TMI Tax Updates - e-Newsletter
July 18, 2018
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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Income Tax:
Form of application for obtaining an advance ruling - Rule 44E of the Income-tax Rules, 1962 - CBDT amends the rule.
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Income Tax:
Transfer of case u/s 127 - “Absence of dissenting note” from officer of equal rank who has to agree to the proposed transfer would not constitute Agreement, envisaged under Section 123(2)(a) of the Act. Thus, making the impugned order dated 2nd July, 2018 without jurisdiction.
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Customs:
Duties of Customs enhanced on import of various textiles and garments falling under chapters 50 to 63 on textile products - Notification as amended.
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Customs:
Release of imported cargo - imported goods not cleared within 30 days - the petitioner should not only pay the customs duty and other levies payable under the Act, but also is bound to clear the entire dues to the second respondent, which is all inclusive.
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Customs:
Duty Drawback - condonation of delay - even if a different interpretation is sought to be given to Rule 17, this is not a case where the petitioner should be denied the benefit of revised rate on such interpretation, as the delay beyond 12 months is only 7 days.
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Customs:
Refund of excess Customs Duty paid - Since the Tribunal’s order had attained finality, there was no option for the appellant except challenging the final assessment order, but the appellant has failed to file any appeal - No refund.
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Service Tax:
The appellants cannot appeal on merits if they have paid up part or whole of the tax liability as insisted upon by the department, in most cases to buy peace - appellants having paid service tax were now estopped from denying their liability.
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Service Tax:
Business Support Services - franchise services - taxable services in or in relation to IPL tournaments - employer-employee relationship - The remuneration received by the respondent from the franchisee M/s KPH cannot be taxed as ‘Business Support Service’
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Service Tax:
Short Levy of Service Tax - demand based on balance sheets recovered during search operations - Commissioner (Appeals) has miserably ignored the settled principle of the law of evidence and the settled principle of jurisprudence by merely relying upon the data of the balance sheet / profit and loss account of the appellant and by completely ignoring the justification of the appellant.
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Service Tax:
Classification of services - contract executed was for removal of over burden in the mine attached to the cement factory - This activity is very much covered within the definition of ‘Site Formation and Clearance Services’
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Service Tax:
Reduction of cost of goods from the value of services - Benefit of N/N. 12/2003 ST date 20.06.2003 - maintenance and repair service - There is no requirement to indicate value separately in each invoice - The only requirement in terms of the Notification is to provide documentary evidence proof indicating the value of said goods and materials.
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Central Excise:
Excisability - SSI Exemption - appellants are attempting to create a confusion between ‘nil’ rate of duty and excisability of goods. There is no ambiguity in the wordings of the Notification - the department is in its right to demand duty on these items.
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Central Excise:
Reversal of CENVAT Credit - The full value of the inputs having been “written off” in the accounts because of this reason by itself cannot be inferred to mean that these inputs are cleared as such - credit cannot be denied
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Central Excise:
100% EOU - Valuation - As per the holistic view from the overall scheme for 100% EOU, the object is that goods manufactured by 100% EOU should be exported and if it is permited to be cleared in DTA, duty equal to the Customs duty should be charged.
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Central Excise:
CENVAT Credit - Capital Goods - The contention of the Revenue that they are huge machines and cannot be removed from one premises to other premises is not born out by any evidence whereas the appellant has produced the delivery challan for transfer of the machineries from the main premises to the job-worker premises and it is returned to the main factory. - credit allowed.
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Central Excise:
CENVAT Credit of excise duty paid on parts, components and accessories would be admissible under the Capital Goods Credit scheme even if they are assembled into goods which are immovable or exempted.
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Central Excise:
CENVAT Credit - input services - annual maintenance of lifts installed in the building - when the repair, maintenance, etc. is the part of a contract where construction is also an activity then that renovation will be covered under the definition of Work Contract else it will be very much inclusive part of the definition of input - credit allowed
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2018 (7) TMI 1044
Addition u/s. 36(1)(viia) - interest on non performing assets not taxable on accrual basis looking to the guidelines of the Reserve Bank of India - Held that:- SLP dismissed.
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2018 (7) TMI 1043
Substantial question of law - Held that:- The special leave petition is dismissed on the ground of low tax effect which is only ₹ 2,64,000/-. Pending application(s), if any, stands disposed of accordingly.
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2018 (7) TMI 1042
Application for settlement rejected - combined application for settlement of all cases - petitioner failed to pay the full tax and interest before the last date provided under the statute i.e. 31.7.2007 - constitutionality of sections 245D(2A), 245D(2D) and 245HA of the Income Tax Act, 1961 inserted by the Finance Act 2007 as ultra vires Article 14 of the Constitution - Held that:- Special Leave Petition is dismissed.
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2018 (7) TMI 1041
Annulling the block assessment order - validity of proceedings under Section 153C - Held that:- SLP dismissed.
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2018 (7) TMI 1040
TDS u/s 194C - TDS on work contract - nature of Composite contract - whether composite or not - contract agreements on Total Turnkey Basis or Partial Turnkey Basis - setting up of its electrical sub-stations - Held that:- The special leave petition is dismissed.
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2018 (7) TMI 1039
Allowing the deduction u/s 80IA to the assessee on the basis of return filed after the issue of notice u/s 153A - Held that:- SLP dismissed.
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2018 (7) TMI 1038
Cancelled the registration under Section 12AA(3) - cancellation related back only from the date of introduction of Section 12AA(3) i.e. with effect from 01.10.2014 and not earlier - Held that:- No ground to interfere with the impugned order. The special leave petition is, accordingly, dismissed.
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2018 (7) TMI 1037
Revenue receipt or capital receipt - entertainment duty subsidy - subsidy of entertainment duty given to the Assessee by the State Government is in the nature of Revenue receipt - Held that:- SLP Dismissed.
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2018 (7) TMI 1036
Deduction u/s 80IB(10) - commencement certificate by the Municipal Authorities for the housing project - project be on the size of a plot of land which has a minimum area of one acre - review petition - Held that:- The High Court has dismissed the appeal by following its order in respect of the same assessee for earlier assessment years and in the process, it has not considered question No. 2 which was not involved in the earlier appeal. We permit the petitioner to approach the High Court by way of review petition. If the review petition is filed within 30 days, it will be decided on merits and shall not be dismissed on limitation. In case the order is against the petitioner, the petitioner shall be entitled to challenge not only the order passed in the review petition but also the impugned order.
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2018 (7) TMI 1035
Penalty levied u/s 271(1)(c) - rejection of books of accounts and estimation of profit - Held that:- SLP dismissed.
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2018 (7) TMI 1034
Addition u/s. 36(1)(viia) - interest on non performing assets not taxable on accrual basis looking to the guidelines of the Reserve Bank of India - Held that:- SLP dismissed.
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2018 (7) TMI 1033
Penalty u/s 271(1)(c) - Exemption claimed u/s 54B - proof of sale of agricultural land at Neelankarai and re-investment in agricultural land at Mahabalipuram - Bonafide belief - no substantial question of law involved - Held that:- SLP dismissed.
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2018 (7) TMI 1032
Block assessment - Reliance upon the self incriminating statement during the Search u/s 132 - unrecorded sales - Held that:- SLP dismissed.
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2018 (7) TMI 1031
Deduction u/s.80IB (10) - Interpretation of section 80-IB(10)(d) - project approved by the Pune Municipal Corporation which is the local authority - Effect of amendment w.e.f. 01.04.2005 - Whether section 80-IB(10)(d) which was brought into force w.e.f. 1st April, 2005 would apply to projects that were approved by the local authority prior to it being brought on the statute book – Held that:- Special Leave Petition is dismissed because of low tax effect leaving the question of law open. Pending application(s), if any, stands disposed of accordingly.
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2018 (7) TMI 1030
Disallowance u/s 14A - Disallowance u/s 40(a)(ia) - amount of variable cost portion of the lease of the aircraft payable by the assessee and tax at source has to be deducted on the same - Held that:- SLP dismissed.
