and Admin) without taking into consideration the representation made by the respondent explaining different facts relating to the show cause notice, issued Order of revocation - It is well settled principle of law that when a report comes to an Authority who has granted license to a Customs broker regarding Commission of an offence under the Customs Act by an exporter and an allegation of breach of negligence by the Customs broker the licensing authority while proceeding against the Customs broker should proceed independently in accordance with law without being influenced by the report and finding of the investigating Authority regarding alleged offence.

The findings of the enquiry officer and decision of the Pr Commissioner of Customs (Airport and Admin) with regard Article of Charge-I, and Article of Charge-II are perverse and the same are set aside. However with regard to charge III the allegation of misconduct against the director of respondent of not appearing upon receipt of the summons, there was some negligence on the part of the director of the respondent in not appearing personally before Commissioner of Customs(p) which ought to have been done - However as security deposit amount of respondent is already confiscated by the Appellant and the respondent has suffered suspension for about 8 years no further penalty is required to be passed at this stage.

Appeal disposed off.
2023 (6) TMI 1095

Rejection of application seeking leave to file appeal - Levy of ADD - import of Melamine - legal right flows in favour of the domestic industry (applicant herein) so as to implead it as a party in the writ proceedings - Applicant is aggrieved person or not - HELD THAT:- The applicant may have provided the information which led to the initiation of the enquiry for determination of the ADD, but merely the fact that the information provided by the applicant led to initiation of the proceeding for imposition of ADD by itself would not imply that the applicant is a person aggrieved in this case - Hon’ble Supreme Court in AYAAUBKHAN NOORKHAN PATHAN VERSUS THE STATE OF MAHARASHTRA & OTHERS [2013 (8) TMI 563 - SUPREME COURT] has taken an affirmative view that a stranger cannot be permitted to meddle in any judicial proceedings unless the court is satisfied that such person/entity falls within the category of “aggrieved person”, who has suffered legal injury and is entitled to challenge the effect/action of the order in the court of law. It was further observed that the court can enforce the performance of a statutory duty by a public body, using its writ jurisdiction at the behest of a person, provided that such person satisfies the court that he has a legal right to insist on such performance.

In view of observations of the Hon’ble Supreme Court in the case of Ayaaubkhan Noorkhan Pathan, it is opined that by any stretch of imagination the applicant cannot be treated to be a person aggrieved, who has suffered a legal injury by the direction of learned Single Bench to disclose the numerical values from the complaint filed by the applicant to the competent authority - accepting the instant application seeking leave to file appeal would tantamount to granting more leverage to the applicant than what was allowed in the original writ proceedings which is absolutely unwarranted.

The instant application seeking leave to file appeal is devoid of merit and, hence the same is dismissed.
2023 (6) TMI 1094

Classification of imported goods - Parts of tricycle (E-Rickshaw) not in CKD condition - to be classified under CTH 87089900 of the First schedule of the Customs Tariff Act, 1975 or under CTH 87038040? - penalty u/s 114A /114AA of CA - Confiscation - redemption fine - dropping of the demand on the value enhancement.

HELD THAT:- The Appellants have not imported many vital parts of the Tricycle. In the impugned order the adjudicating authority concluded that some parts which were not imported by either of the Appellants were ‘minor parts’. From the description of the parts not imported mentioned above, we observe that they are essential parts without which a fully finished Tricycle will nor come into existence. The adjudicating authority has not provided any evidence in the impugned order that the goods imported by the appellants together has the essential characteristic of e-rickshaw - The goods imported by the appellants together if assembled will not provide the basic function of propulsion as required for the classification under CTH 870 3.So, without the battery, the Tricycle cannot be operated and hence it is one of the essential parts. Similarly, the other parts not imported are also essential to make a fully finished Tricycle. Hence, the findings of the adjudicating authority that the goods imported by the appellants together has the essential characteristic of erickshaw/ Tricycle, cannot be agreed upon.