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2018 (7) TMI 1029
Exemption of income u/s 14A - as argued by learned ASG that the High Court has wrongly applied Rule 8D of the Income Tax Rules, 1962, inasmuch as, as per the Judgment of this Court in Godrej & Boyce Manufacturing Co. Ltd. [(2017 (5) TMI 403 - SUPREME COURT OF INDIA] the said rule has prospective application w.e.f. 01.04.2008 and the assessment year in question is 2002-03 - Held that:- We permit the petitioner to approach the High Court in the first instance and point the aforesaid aspect, by filing a review petition. If the review petition is filed within a period of one month from today, the same shall be entertained on merits and shall not be dismissed on the ground of delay. In case, the order in review petition is passed against the petitioner, the petitioner shall be at liberty to challenge that order as well as the order impugned in these petitions.
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2018 (7) TMI 1028
Benefit of deduction u/s 10AA - modernization of existing unit or new undertaking - Held that:- SLP dismissed.
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2018 (7) TMI 1027
Disallowance under 14A - issue involved is squarely covered by the decision of this Court in Godrej & Boyce Manufacturing Co. Ltd. Vs. Deputy Commissioner of Income-Tax and Another [2017 (5) TMI 403 - SUPREME COURT OF INDIA] - Held that:- SLP dismissed.
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2018 (7) TMI 1026
Recover tax from one assessee, while declining to recover tax from others - reopening - Held that:- in the light of decision [2008 (7) TMI 1057 - SUPREME COURT] this SLP also dismissed.
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2018 (7) TMI 1025
Eligibility for deduction under Section 80HHE - television news software produced and exported by the Assessee outside the country - whether it is customized electronic data eligible for deduction under Section 80 HHE - Held that:- SLP dismissed.
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2018 (7) TMI 1024
TDS u/s 194C - expenses under head "Payment made of lorry hire charges' - applicability of Section 40(a)(ia) - TDS liability - Held that:- SLP dismissed.
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2018 (7) TMI 1023
Transfer of case u/s 127 - petitioner has raised the objections - respondent did not consider the objections - authority of Centralisation Committee u/s 127(2) - Held that:- Revenue has not placed anything on record to show, that CCIT, Pune has given a consent to request of CCIT (Central), Mumbai so as to constitute agreement as a pre-condition for invoking powers under Section 127 of the Income-Tax Act. “Absence of dissenting note” from officer of equal rank who has to agree to the proposed transfer would not constitute Agreement, envisaged under Section 123(2)(a) of the Act. Thus, making the impugned order dated 2nd July, 2018 without jurisdiction. The impugned order dated 2nd January, 2018 and the impugned notice dated 14th February, 2017 are hereby quashed and set aside. Petition allowed in above terms with no order as to costs.
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Customs
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2018 (7) TMI 1021
Mis-declaration of goods - imported vessels and barges - Confiscation - Penalty - Held that:- There is no legal and valid ground for interference - The Special Leave Petition is dismissed.
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2018 (7) TMI 1020
Release of imported cargo - imported goods not cleared within 30 days from the date of unloading thereof at a port - The petitioner claims that they have paid the entire customs duty and penalty, and the containers along with the cargo are being held in the custody of the first respondent and therefore, prays for direction - Section 48 of Customs Act - Held that:- The said provision deals with procedure in case of goods not cleared to warehoused or transhipped within 30 days after unloading. If the goods are not cleared within the said time period, the title to the imported goods gets relinquished and such goods, may after notice to the importer and with the permission of the officer, be sold by the petitioner having custody thereof - It is not in dispute that the goods were not cleared within the 30 days period and no attempts were made by the petitioner to clear the goods for over one and half years. Therefore, the respondents were fully justified in invoking Section 48 of the Act. The facts disclose that the petitioner had imported goods in 96 containers of which, 41 have been cleared at different points of time for which, duty and all other charges have been paid by the petitioner. Therefore, it may not be a case where there is total lack of bona-fide on the part of the petitioner. It is no doubt true that one and half years had lapsed and the containers were lying in the Container Freight Station. Consequently, the second respondent lost other business opportunities. However, if the petitioner chooses to clear the cargo upon permission being granted by the first respondent, it goes without saying that the petitioner should not only pay the customs duty and other levies payable under the Act, but also is bound to clear the entire dues to the second respondent, which is all inclusive. This writ petition is disposed of by permitting the petitioner to approach the first respondent Department within a period of one week from the date of receipt of a copy of this order and request to grant permission to pay the highest bid amount as realised in the auction.
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2018 (7) TMI 1019
Duty Drawback - condonation of delay in terms of Rule 17 of the Customs and Central Excise Duties Drawback Rules, 1995 - supplementary claim - revision of rates with retrospective effect - the claims were rejected by the second respondent on the ground of delay as they were filed after 12 months period including the three months condonable period granted under the Drawback Rules - supplementary claim - Rule 15 of the Drawback Rules - Held that:- Rule 15 can be invoked when the exporter finds that the amount of drawback paid to him is less than what he is entitled to - In the instant case, the supplementary claim made by the petitioner for the 27 export consignments was as a result of the Central Government issuing N/N. 77/2003-CUS(NT) dated 18.09.2003, revising the drawback rates with retrospective effect on the goods, which were exported by the petitioner. Thus, the supplementary claim made by the petitioner was not on account of any error or mis-calculation done by the petitioner or for any reason attributable to the petitioner. What occasioned the supplementary claim was the decision of the Government of India to revise the drawback rates with retrospective effect. Thus, it goes without saying that if there is a revised rate of drawback determined that too with retrospective effect, then every exporter, who is entitled for the benefit of the notification, is entitled to maintain a supplementary claim as a matter of right - the period of limitation as per Rule 15(1)(i) read with the second proviso is 3 months + 9 months, i.e., = 12 months. The language of Rule 17 is so couched to confer power on the Central Government to grant exemption in favor of an exporter from the provisions of any of the Rules and allow drawback. The power of exemption is conferred on the Central Government to exempt an exporter, who has failed to comply with any of the provisions of the Drawback Rules, the object being that the exporter should be entitled to drawback. In fact, the Rules specifically empower the Central Government not only to exempt exporter from the provisions of the Rules for compliance of any of the provisions, but also make an order allowing drawback in respect of such goods. The power conferred on the Assistant Commissioner / Deputy Commissioner of Customs under the second proviso to Rule 15 is no doubt limited. So far as the procedural aspect is concerned, always liberal interpretation is given so that the exporter or the importer gets the benefit of the scheme framed by the Government - what the petitioner has stated is that they were not properly advised that they would have entitled to get the benefit of the revised drawback rate only upon filing a supplementary claim and on enquiry, they were orally informed that the drawback amount would be automatically credited to their account, since it is the decision of the Government of India to revise the rate of drawback retrospectively - the petitioner should not be non-suited on the ground stated by the respondents. Period of delay - Held that:- So far as the first 12 months is concerned, there is sufficient power vested with the second respondent to exercise discretion and condone the delay of 9 months. In the instant case, there is a further delay of 7 days over and above 12 months period, though cumulatively taken delay is 9 months and 7 days. However, the first 9 months period is a condonable period even at the instance of the proper officer, the second respondent. Thus, even if a different interpretation is sought to be given to Rule 17, this is not a case where the petitioner should be denied the benefit of revised rate on such interpretation, as the delay beyond 12 months is only 7 days. Petition allowed.
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2018 (7) TMI 1018
Freezing of Bank Accounts - goods under seizure - Mis-declaration of value and description of goods - evasion of Anti-Dumping Duty - Held that:- It is true that a provisional release order is passed but the goods are not released. The goods would not be released until the petitioner complies with the terms and conditions of the provisional release order. Therefore, the goods continue to be under seizure. If the goods are under seizure and merely because a provisional release order is passed, there is no justification for continuation of the attachment of the petitioner's bank accounts. Petition allowed - decided in favor of petitioner.
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2018 (7) TMI 1017
Valuation of imported goods - Mercedes Benz E220 CDI AT white - invocation of Rule 8 of Customs Valuation Rules, 1988 - Commissioner (A) held that though the assessing officer has correctly invoked the Rule 8 of Customs Valuation Rules, 1988, they have failed to arrive at the price on the basis of which is available in India - Held that:- The respondents have for the first time submitted another invoice showing the price at USD 6200 before the appellate authority. The same was not pleaded before the original assessing officer. Moreover, though it was stated in the Order-in-Appeal that the respondent has produced evidence that in 2006 the same model car was traded in India at ₹ 7,80,000/- and ₹ 8,30,000/-, the price at a reasonable correlation to the invoice submitted by the respondent at the appellate stage; however, the details of invoices were not given - the assessing officer has prima facie accepted the submission of the respondents that the value was declared wrongly at the time of import on the basis of original value in 2001 and the assessing officer has allowed depreciation of 58%. Therefore, the reasonableness of the assessing order is not in doubt. It is a clear case where the Commissioner (A) has entertained a new evidence even though the conditions under sub-rule (1) of Rule 5 (1) (a) to (d) are not satisfied and he has also not given any records in writing for such admission. The matter should necessarily go to the original assessing authority for a proper evaluation of the claim of the respondent with the available evidence and following due processes of law - appeal allowed by way of remand.
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2018 (7) TMI 1016
Quantum of penalties - On identical issue concerning the same appellants for a live consignments of 3 shipping bills separate proceedings had been initiated and adjudication orders issued, which on appeal to the Tribunal had been disposed in the case of VISWANAATH AGRO PRODUCTS INTERNATIONAL, S.R. JANAKIRAM, J. GANESH KUMAR VERSUS COMMISSIONER OF CUSTOMS, CHENNAI [2010 (4) TMI 1191 - CESTAT CHENNAI] wherein the redemption fine and penalties imposed on the very same appellant had been reduced. Held that:- The Tribunal in the said case, dealt with live consignments of goods which were available for inspection and verification. The Tribunal considered it proper and appropriate in that case to reduce the penalty substantially. However the present appeals are related to the consignment that were exported prior to that live consignments. These items that had actually been exported in these consignments were not available at the time of investigation and for which reason only, the adjudication has not imposed any redemption fine. At the same time, it has to be noted that the appellants have admitted their offence in respect of the past consignments also and have paid up an amount of ₹ 85 lakhs towards the adjudication liabilities. While these actions on the part of the appellants will not in any way sanctify or redeem their contraventions, they are nonetheless acts of contrition, which should be considered as mitigating factors while imposing penalties - the quantum of penalties reduced. Appeal allowed in part.
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2018 (7) TMI 1015
Imposition of penalty u/s 114AA of the Customs Act, 1962 - penalty imposed is challenged on the ground that that under section 114AA of the Customs Act, 1962 penalty can be imposed only on cases related to export of goods and not on import of goods - Held that:- Section 114AA nowhere suggests that penalty is imposable only in cases of export of goods and not on import of goods. Since, there is no explicit mention in this regard the section 114AA shall apply to all the cases irrespective whether it is related to import or export. The penalties under section 114AA on Shri Vimal Shah and Shri Anmol Sethi was not imposed only on the ground of report of standing committee on finance but also on the ground that a separate penalty cannot be imposed on the proprietors when penalty on the proprietorship concern has been imposed - It is a settled law that a separate penalty cannot be imposed on the proprietor when the penalty on proprietorship firm has been imposed. Appeal dismissed - decided against Revenue.
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2018 (7) TMI 1014
Refund of excess Customs Duty paid - Commissioner (Appeals) set aside the refund sanctioning orders and directed the lower authority to serve the final assessment orders, if any, along with the attested copies of bills of entry finally assessed - Held that:- Initially when the refund claim was sanctioned by the adjudicating authority, the assessment was provisional. Therefore, the refund itself at that stage was premature. Moreover, in the department’s appeal, the Commissioner (Appeals) set aside the refund sanctioning order and directed the adjudicating authority to provide the final assessment order, against which the appellant filed appeal before the Tribunal. The appellant was under obligation to file the appeal challenging the assessment order in order to make themselves eligible for the refund, however it is undisputed that the appellant have not challenged the final assessment order, accordingly, the direction of the Tribunal in the case of ADANI WILMAR LTD. VERSUS COMMISSIONER OF CUSTOMS, JAMNAGAR [2009 (2) TMI 576 - CESTAT, AHMEDABAD] was not complied with - Since the Tribunal’s order had attained finality, there was no option for the appellant except challenging the final assessment order, but the appellant has failed to file any appeal. The appellant are not entitled for the refund - appeal dismissed - decided against appellant.
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Corporate Laws
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2018 (7) TMI 1022
Disqualifying the petitioner as Directors in the Companies - Held that:- Drawing our attention to the mandatory requirement under Section 248(1), upon the Registrar of Companies to send a notice to the company and all directors of the company, it has been contended by the petitioners that such notice had to be issued and served in the manner prescribed by law i.e. in compliance with Rule 3(2) of the Companies (Removal of Names of Companies from the Registrar of Companies) Rules, 2016. The petitioners contend that this has not been done and that the action of the respondents in disqualifying the petitioners in striking off the name of the company from the register of companies cannot be sustained for this reason as well. It cannot be denied that the issues raised in this writ petition require adjudication and are of grave importance so far as the working of the spirit, intendment and object of the Companies Act, 2013, more specifically the manner in which the respondents would operate Sections 164 and 248 of the enactment. Till the next date of hearing, there shall be a stay of the notices dated 6th September, 2017 and 12th September, 2017 whereby the petitioner was declared disqualified as Director under Section 164(2)(a) of the Companies Act, 2013. The DIN numbers as well as digital signatures of the petitioners shall be forthwith revived. It also cannot be denied that so far as the legal submissions are concerned, several other writ petitions have raised identical questions of law and for this reason, are required to be heard together. We, therefore, direct that an individual counter affidavits dealing with the factual averments in this writ petition shall be filed separately within a period of ten days as prayed. The full details of the issuance and service of the notice(s) shall be placed on record with copies of the supporting documents. Rejoinder thereto, if any, shall be filed before the next date of hearing. The respondents shall produce the original records relating to this company with regard to the impugned notices before this court on the next date of hearing.
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Service Tax
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2018 (7) TMI 1013
SEZ Unit - Refund of service tax paid - N/N. 12/2013-ST dated 1/7/2013 - case of Revenue is that Bond was accepted by the competent authority on 9/3/2016 but the lease agreement has been entered into prior to such date, i.e., on 14/12/2015 - Held that:- The service tax in the present case has been paid for lease of the land on which the respondent unit is situated within the SEZ. Since, the operation is approved by the LOA, the main condition of the Notification stands satisfies - the Bond also has been executed and accepted by the competent authority on 9/3/2016. Even though the lease agreement has been entered prior to such date, it is seen that the refund claim for the same in terms of the N/N. 12/2013 has been preferred only after the execution of the Bond. Refund allowed - appeal dismissed - decided against Revenue.
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2018 (7) TMI 1012
CENVAT Credit - input service - advertisement in print media - denial of credit on the ground that advertisement in print media service does not carry any service tax liability - Held that:- The definition of input service under Rule 2(l) of the CCR, 2004 provides for credit on any service used for providing the output service. In addition, in the inclusive part of such definition, various activities have been included in which also the service tax is available as input credit. The inclusive portion specifically mentions advertising services. Consequently there is no doubt that the activity carried out through the advertising agencies can be considered has input service in Rule 2(l) - credit allowed - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 1011
Classification of services - appellants had removed over boulders / over burdens in respect of mines owned by Chettinad Cement Corporation Ltd. - whether classified under the head Site Formation Service or otherwise? - Held that:- CBEC in Circular F.No.232/2/2006- CX dt. 12.11.2007 had in para 2 (i) clarified that following services on contract basis will fall under the fold of Mining Service: Excavation / drilling and removal of overburdens (ie stratum layer of mud, boulder etc. that need to be removed during or prior to extraction of coal / minerals - the clarification given by the CBEC is amply clear and there should not be any doubt on the issue. However, the appellants cannot appeal on merits if they have paid up part or whole of the tax liability as insisted upon by the department, in most cases to buy peace - appellants having paid service tax were now estopped from denying their liability. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 1010
Business Auxiliary Service - STAR L appointed and engaged the appellant as their exclusive sales agent - Export of services or not? - Held that:- The conditionalities of Rule 3 of Export of Services Rules, 2005 are not fully satisfied since services are provided only within India - This controversy has now been fully settled by the case laws of higher appellate forums which have consistently held that if other requirements of Rule 3 are satisfied and the only niggle is that the services have been provided in India, this should be considered as ‘Export of Service’, notwithstanding the Board’s circulars - the impugned services provided by appellant to STAR L will have to be treated as ‘Export of Service’ and hence there would be no tax liability on the same - demand set aside. CENVAT Credit - Mediclaim and Accident Insurance Policy - denial on account of nexus - Held that:- he issue is amply covered by the Tribunal decision in CCE Bangalore-III Vs Stanzen Toyotetsu India (P) Ltd. [2011 (4) TMI 201 - KARNATAKA HIGH COURT] where the Hon’ble Karnataka High Court, inter alia held that credit on Group Insurance Policy taken by assessee has to be construed as activities relating to business and hence credit is to that extent is permissible - credit allowed. Appeal allowed in toto.