The goods as imported by the Appellants together are not in complete nature and require a manufacturing process in order to obtain a fully finished vehicle. As per the definition of the vehicle, any imported components cannot be said to be fully functional unless they achieve the basic characteristic of the said appliance/instrument. Since, the Appellants together has not imported the complete kit required for a fully finished Tricycle falling under CTH 8703, it is held that the imported spare parts together cannot be classified under 8703. Accordingly duty cannot be demanded @ 30% by applying Sl.No.526(1)(b) of Notification 50.2017.

The Notice proposes to adopt the value of Rs 33,000 per Tricycle as per the assessable value available for fully finished tricycle in NIDB data. There is no evidence available to establish that the goods for which value is available in NIDB and the impugned goods imported by the Appellants together are similar goods. Hence, the adjudicating authority has rightly rejected the value of 33,000 proposed in the Notice. Accordingly, the department’s appeal for value enhancement is liable for rejection.

The goods imported by both the Appellants cannot be clubbed for classification purpose. The goods imported by the appellants were not in CKD condition and therefore goods cannot be classified under Customs Tariff Heading 87038040. The goods are rightly classsifiable under CTH 87089900 - Regarding penalty imposed in the impugened order, we hold that Notice was not issued under Section 28(4) of the Customs Act and therefore penalty under Section 114A and under Section 114 AA are not applicable.provisionally assessed bill of entry could not be covered under Section 28 and 114 A of the Customs Act, 1962 and therefore imposition of penalty of Rs.18,91,596/- was erroneous inasmuch as 114A was not liable in the subject case - goods were not liable for confiscation under Section 111(m) and 111(o) of the Customs Act and the order of confiscation not sustainable.order of imposition of redemption fine of Rs.2 Lac not sustainable and is liable to be set aside - departments appeal for value enhancement is rejected.

Appeal allowed.
2023 (6) TMI 1093

Maintainability of appeal - failure to comply with the requirement of pre-deposit - Classification of imported goods - HDPE Pipes - to be classified under CTH 89051000 or under CTH 391721? - HELD THAT:- The first appellate authority having directed the appellant to make a pre-deposit which was not met by the importer, the Commissioner (Appeals) has simply rejected the appeal in limine, without going into the merits of the case. Both the Ld. Advocate and the Ld. Departmental Representative agree that there was no discussion on merits by the first appellate authority in the impugned order.

It is deemed appropriate to remand the matter back to the file of the Commissioner (Appeals) for disposing of the appeal on merits. Though both the counsel have made respective submissions on merits and reference was also made to judicial pronouncements, it is felt improper to discuss anything on the same since, admittedly, the lower appellate authority has not given any findings on the merits of the case.

The first appellate authority directed to comply with the principles of natural justice by hearing the appellant and thereafter, pass a speaking order on merits, in accordance with law - appeal allowed by way of remand.
2023 (6) TMI 1092

Violation of principles of natural justice - Handling of Cargo in Customs Areas- Setting up of ICD - Implication of having DTA unit and Customs Area both within the same premises - Revocation of approvals granted u/s 8, Section 45 of Customs Act,1962 read with Regulation 10 of (HCCAR, 2009) - verification report relied upon by the Commissioner post survey dt. 08/02/2023 was not made available to the appellant - procedure prescribed under Regulation 12 of HCCAR, 2009 not followed before such revocation - HELD THAT:- After prolonged verification and inspection of the proposed ICD premises commencing from the year 2016 by the Customs Department and taking note of necessary rectifications carried out by the appellant from time to time on the objections raised during the course of inspection, Notification No.01/2022(NT) dt. 24/01/2022 was issued, specifying the Customs area of ICD for the purpose of loading of export goods and unloading of imported goods; also permission was granted under Section 45 of the Customs Act, 1962 read with Regulation 10 of HCCAR, 2009 for a period of two years w.e.f. 24/01/2022 - The ICD could not come into operation immediately after issuance of the said Notification due to non-allotment of location code by the competent authority. Correspondences have been exchanged between the appellant and the Department from time to time in this regard but no positive result has emerged. The appellant was, however, intimated through order dt. 16/02/2023 about the revocation of the permission granted earlier on 24/01/2022 pursuant to a survey conducted on 08.2.2023.