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2018 (7) TMI 1009
Business Support Services - franchise services - taxable services in or in relation to IPL tournaments - employer-employee relationship - Held that:- It is settled legal position that services provided by an employee, for the activities undertaken by the employer, for and under the instruction of the employer, cannot be termed as service provided by the employee. An identical matter titled as Sourav Ganguly v. UOI & Ors. [2016 (7) TMI 237 - CALCUTTA HIGH COURT], has been decided by the Hon’ble Calcutta High Court in favour of cricketer. The Petitioner therein entered into an agreement with the franchisee under which he was obliged to participate in promotional activities apart from playing cricket for their franchisee and the department sought to tax the consideration received by the Petitioner from their franchisee under ‘Business Support Service’ - The Hon’ble High Court of Calcutta held that the Petitioner was engaged as a professional cricketer for which the franchisee was to provide fee to the petitioner. He was under full control of the franchisee and had to act in the manner instructed by the franchisee. The Hon’ble High Court further held that the Petitioner therein was not providing any service as an independent individual worker and his status was that of an employee. Therefore it cannot be said that the Petitioner was rendering any service which could be classified as Business Support Service. The remuneration received by the respondent from the franchisee M/s KPH cannot be taxed as ‘Business Support Service’ - demand do not sustain - appeal dismissed - decided against Revenue.
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2018 (7) TMI 1008
Utilization of CENVAT Credit - reverse charge mechanism - output services - whether the CENVAT credit availed by the appellants can be utilized towards the payment of input service paid on the basis of reverse charge mechanism? - Held that:- The jurisdictional High Court of Karnataka in the case of M/s. Aravind Fashions [2011 (9) TMI 852 - KARNATAKA HIGH COURT] observed that Order of the Tribunal sustained in which it was held that prior to 19.4.2006 recipient of services who was liable to pay service tax was entitled to avail cenvat credit for the purpose of making payment of service tax on import of services. Utilization of credit allowed - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 1007
CENVAT Credit - input services - Outdoor Caterer Services - Rent-a-cab Services - Cargo handling services/ Packers and Movers Services - Event Management Services - denial on account of nexus - Held that:- The appellant has stated the necessity of availing such services and their nexus with the output services - it is convincing that these services qualify as input services - Further, the period involved is prior to 01.04.2011 when the definition of input services had a wide ambit - the disallowance of credit on these input services is unjustified - credit allowed. Reverse charge mechanism - Commercial Coaching and Training Services in India as well as abroad - demand of service tax - Part of the demand falls prior to 18.04.2006 - Held that:- It is settled position of law, as rendered by the Hon’ble Apex Court in the case of Indian National Shipowners Association [2009 (12) TMI 850 - SUPREME COURT OF INDIA], that an assessee would be liable to pay service tax under reverse charge mechanism for the services provided abroad only w.e.f. 18.04.2006. The demand prior to 18.04.2006 cannot, therefore, sustain - demand set aside. For the period post 18.04.2006 - Penalty - service tax with interest was paid - Held that:- The issue whether an assessee is liable to pay service tax on reverse charge basis was under litigation and there was much confusion with regard to the said issue during the relevant period - Being an interpretational issue, no penalties can be imposed on the appellant in regard to the amount of ₹ 6,83,897/- pertaining to Commercial Coaching and Training Services imparted in India post 18.04.2006 - demand with interest upheld - penalties cannot be levied. Training conducted by the appellant outside India for the period post 18.04.2006 - Rule 3(ii) of the Taxation of Services (provided from outside India and received in India) Rules, 2006 - Held that:- Though the learned AR has made a frail effort to argue that the training conducted abroad is a continuation of the training conducted by appellants in India, he has not been able to support this by any allegation raised in the SCN or by any evidence. In fact, in Annexure to the SCN, the charges collected by appellant for training imparted in various places abroad as well as in India are separately shown - the service is performed entirely outside India and, therefore, does not attract the levy of service tax and the demand pertaining to the training conducted outside India to the tune of ₹ 2,90,569/- requires to be set aside - demand set aside. Appeal allowed in part.
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2018 (7) TMI 1006
Short Levy of Service Tax - Consulting Engineering Service - the entire case of the Department is based on the balance sheets recovered during search operations showing the inflated income - the sole basis of the Department is the third party evidence which has no where been got corroborated from the appellants - proper appreciation of facts not made - principles of Natural Justice. Held that:- The allegation of short levy are as serious as that of the allegations of the clandestine removal - In the case of Hilton Tobacco Ltd. vs. CCE, Hyderabad [2004 (12) TMI 214 - CESTAT, BANGALORE], it was held that demand of duty cannot be made simply on assumptions and presumptions. The Commissioner (Appeals) has miserably ignored the settled principle of the law of evidence and the settled principle of jurisprudence by merely relying upon the data of the balance sheet / profit and loss account of the appellant and by completely ignoring the justification of the appellant and the fact that nothing from appellant could be recovered which may corroborate those balance sheets - Commissioner has committed a grave mistake while confirming the entire levy including the one which was dropped by the original authority. The impugned order lacks proper appreciation of the facts and circumstances and also the proper application of the principles of law and is set aside - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 1005
Valuation - telecommunication services - inclusion of amount of discount extended to PCO operators - Department however took the view that while arriving at the taxable value for discharge of service tax on the bills raised on PCO operators, BSNL should take into account the discount extended to PCO operators and since service is provided to the user/caller, that the taxable value has to be arrived by including such discount. Held that:- The issue stands decided in appellant own case BHARAT SANCHAR NIGAM LTD. VERSUS CCE MADURAI AND VICE-VERSA [2018 (3) TMI 1007 - CESTAT CHENNAI], where placing reliance in the case of Bharti Infotel Ltd. [2005 (7) TMI 3 - CESTAT, New Delhi], it was decided that such commission / discount cannot be included in the value for levy of service tax. Demand set aside - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 1004
Classification of services - contract executed was for removal of over burden in the mine attached to the cement factory - Whether classified under the head Site Formation and Clearance, Excavation, Earth moving and Demolition Services or otherwise? - Held that:- The activity carried out by the appellant was limited to removal of over burden only. Even though such activity has been carried out in the mine area, the contract does not cover any other activity relating to mining. Hence, it is to be considered as a service contract simplicitor for the activity of removal of over burden. This activity is very much covered within the definition of ‘Site Formation and Clearance Services’ which was included in the statute w.e.f. 16/06/2005 - demand under the head upheld. Time limitation - Held that:- It is seen from the record that the appellant has failed to discharge their responsibility in terms of self assessment of the tax and filing statutory returns - Revenue is justified in invoking the extended period in raising the present demand. Appeal dismissed - decided against appellant.
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2018 (7) TMI 1003
Reduction of cost of materiel from the value of services - Benefit of N/N. 12/2003 ST date 20.06.2003 - maintenance and repair service - It was alleged that benefit of Notification was subject to documentary proof indicating the value of said goods and material sold, which the appellant failed to provide - Rule 6 of CCR 2004 - Whether the respondents are required to indicate the cost of goods and material supplied in the course of rendering a service specifically in the invoices? Held that:- The N/N. 12/2003 ST dated 20.06.2003, inter alia, exempts so much of the value of all taxable services, as is equal to the value of the goods and materials sold by the service provider to the recipient of service; hence, the service tax is leviable thereon under Section 66 of the said Act, subject to the condition that there is documentary proof specifically indicating the value of the said goods and materials - The only requirement in terms of the Notification is to provide documentary evidence proof indicating the value of said goods and materials. There is no requirement to indicate value separately in each invoice, this Bench would not be in a position to decide on the issue of whether or not any documentary evidence is in existence to show the value of goods and articles supplied by the respondents in course of rendering service to their clients - It is a matter of fact and therefore, the case requires to go back to the original authority to verify the documentary evidence to be produced by respondents to arrive at the value of goods and articles used by them. Appeal allowed by way of remand.
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2018 (7) TMI 1002
Classification of services - accounting/ledger maintenance work - whether the services would be classified under the category of “Practicing Chartered Accountant”? or otherwise? - Held that:- The impugned services rendered by the appellant to MESCOM do not fall in the category of professional activity of Chartered Accountant - these activities are exempted under Notification No. 59/98-ST dated 16.10.1998 - reliance placed in the case of COMMISSIONER OF CENTRAL EXCISE, MANGALORE VERSUS RAI ASSOCIATES [2007 (11) TMI 179 - CESTAT, BANGALORE], where it was held that the kind of activities which are involved in the present case do not fall in the definition of professional activity of the Chartered Accountant and are exempted under N/N. 59/98-ST dated 16.10.1998 - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 1001
Business Auxiliary Services - appellants have been appointed by the Airlines as Air Cargo Agent for supporting professional line of work relating to booking and transportation of cargo, preparing bills, collecting them, realizing the payments etc - Benefit of Notification No. 13/2003. Held that:- he appellant sought to rely on the decision of the Tribunal in the case of Greenwich Meridian Logistics [2016 (4) TMI 547 - CESTAT MUMBAI]. In the case, the facts of the case involved the appellant claiming pre-booking and trading of space in Aircraft. In the instant case, no such claim has been made before the lower authorities or even in Tribunal. In view of that the facts of the case are different and therefore the said decision have no applicability in the instant case - demand under the head Business Auxiliary Service upheld. Benefit of Notification No. 13/2003 - Held that:- It is seen that only commission agent involved in purchase and sale of goods were exempted by virtue of this notification. In the instant case, there is no purchase and sale of goods and therefore, the said notification does not apply to this case. Time Limitation - Held that:- The Commissioner (Appeals) in her order has specifically observed that there was an element of doubt at the material time as is evidence by the litigation and clarification of DGST, in these circumstances, invocation of extended period of limitation is not justified. Appeal allowed in part.
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2018 (7) TMI 1000
Liability of service tax - Reverse charge mechanism - appellant, manufacturer and exporter of printed circuit board, was making payment to their overseas agencies as commission for providing services - services received during the period from 09.07.2004 to 31.03.2005 - Held that:- The issue involved in the present case is settled in favor of the appellant as the period involved in the present case is prior to 18.04.2006 when there was no service tax liability on the recipient of service - The ratio of the decision of Indian National Ship Owners’ Association [2008 (12) TMI 41 - BOMBAY HIGH COURT] is fully applicable in the present case, where it was held that Before insertion of section 66A with effect from 18-4-2006, there was no authority to levy service tax on Import of service. Explanation below section 65(105) did not give any authority to levy service tax on import of services - demand set aside - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 999
Principles of Natural Justice - non-payment of Service Tax - Various letters were issued to the noticee, and finally the summons to furnish data / documents were served upon him. But the noticee or the respondent failed to comply with the same except for providing some incomplete copies of balance-sheets for the years 2008-09 and 2009-10 - Best judgement assessment u/s 72 of FA, 1994 done. Held that:- The Respondent should be allowed one more opportunity to prove that no service was rendered and no consideration was received during the period covered by the Show Cause Notice and that the record of ROC is not correct. The learned representative of the Respondent offered to submit a CA’s certificate to this effect - To facilitate submission and consideration of such a certificate, the impugned order is set aside and matter remanded to the adjudicating authority for a de novo decision - appeal allowed by way of remand.
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2018 (7) TMI 998
SEZ Unit - Refund of Service tax - rejection on the ground that the documents enclosed in respect of service tax paid to M/s. Maersk Line India (P) Ltd. does not tally with the service tax paid and claimed - Held that:- In all the invoices produced, there is a mention of Bill of Lading No. 560518665 dated 26.06.2013 and the input service relates to the said Bill of Lading and therefore there is a nexus between input service and the authorized operation - refund is allowed - appeal allowed - decided in favor of appellant.
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Central Excise
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2018 (7) TMI 997
Transitional Credit - MODVAT scheme - Cash Refund - The ld. counsel submitted that the issue with regard to demand of ₹ 54,06,249/- has attained finality wherein the issue was held in favor of the appellant vide Order-in-Appeal No.47/2010 dated 4.8.2010 and therefore the question of adjustment of ₹ 8,13,816/- does not arise - Held that:- It is very much clear that the adjudicating authority as well as the Commissioner (Appeals) have floated the order passed by the Tribunal by rejecting the refund claim of the appellant - the partial rejection of refund is against the order passed by Tribunal and therefore cannot sustain - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 996
Default in payment of duty - Demand of duty on consignment basis without utilising CENVAT Credit - Rule 8(3A) of the Central Excise Rule, 2002 - whether during the defaulted period, the appellant was entitled to make use of the cenvat credit for discharge of duty at the time of clearance of the goods from the factory? Held that:- The provision of rule 8(3A) has been the subject matter of much litigation. The Hon’ble Gujarat High Court in the case of Indsur Global Ltd. [2014 (12) TMI 585 - GUJARAT HIGH COURT] has held as ultra virus the provision of Rule 8(3A) - Similar view has been expressed by the Delhi High Court in the case of Space Telelink Limited [2017 (3) TMI 1599 - DELHI HIGH COURT]. The Delhi High Court has further held that even though the Gujarat High Court decision is stayed by the Apex Court in the appeal filed by Revenue, this does not deface the underlying basis of the judgement itself. The Tribunal in the case of Ess Ess Kay Engg. Co. Pvt. Ltd. [2018 (1) TMI 257 - CESTAT CHANDIGARH] has already taken the view that duty demands are not justified and also the penalties. Demand not justified - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 995
Refund of Interest - Time limitation - discharge of duty in terms of Section 3A of Central Excise Act, 1944 under Compounded Levy Scheme - whether the same would be hit by the bar of limitation or not? - Held that:- The present appellant did not keep the matter alive by filing any appeal against the confirmation of interest or deposit of the same. All the refunds, have to be claimed in terms of Section 11 B of the Act, which prescribed a period within which such claims should have been filed by an assessee, subject to some exceptions. Admittedly in the present matter, the appellant’s case is not covered by such exceptions like payment of duty under protest or the assessments being provisionally. The Hon’ble Supreme Court in the case of Porcelain Electrical Mfg. [1994 (11) TMI 145 - SUPREME COURT OF INDIA] has held that the authorities working under the Act are bound by the provisions of the Act and are required to decide the disputes in terms of the law provided in the said Act - Tribunal being creature of the Act, is bound by the provisions of the Act and even though the appellant’s refund claim of interest is admissible on merits, the same having been filed after the normal period of one year provided under Section 11 B, is hit by the bar of limitation. Appeal dismissed - decided against appellant.
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2018 (7) TMI 994
Excisability - SSI Exemption - Appellants, engaged in the business of running Hotels throughout the country, also operate a small bakery within the premises of the Hotel at Bangalore wherein Pastries, Cakes, Biscuits, Cookies, Chocolates and Confectionary are made for consumption in the Hotel and also for sale from the sales counter of the pastry shop, located in the Hotel premises itself - whether the Bakery items manufactured and sold by the appellants are excisable? - whether the value of exempted goods can be taken into account for the purposes of arriving at the exemption claimed vide N/N. 8/2003-CE? - Extended period of Limitation. Held that:- It appears that the appellants are attempting to create a confusion between ‘nil’ rate of duty and excisability of goods. There is no ambiguity in the wordings of the Notification - the department is in its right to demand duty on these items. Method to arrive at the value of clearances in the previous year in terms of Notification No.8/2003 (as amended) - Held that:- The appellants contentions are misplaced. It appears that the appellants are attempting to create a confusion between ‘nil’ rate of duty and excisability of goods. There is no ambiguity in the wordings of the Notification - The department was correct in calculating the eligibility limit. Extended period of limitation - Held that:- It is a fact that the appellants have not obtained registration and have not paid the tax during relevant time. However, in the absence of a positive act of suppression of fact, collusion with intent to evade duty, we find that extended period cannot be invoked - The department was aware of the budgetary changes from time to time and there was nothing to stop them from visiting the appellants in even time and demand duty. The fact that all the Five Star Hotels make and sell such bakery items is invariably known / acknowledged and is not certainly a fact which could have been unearthed only after investigation or audit. - extended period cannot be invoked - the demand is liable to be restricted to one year i.e., 2005-06 - penalty u/s 11AC also set aside. The original authority is directed to quantify the duty for normal period i.e., 23.3.2006 to 22.3.2007 and to appropriate the same towards the duty already paid and to refund the balance amount - appeal allowed by way of remand.