It is the contention of the Revenue that subsequent to the examination of the permission granted while issuing location code, difficulties that would be encountered once the said area becomes operational, came to the knowledge of the Department pursuant to the survey conducted on 08.2.2023 and accordingly, the permission was withdrawn with a liberty to the Appellant to re-apply after compliance with the observation mentioned in the said Order. We do not find emergence of any new facts after the Notification was issued on 24.01.2022 that has spelt out in the revocation order; the existence of the manufacturing unit in the basement of the Customs notified area has been raised in the inspection reports. Consequent to the observation in the letter dated 21.3.2021 it was sterilised and artificially separated from the proposed customs notified area to enable the department to declare it the premises as Customs Notified area. Now, the argument of the Revenue is that there would be some GST implications if both the DTA unit as well as Customs notified area are situated in the same premises. It is also seen from the records that such apprehensions have not been spelt out in the order.

It is indicated by the Revenue that there could be some misuse and complications in the implementation of GST laws if both the manufacturing unit as well as customs operations under the Customs notified area are allowed simultaneously. However, it is found from the records that the said apprehension and other objections have not been communicated to the appellant by way of issuance of a show-cause notice and response from the appellant in this regard in complete disregard and blatant violation of Regulation 12 of HCCAR, 2009 - the appellant be given a reasonable opportunity, by way of issuance of a show-cause notice and reply thereof, to explain the apprehensions now raised by the Department on the basis of a survey report dated 08.2.2023(not issued to the Appellant), even after modifications/alternation carried out by the Appellant from time to time.

To meet the ends of justice, and taking note of the fact that the Appellant has made huge investment in this regard, and the ICD could not be made operational even though the necessary infrastructure is in place since 2017, the Department are directed to issue a notice to the appellant within a week’s time from the date of receipt of this order raising all issues clearly stating the grounds for proposed action. Also, copy of the survey report dated 08.2.2023 be issued to the Appellant, if not delivered.

The learned advocate for the appellant undertakes to file their reply within one week from the date of receipt of notice even though the time limit for filing reply prescribed under the said Regulation 12 of HCCAR, 2009 is thirty days. On receipt of the reply to the Notice and after affording an opportunity of hearing to the appellant, the learned Commissioner should decide the issue maximum within a fortnight thereafter - appeal allowed by way of remand.
2023 (6) TMI 1091

Confiscation - imposition of redemption fine and penalty - Import of old and used worn clothing, completely fumigated - restricted item or not - classifiable under Tariff Item No.63090000 of the First Schedule of the Act or not - HELD THAT:- This issue came up before this Tribunal in the case of VENUS TRADERS, RAINBOW INTERNATIONAL, AL-YASEEN ENTERPRISES, GLOBE INTERNATIONAL, KRISHNA EXPORT CORPORATION, PRECISION IMPEX, BMC SPINNERS PVT. LTD., SHIVAM TRADERS, LEELA WOOLEN MILLS, M.U. TEXTILES VERSUS COMMISSIONER OF CUSTOMS (IMPORTS) MUMBAI [2018 (11) TMI 625 - CESTAT MUMBAI], wherein this Tribunal has observed the failure of the original authority to comply with the direction in remand to disclose the margin of profit that prompted the fine and penalty, the matter would normally have to be remitted back by another remand order.

The redemption fine and penalty imposed on the respondents by the adjudicating authority is sufficient to meet the end of justice. Therefore, the redemption fine and penalty confirmed by the adjudicating authority are upheld - there are no infirmity in the impugned order and the same are upheld = appeal of Revenue dismissed.
2023 (6) TMI 1090

Valuation of imported goods - white poppy seeds 99% purity - rejection of transaction value - enhancement of assessable value on consignments - trigger of rule 10A/rule 12 and in deployment of ammunition in rule 8/ rule 9 of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988/ Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - HELD THAT:- In the amended context of rule 4(2) of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 that applies to most of the impugned consignments, it does not suffice for those limiting factors to be drawn upon without proffering evidence of existence of such defined circumstances; mere whims or fancies cannot take the hue of revealed truth or oracular exclamation. The lack of factual evidence in the findings to sustain the contention of cartel operations impedes the consequence of rejection of declared value. Even if some suspicion of cartelization did cross the minds of customs authorities, the assessments were provisional and ample time was available for appropriate inquiry into facts to be incorporated in the notice preceding finalization of assessment. The situation obtaining in proviso to rule 3(2) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 has not retained that special consideration for being resorted to in consignments imported after 10th October 2007. The rejection of declared value is, thus, without authority of law.