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2018 (7) TMI 993
Time Limitation - suppression of facts - second mode of billing was not declared in the ER-1 Returns - Held that:- The ld. A.R is correct in his assertion that department was only aware about the invoices on which duty had been paid and not with regard to supplementary invoices / billing done by the respondents, since the second mode of billing was not declared in the ER-1 Returns. This aspect has not been disputed by the respondents either before the lower authorities or even in the cross objections filed by them - the respondents cannot make a claim that the entire manner of billing both by Central Excise invoices and also by supplementary invoices for job work was known to the department. This being so, the finding of the Commissioner (Appals) that the matter was hit by limitation does not appeal to us. Appeal allowed - decided in favor of Revenue.
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2018 (7) TMI 992
Refund claim - abatement of duty due to non production of notified goods - Compound Levy Scheme - the Appellant on 11.8.2016 filed application before the department for refund of the amount of 17 days (i.e. from 10.11.2011 to 26.11.2011) with interest - Held that:- There is no change in the 2008 Rules and 2010 Rules so far as the issue in the present matter is concerned. In this matter, there is delay in refund of duty from 21.3.2012 to 19.10.2016 and there is no dispute that the appellant had claimed interest on delay refunds after three months from 21.12.2011 i.e. from 21.3.2012 under Section 11 BB of the Act and the same has been recorded in the adjudicating order also and the same has only been denied on the ground that this Tribunal has not directed for payment of interest on delay refund and also that there is no provision for grant of interest under Rule 10 of 2010 Rules. Merely because the interest on refund is not directed doesn’t mean that it has been refused or rejected. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 991
Refund of duties for remaining days in case of closure of factory - surrender of registration - obtaining a new registration after few days and carrying of same production as was carried earlier - whether a refund claim under Rule 17 of 2010 Rules is admissible to the appellant when they had although surrendered their registered certificate but after few days again obtained a new registration and started the same production from the same premises? - whether the Appellant has fulfilled the conditions of Rule 17 of 2010 Rules? Held that:- The appellant although surrendered registration certificate on 29.05.2015 but on 01.06.2015. i.e. only after two days they have again applied for new registration certificate for the same work and with the same machines and in the same premises of factory. This clearly indicates their malafide intention to get the refund of duty which they were not able to claim otherwise in view of the provisions of Rule 10 of the said Rules 2010, wherein the continuous closure of 15 days or more was required for getting refund. As per Rule 17 a manufacture has to permanently ceases to work in respect of machine installed in the factory - Whereas in the present matter the appellant has intentionally surrendered his registration to take benefit of refund under Rule 17 as he intended to close his business for less than 15 days and in such situation abatement under Rule 10 was not allowed to them. Therefore they have intentionally surrendered their registration for taking the benefit of refund of duty under Rule 17 and again after 2 days only, have applied for new registration at the same premises, without making any changes and amendments and started the production with the same machines. The Appellant in not entitled for any refund - appeal dismissed - decided against appellant.
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2018 (7) TMI 990
Adjustment in respect of excess supplies - Excesses/shortage of goods - the receipt quantity did not match the despatched quantity from the refinery for various reasons - Department took the view that differential excise duty is required to be paid for the amount removed from the refinery but not received by the Oil Manufacturing Companies (OMCs) - Held that:- The issue stands decided in the case of BHARAT PETROLEUM CORPORATION LTD. VERSUS COMMISSIONER OF C. EX., KOCHI [2010 (7) TMI 961 - CESTAT BANGALORE], where it was held that The assessments made on invoices is final w.r.t. value and quantity. Assessee cannot make suo motu adjustments contrary to the assessment on the invoices. Right course for the assessee would have been to follow provisional assessment. Notwithstanding the discrepancy between quantities ascertained by the assessee and the buyer, then the transaction value would have been that as agreed mutually in a contract and paid by the OMC. Appeal dismissed - decided against appellant.
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2018 (7) TMI 989
Clandestine removal - The allegation of the Department is that the appellants have manufactured and cleared structures (iron and steel) falling under CETSH 73089090 and accessories falling under CETSH 87089000 to the customers, such as M/s. Hyundai Motors India Ltd, without paying excise duty - Penalties - Held that:- In the present case, it is not clear as to how much portion of the demand would relate to structures that are fabricated/erected at the site of the customer - The argument of the Revenue that if such structurals, parts, etc., are fabricated at the site also as per design and requirement of customer and though attached to the earth would be excisable, cannot be accepted fully - if the goods are fabricated at site according to design of customer, forming a whole structure, will not be dutiable as clarified by Board Circular. Whereas in the case of structurals which have been prefabricated at the premises of the respondent and brought to the site may attract duty. These aspects have to be examined. Penalties - Held that:- The appellant has paid up ₹ 11.50 lakhs on being pointed out and also that the issue is an interpretational one and was mired in litigation - the penalties cannot sustain and, therefore, this part of the order does not require interference. The matter is remanded for reconsidering the demand of duty - appeal allowed by way of remand.
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2018 (7) TMI 988
CENVAT credit of Basic Customs Duty, Customs Education Cess and Customs Secondary And Higher Education Cess - case of appellant is that they availed the cenvat credit under mis-interpretation of the provision however, under bonafide belief - applicability of Sub Section C of Section 11 AC of CEA or Sub Section A of 11AC of CEA? Held that:- It is an apparent and admitted fact that the amount of CENVAT credit as is alleged by the Department to have been wrongly availed, was deposited by the appellant alongwith the interest much within the reasonable time of it being brought to the notice of the appellant and much before the issuance of the impugned Show Cause Notice. It is apparent that the said deposit was made almost 15 months prior the said Show Cause Notice. The only adjudication remains is as to whether the Commissioner (Appeals) has rightly invoked Sub Section C of Section 11 AC of CEA or the facts of the case takes the appellant to fall under Sub Section A of 11AC of CEA - Held that:- The Sub Section C could have come into picture if and only if there had been some positive act observed by the Department, that too by way of cogent evidence to show that there was an element of mensrea of tax evasion available with the appellant while availing the impugned cenvat credit and even while utilizing the same - The findings of Commissioner (Appeals) merely relying upon the deposit by the appellant of the wrongly availed cenvat credit as an admission and a reason to not to search for the evidence qua the positive act of alleged fraud and mis-representation, is a finding based on the presumption and surmises. The same is therefore not sufficient to bring home the guilt of the appellant. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 987
CENVAT Credit - inputs/capital goods - iron and steel items - whether the iron and steel items (angle, channel, joist, bar plate sheet and coil) can clearly fall under the definition of capital goods and the inputs? - Held that:- The Sub Clause (i) of Rule 2a of CCR makes it very clear that any item other than those falling under Chapters 82, 84, 85 and 90 will not be a capital good. Apparently and admittedly the impugned iron and steel items are falling under Chapter 72. For these items to still fall under the aforesaid definition, it is for the appellant to show that these items have been used as components, spares and accessories of the goods falling under the above mentioned Chapters, i.e. 82, 84, 85 & 90 - As is very much apparent from the terminology used, the items are used purely for the construction activity - there is nothing on record as may show that these items have been used in such a structure which is used in or integrally connected with the process of actual manufacture of the final product - credit rightly denied. Penalty - Held that:- The Act of the appellant has rightly been held as suppression of relevant facts - Penalty upheld. The iron and steel items do not fall either under the definition of capital goods or under definition of inputs under Section 2(a) and 2(k) of the Cenvat Credit Rules, 2004 - Credit rightly denied - penalty upheld - appeal dismissed - decided in favor of appellant.
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2018 (7) TMI 986
Valuation - VAT liability discharged by the utilisation of the investment subsidy granted in Form 37B - inclusion of subsidy amounts in assessable value - Held that:- An identical issue decided in the case of Shree Cements Ltd. V/s CCE, Alwar [2018 (1) TMI 915 - CESTAT NEW DELHI], where it was held that There is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 985
Classification of goods - various Bio-products namely, Azospirillum, Phosphobacterium, VAM, Beauvemet, Trichoderma Viride, Pseudomonas Fluorescens - whether these micro-organisms fall under classification 3808, as contended by the Department, or would fall under 3002, as claimed by the respondents? Held that:- It can be seen that Chapter 38 deals with insecticides, rodenticides and other miscellaneous chemical products whereas 3002 deals with micro- organisms which are living organisms - The Tribunal in the case of T. Stanes and Co. [2008 (10) TMI 109 - CESTAT, CHENNAI] has held that CH 3808 doesn’t cover insecticides & fungicides with cultures of microbes as basis, impugned microbes were cultures of micro-organisms which aided growth of plants and were classifiable u/ch 3002. The Commissioner (Appeals) has rightly classified the impugned goods under 3002 - appeal dismissed - decided against Revenue.
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2018 (7) TMI 984
CENVAT Credit - duty paying documents - credit availed on the basis of photo copy of the bills of entries accompanied by the invoice - Rule 9 of Cenvat Credit Rules, 2004 - units dispatched from port itself - Held that:- In this case, just to save the additional expenditure incurred the appellant has despatched the consignment to their various units from the port itself - As long as the input is received in the factory of the production and used for the manufacture of excisable goods, there should not be any bar in taking Cenvat credit under Rule 9 thereof which is substantial benefit and not to be denied on account and procedural ground. CENVAT Credit allowed - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 983
Maintainability of appeal - monetary amount involved in the appeal - the amount involved is less than ₹ 10,00,000/- - Held that:- According to the instruction issued under F. No. 390/Misc./163/2010-JC dated 17.12.2015 in partial modification of the earlier instruction dt. 17/08/2011, monetary limit for filing the appeal before the Tribunal by the Revenue has been fixed at ₹ 10,00,000/- - Since in this appeal the amount is less than ₹ 10,00,000/-, the appeal has to be rejected - the appeal is liable to be dismissed on monetary limits without going into the merits. CENVAT Credit - education cess and secondary and higher education cess - Whether Rule 3(1) of the Cenvat Credit Rules, 2004 applies to goods received from 100% export oriented units and whether the appellant-assessee is eligible to avail Cenvat credit on entire amount of education cess and secondary and higher education cess? - Held that:- The issue is no longer res-integra and stands decided in the case of TYCHE INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., VISAKHAPATNAM [2010 (2) TMI 1125 - CESTAT BANGALORE], where it was held that appellants are entitled to avail 100% credit of Education Cess on the goods supplied to them by a 100% EOU - credit allowed. Appeal dismissed - decided against Revenue.
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2018 (7) TMI 982
CENVAT Credit - electricity generated for own use in the manufacture of dutiable products - electricity sold outside to UPPCL - demand under Rule 6(3) of the CCR 2004 - Held that:- Identical issue decided in the case of M/S. NANGLAMAL SUGAR COMPLEX VERSUS CCE, NEW DELHI (VICE-VERSA) [2017 (1) TMI 413 - CESTAT NEW DELHI], where reliance was placed in the case of DSM Sugar Mills Ltd.,[2014 (7) TMI 531 - CESTAT NEW DELHI], where the Tribunal has held that electricity is not an excisable good and hence, in respect of the sale of the electricity to U.P. Power Corporation Ltd., the provisions of Rule 6(3) of the Cenvat Credit Rules would not be applicable - demand set aside - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 981
Reversal of CENVAT Credit - inputs cleared 'as such' and shown in their accounts as “written off” - Held that:- An identical issue decided in the case of FORCE MOTORS LTD. VERSUS CC, CCE & ST, INDORE [2017 (5) TMI 813 - CESTAT NEW DELHI], where taking a view that the credit on inputs, which are rejected during the course of manufacture (line rejections) cannot be denied as they are already put in the process of manufacture, it was held that The full value of the inputs having been “written off” in the accounts because of this reason by itself cannot be inferred to mean that these inputs are cleared as such - credit cannot be denied - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 980
N/N. 65/1997-CE in terms of clause 6 of Proviso to the Notification - Manufacture of intermediate goods - CENVAT Credit on any input not availed - Compliance with Rule 6(1) of the Cenvat Credit Rules, 2004 - Held that:- The appellant though manufacturing intermediate goods, namely, plastic powder out of plastic granule, but they are also not availing the Cenvat Credit. The Exemption Notification in respect of intermediate input is provided under the N/N. 67/1995-CE. From notification, it is observed that the exemption is available under the said Notification if the assesse complied with the provision of Rule 6 of Cenvat Credit Rules, 2004. In terms of Rule 6(1), the appellant should not avail the Cenvat Credit in respect of inputs used in the manufacture of exempted final product - In the facts of the present case also the appellant have not availed the Cenvat Credit in respect of plastic granules, accordingly, they have scrupulously complied with the provisions of Rule 6(1), therefore, according to the provision under clause (vi) of Proviso to N/N. 67/1995-CE, the appellant became eligible for exemption N/N. 67/1995-CE in respect of their intermediate inputs i.e. plastic powder. Benefit of notification allowed - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 979
100% EOU - Valuation - goods manufactured and cleared by 100% EOU - whether the valuation shall be governed by Section 4 of Central Excise Act, 1944 or Section 14 of Customs Act, 1962? - Held that:- As per the facts of the case, the goods were manufactured out of the imported and some of the indigenous raw material and cleared in DTA on payment of duty. Some of the goods were cleared to the appellants own sister unit and part of the goods manufactured and cleared to the independent manufacturer - as per Section 3 proviso, Clause (ii) of CEA, it is clear that the value for the purpose of DTA sale shall be determined in accordance with the provisions of the Customs Act, 1962 and the Customs Tariff Act, 1974 - Thus, there is no doubt that the valuation in respect of goods manufactured by EOU shall be adopted in accordance with the Customs Act, 1962. As regards the judgement of Hon’ble Supreme Court in the case of Nestle India Ltd [2015 (11) TMI 1171 - SUPREME COURT], it is found that in the said case the fact was different as the goods were manufactured from only indigenous raw-material and allowed to be sold in DTA, whereas in the present case, the goods were manufactured out of the imported and some of the indigenous raw material and cleared in DTA on payment of duty - As per the holistic view from the overall scheme for 100% EOU, the object is that goods manufactured by 100% EOU should be exported and if it is permited to be cleared in DTA, duty equal to the Customs duty should be charged. Appeal dismissed - decided against appellant.
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2018 (7) TMI 978
100% EOU - clearances of by-products by availing benefit of N/N. 23/2003-CE dated 31.03.2003 - The case of the department is that the appellant did not obtain any permission from the Development Commissioner for the said clearances - appellant claims that they are holding “two star export house” status and not required to obtain permission for removal of goods in DTA. Held that:- The Ld. Commissioner has recorded that the appellant have not produced any evidence that they are holding “two star export house” status, therefore, the matter needs re-consideration on this issue. However, the appellant have submitted the certificate of two star export house status with the present appeal. Since, there is no finding on this issue whether the appellant is eligible to clear the goods without obtaining any permission of the Development Commissioner. Therefore, the impugned order set aside and matter remanded to the adjudicating authority to re-consider the issue of two star export house status with reference to the para 6.39.13 of the Handbook of Procedure - The appellant’s submission is also that the spent solvent is not excisable goods, therefore, the permission is not required and no duty can be demanded. This issue also needs to be reconsidered by the adjudicating authority. Appeal allowed by way of remand.