Turning to the adoption of prices from ‘Public Ledger’, a survey of the several alternatives in Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 and of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 do not admit to such option. Rule 8 of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 and rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, titled as the ‘residual method’, envisages determination using reasonable means consistent with the principles and general provisions of the Rules and is further qualified by restriction on adoption of a value on the basis of, inter alia, price of goods for export to country other than India which the ‘Public Ledger’ makes no pretence of not being.

The specific discarding of resort to ‘Public Ledger’ prices for reason of discord with the prescriptions of the Rules framed under section 14 of Customs Act, 1962 is no less applicable here. There is no allegation that the prices declared do not reflect the contractual consideration. There is no allegation of misdeclaration of description of the goods. The conditions precedent to invoking of rule 10A of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 or rule 12 of 4(2) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 have not been duly discharged to validate shifting the burden of proof to the importer.

The proceedings of the lower authorities have been undertaken on erroneous premise of law which does not even have the saving grace of proper resort to the relevant method of valuation and requires the impugned orders to be set aside - Appeal allowed.
2023 (6) TMI 1089

Valuation of goods imported from few related parties of the appellant - whether the loading of the amounts of royalty paid to their different entities in terms of 10 agreements in the Bills of Entry, as per the SVB Mumbai order dated 19.6.2008 is in order? - HELD THAT:- The SVB order dated 19.6.2008 has been set aside and the present issue has now been settled in their favour by the Tribunal’s Final Order [2012 (11) TMI 571 - CESTAT MUMBAI].

The present issue in the impugned order deals with the 10 agreements based on which the value has been loaded. Since the original Mumbai SVB order dated 19.6.2008 itself stands set aside all orders based on that will have to be set aside.

Appeal allowed.
2023 (6) TMI 1088

100% EOU - diversion of goods - import as well as procured indigenously capital goods, raw materials, packing material and consumables free of duty vide Notification No.52/2003-Cus. and No.22/2003-C. Ex. both dated 31.03.2003 - said goods not used for intended purpose - HELD THAT:- There is no dispute that the conditions of the notifications, were violated and the appellant had contravened the provisions of section 71 of the Customs Act 1962. Accordingly, the entire duty demanded was paid and the appropriation of the duty payment has been confirmed by the learned Commissioner vide paragraph (iv) and (v) in the findings portion of his Order. The commissioner has demanded interest on the duty demanded and imposed penalty equivalent to the duty demanded in terms of proviso to Section 114A of the Customs Act 1962.

The fact that the goods were diverted to DTA from their bonded warehouse is not disputed and this fact has come to the notice of the department only after investigation, is also not contested. The only plea made by the appellants is that it was done on account of their inefficiency of the staff and there was no intention to evade duty. Based on the investigations the Commissioner has rightly held the appellant had wilfully suppressed and mis-declared the fact that the goods were used within the bonded warehouse. Therefore, the appellants were liable for penalty under Section 114A.

The Commissioner has given an option to pay interest along with 25% of duty within 30 days from the date of receipt of his order in terms of Proviso to Section 114A of the Act - Appeal dismissed.
2023 (6) TMI 1087

Confiscation of imported goods - redemption fine imposed on the condition that the goods should be re-exported - While moving from USA, the Appellant has bought several items in open auction under proper invoices and imported the same to India - HELD THAT:- The Commissioner (Appeals) has fairly handled the litigation and has classified the goods under 5 different categories and remanded the issue in respect of 4 categories of goods to the Adjudicating Authority but in respect of category (iii) the Commissioner (Appeals) has directly came to a conclusion and dismissed the Appellant’s appeal.