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2018 (7) TMI 977
CENVAT Credit - ‘toothbrushes’ procured between 13th March 2006 and 28th November 2006 for free supply along with toothpaste - Held that:- It is admitted by Learned Counsel that the goods were cleared as toothpaste and not under any other description that would describe both the items as a set for acceptance of the price thereof as the correct assessable value; consequently, the definition of inputs in rule 2 (k) of CENVAT Credit Rules, 2004 cannot be extended to such toothbrush for availment of CENVAT credit - credit not allowed. Valuation - cosmetics manufactured and cleared as free samples - demand of duty - Held that:- It is not in dispute that cosmetics are statutorily mandated for the printing of maximum retail price on the product with appendant liability to be assessed under section 4A of the Central Excise Act, 1944 - The appellant has not been able to bring on record any evidence that these were to be used by anyone other than the final customer. The manner of distribution of these ‘free samples’ was also to be left to the entities in the marketing chain - the claim of the appellant that these were, not intended for sale to the ultimate consumer cannot be accepted, and they are required to comply with the printing of ‘maximum retail price’ and to discharge duty liability under section 4A of Central Excise Act, 1944 - demand upheld. Valuation - double pack of toothpaste as sales promotion - demand of duty - Held that:- It is not in dispute that the clearance of two tubes toothpaste in a single packet is intended to be made available customers in that manner. It is also not in dispute that the appellant discharged duty liability on the maximum retail price printed on such sets of toothpaste - Whether the tooth paste is sold as a single piece, or intended for sale is as a pair, is best left as a business decision of the manufacturer and, to the extent that the price has been declared on the package containing the combined set, the assessable value cannot be enhanced without any evidence of additional consideration flowing back. There is no evidence on record that duty has been discharged on value less than the retail price declared for the combination - demand set aside. The penalty under section 11 AC of Central Excise Act, 1944 reduced to ₹ 1,21,378/- - other penalties set aside. Appeal allowed in part.
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2018 (7) TMI 976
CENVAT Credit - Capital Goods not installed in the premises but in a different unit situated elsewhere - Held that:- The appellants have informed the concerned Assistant Commissioner of Central Excise vide their letter dated have 07.07.2010 vide which they have informed that due to space problem they have purchased new premises at 48 & 49, Industrial area, Tumkur for doing certain operations and have shifted the machineries - further, at the said premises the machineries have been used only for the captive consumption of the appellant and it is in the name of the appellant's own name and it is also a fact that clearance has not happened from the job-workers premises and the appellants have cleared the goods on payment of duty. The contention of the Revenue that they are huge machines and cannot be removed from one premises to other premises is not born out by any evidence whereas the appellant has produced the delivery challan for transfer of the machineries from the main premises to the job-worker premises and it is returned to the main factory. the Hon'ble Supreme Court in the case of Vikram Cement [2006 (2) TMI 1 - SUPREME COURT] has held that if the mines are captive mines so that they constitute one integrated unit together with the concerned cement factory, then cenvat credit on capital goods are available. Credit allowed - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 975
Valuation - DTA Sale - it was alleged that the value of plastic bags which were physically exported cannot be counted for computing DTA sale entitlement in respect of Plastic Agglomerates and Plastic Pellets (Granules), which were cleared for DTA sale, since plastic agglomerates/pellets are not similar to plastic bags - Held that:- The Tribunal in the case of Amitex Silk Mills Ltd. [2007 (7) TMI 279 - CESTAT, AHMEDABAD] has held that the raw materials were admittedly issued for manufacture in the 100% EOU and no raw materials as such has been diverted and hence demand of duty on the raw materials is not sustainable - for the purpose of DTA clearance, the value of deemed export is also to be considered as export. Third time payment of Education Cess and S&H Education Cess on the DTA clearance - Held that:- Reliance placed in the case of SARLA PERFORMANCE FIBERS LTD. VERSUS COMMISSIONER OF C. EX., VAPI [2010 (2) TMI 335 - CESTAT, AHMEDABAD], where it was held that Education cess not payable for third time as contended by the department. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 974
CENVAT Credit - items/goods used for the erection of Gas Manufacturing Plant - no Central Excise duty was paid on the said plants - Held that:- An identical issue decided in the case of M/S JSW ISPAT STEEL LTD VERSUS COMMISSIONER OF CENTRAL EXCISE [2013 (11) TMI 1389 - CESTAT MUMBAI], where it was held that CENVAT Credit of excise duty paid on parts, components and accessories would be admissible under the Capital Goods Credit scheme even if they are assembled into goods which are immovable or exempted - credit allowed - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 973
Extended period of limitation - Demand of Central Excise duty - Drum washer machine/relax drum machine - benefit of N/N. 6/2002-CE dated 1.3.2002 and N/N. 6/2006-CE dated 1.3.2006 - Held that:- The appellants have, during this period, filed returns claiming the benefit of notification. There is no assertion that they have mis-declared the product. Their unit was also audited numerous times. The description in the returns is ‘Relax drum machine’ and the benefit of notification has been claimed. In these circumstances, it cannot be said that the appellants had suppressed anything or had an intention to evade payment of duty - appeal allowed on limitation.
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2018 (7) TMI 970
CENVAT Credit - input services - annual maintenance of lifts installed in the building - appellant herein is engaged in providing the taxable services of accommodation in hotel for lodging purposes - whether the service for getting the lift of the premises maintained and for getting the premises painted is an input service for the appellant on which the credit has rightly been availed or not? Held that:- The inclusive part of the definition specifically includes the renovation or repair of the premises of provider of output services. It is an apparent and admitted fact that the appellant is providing output services of accommodation/ lodging from the said premises - The use of word repair and maintenance in the Works Contract, is not applicable to the given circumstances as the definition of Works Contract has to be read as a whole and the perusal thereof makes it clear that when the repair, maintenance, etc. is the part of a contract where construction is also an activity then that renovation will be covered under the definition of Work Contract else it will be very much inclusive part of the definition of input. Credit allowed - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 969
Restoration of Appeal - case of appellant is that neither the previous counsel informed them about the date of hearing nor they received the hearing notice - Held that:- The reasons stated in the ROA application seems to be satisfactory - the miscellaneous application for restoration of appeal is allowed and appeal is restored to its original number. Change in cause title - change due to the expiry of license agreement with the Intercontinental Hotels Corporation, a company incorporated in Singapore “The Grand” and now, it is operating under its own brand name and styled as “The Lalit, Bangalore” - Held that:- The Registry is directed to change the cause title in respect of the appellant to “The Lalit, Bangalore” (A Unit of Bharat Hotels Ltd.) - application allowed. Applications allowed.
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CST, VAT & Sales Tax
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2018 (7) TMI 972
Jurisdiction - Power of AO to levy VAT - Levy of Sales Tax or Service tax? - transfer of right to use - lease rent on Plant and Machinery forming part of Composite lease of Brewery. Held that:- In the given facts of present case wherein the Assessing Officer has levied VAT on transfer of plant and machinery being covered by sub-clause (d) of Clause (29-A) of Article 366 of the Constitution it is difficult to accept the submissions on behalf of the petitioner, that it was beyond his competence to levy VAT on transfer of plant and machinery. Being within the competence of the State and its functionaries in vivisecting the composite lease rent and levying VAT on the transfer of plant and machinery. The challenge as to the jurisdiction of State functionaries in levying VAT is negatived - Since we have held that it is within the competence of the State and its functionaries to levy VAT on the transfer of plant and machinery, the petitioner is set to avail the remedy of Appeal under Section 46 of VAT Act, 2002, against the assessment order. Petition disposed off.
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2018 (7) TMI 971
Validity of assessment order - levy of tax at 1% under Section 3H of TNGST Act - local purchase of dyes and chemicals were used in the process - whether the respondent in the assessment orders, for the years 2002-03 and 2005-06, has to specifically give the details, of the extent of dyes used in bleaching / works contract and consequently, the quantum of liability to pay tax, in the case of works contract? - availability of alternative remedy. Held that:- From the perusal of the judgment of State of Tamilnadu Vs. Vanavil Colours, [2017 (5) TMI 1548 - MADRAS HIGH COURT], it could be seen that levy of tax has been sustained, but, penalty alone has been cancelled. Statute provides for an appeal. On more than one occasion, the Hon'ble Supreme Court, as well as this court, held that, ordinarily, writ petitions should not be entertained, when statutes provide for an effective and alternative remedy - where hierarchy of appeals is provided by the statute, the party must exhaust the statutory remedies before resorting to writ jurisdiction. Though, the appellant/assessee has sought for reversal of the common order impugned, it not correct to interfere with the same. It is always open to the appellant, to prefer statutory appeals as directed by the writ Court. While sustaining the orders impugned, the assessee are permitted to prefer statutory appeals to the appellate authority, if so advised - appeal dismissed.
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