In the interest of justice, the appellant should have been given an opportunity to present all their documentary evidence including the Chartered Engineer’s Certificate and citing all statutory provisions before the Adjudicating Authority even in respect of category (iii) goods. The very fact that the Adjudicating Authority in the Denovo proceedings has relied on the Chartered Engineer certificate so as to complete the valuation proceedings, speaks of the veracity of the Chartered Engineer’s certificate - matter remanded to the Adjudicating Authority in respect of category (iii) goods wherein absolute confiscation and redemption fine was imposed on the appellant. He will follow the principles of natural justice and allow the appellant to produce all the documentary evidence before a considered Order is passed.

Appeal disposed off by way of remand.
2023 (6) TMI 1086

Interest earned on the aggregate escrowed amount - Liability of the petitioners to deposit to the Investor Education Protection Fund (IEPF) under Section 125 of the Companies Act, 2013 - whether the petitioner no. 1-Company is liable to transfer the interest earned on the aggregate escrowed amount (including the principal and the accrued interest thereon) also to the IEPF? - Doctrine of estoppel against statute -

HELD THAT:- A close examination of Section 205C and Section 125 of the 1956 and 2013 Acts shows that the said provisions do not have any direct conflict with Chapter IIIB of the RBI Act. Whereas the provisions of the said two Companies Acts govern all companies generally, Chapter IIIB of the RBI Act pertains to certain provisions specifically relating to non-banking institutions receiving deposits and to financial institutions, insofar as such disputes are concerned.

The Peerless, that is, the petitioner, is squarely covered under the said definition and, as such, Chapter IIIB governs the functioning of the petitioner’s company as well - Chapter IIIB operates in particular spheres. Whereas a variety of functioning of NBFCs is covered by the directions contemplated in Chapter IIIB, very few of the same are pertinent in the present context. As for example, Section 45 IA pertains primarily to requirement of registration and net owned fund, Section 45 IB to maintenance of percentage of assets and 45 IC to reserve fund. Section 45 ID deals with the power of the bank to remove directors from office and Section 45 IE with supersession of Board of Directors of NBFCs other than Government Companies. Section 45 J pertains to regulation or prohibition of issue of prospectus of advertisement soliciting deposits of money.

It is relevant to mention here that the Escrow Account was created in terms of the order of Court and specifically to deposit the amount which was the subject-matter of the present lis. Hence, the said deposits were sub judice and it was de hors the authority of the RBI to dictate the fate of the same. Moreover, as discussed above, nothing in Chapter IIIB pertains to interest on Escrow Accounts in cases such as the present one. Even if the RBI advised the petitioner that any interest received by the Company on investment in FDs/government securities would be available to the company, the same pertained only to interest “received by the company”. However, the interest which accumulated on the deposits in the Escrow Account in the present case, under no stretch of imagination, could be said to be received by the Company. The said amounts were sub judice and were subject to the outcome of the present writ petition. Hence, the argument that the directives of the RBI prompted the petitioner to use such interest is neither here nor there.

The entire entitlement of the deposits in the Escrow Account, on which the interest was accrued, belongs to the IEPF.

The interest accrued in the Escrow Account in the present case was not a component of the usufructs of the petitioner’s functions in any manner but, all along, belonged to the IEPF, which is an entity constituted statutorily for specified purposes. The purpose of the creation of the IEPF would itself be defeated if the petitioner is permitted to usurp the said interest. Hence, it cannot be said that the petitioner is entitled to such interest in any manner.

Doctrine of estoppel against statute - Power of RBI to issue instructions under the Companies Acts, 1956 or 2013 - NBFC - HELD THAT:- The same need not be invoked in the present case since, the RBI did not give any specific direction to the petitioner, nor did the petitioner construe any such direction so as to defeat the right of the IEPF conferred under a different statute that is the 2013 Act and, thereinbefore, by the 1956 Act.

Petition allowed.