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M/s. Krishna Carago Movers Pvt. Ltd. Versus CC, Amritsar

2016 (10) TMI 446 - CESTAT CHANDIGARH

Cost Recovery Charges - notified CFS - CBEC instruction dated 14.12.95 read with circular No.52/97Cus dated 17.10.97, a CFS is required to deposit in advance cost recovery charges i.e. charges of the custom official posted at port - Whether the appellant can be held responsible for non payment of cost recovery charges when no calculation was made by the Revenue? - Held that: - it is fact on record that cost recovery charges are to be calculated by the Revenue, the appellant cannot pay cost recov .....

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f charges. The appellant has achieved the bench mark performance within the initial two years - the Revenue is duty bound to examine the issue and disposed of the claim of waiver failing which the Revenue cannot continue to demand of cost recovery charges from the appellant. - Appeal allowed - decided in favor of appellant. - C/56088//2013-Cus(DB) - Final Order No. 61148/2016 - Dated:- 18-7-2016 - Mr. Ashok Jindal Member (Judicial) and Mr. V. Padmanabhan, Member (Technical) Shri Naveen Binda .....

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ted at port. Advance deposit may be made for three months. The appellant paid cost recovery charges till Feb., 2010, Thereafter, the appellant did not pay any cost recovery charges till September, 2010. On 6.9.2010, the cost recovery charges amounting to ₹ 36 lakh were demanded from the appellant. The appellant deposited ₹ 15 lakh and ₹ 21 lakh respectively on 22.9.2010 and 29.9,2010. Further on 18.0.5.2011, a demand of ₹ 1,35,95,874/- was raised but the appellant submitt .....

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h Court and Hon'ble High Court directed the appellant to make detailed representation to the respondent. In compliance to the direction of Hon'ble High Court, the Revenue passed the impugned order on 14.12.2012 whereby the appellant was asked to pay a sum of ₹ 1,18,00,249/- for the period March 2010 to 31.03.2012. Aggrieved with the said order, the appellant is before us. 3. Shri Jagmonhan Bansal, Advocate, learned Counsel for the appellant submits that prior to introduction of Han .....

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the same. The said provision explicit is that CFS is liable to pay charges at the rate and manner prescribed by the Ministry. He further submitted that till date, neither rate are prescribed nor manner has been prescribed. In the absence of prescribed rate and manner in exercise of power conferred by aforesaid regulation, the Revenue has no authority to demand the cost recovery charges from the appellant. To support this contention, he relied on the decision of the Larsen & Toubro Ltd.2015 .....

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the demand of ₹ 36 lakh and the appellant instantly paid the same, thereafter the appellant claimed the waiver and the Revenue by one after another letter increased the demand. At no point of time, the respondent was sure about charges so amount was changed from time to time. There is no provision which requires determination of charges at the end of the appellant, Therefore, the respondent cannot claim when there is lapse on the part of the appellant. In the circumstances, it is prayed th .....

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uring the period September, 2010 July, 2012. The appellant further failed to make advance payment of charges asked to pay from the Revenue. Therefore, the appellant is not entitled for exemption and the appellant is liable to pay charges from the date till from the date of issue of the order waiver. 5. Heard both sides and considered the submissions. 6. On careful consideration of the submissions made by both sides, we find that short issue involved before us: (a) Whether the appellant is entitl .....

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to be calculated by the Revenue, the appellant cannot pay cost recovery charges without calculation of demand of cost recovery charges payable by the appellant. Therefore, we hold that in the absence of any calculation of the demand made by the revenue, the appellant cannot be responsible for non payment of cost recovery charges. We find that as per CBEC circular dated 12.9.05, if CFS achieved bench mark performance during the previous years, it is entitled for waiver of charges. Admittedly, in .....

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e case in hand which is reproduced as under: "Shall bear the cost of the customs officer posted by the principal Commissioner of Customs or Commissioner of Customs, as the case may be on cost recovery basis and shall make payments at such rates and in the manner specified by the Government of India in the Ministry of Finance unless specifically exempted by an order of the said Ministry 8. On perusal of the said provision, we find that the CFS is required to pay the cost recovery charges at .....

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nt, where the provision of service is for a consideration which is not ascertainable, to be the amount as may be determined in the prescribed manner. 26. We have already seen that Rule 2(A) framed pursuant to this power has followed the second Gannon Dunkerley case in segregating the service component of a works contract from the goods component. It begins by working downwards from the gross amount charged for the entire works contract and minusing from it the value of the property in goods .....

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regard to the aforesaid parameters, (namely, in those cases where the books of account of the contractor are not looked into for any reason) by determining in different works contracts how much shall be the percentage of the total amount charged for the works contract, attributable to the service element in such contracts. It is this scheme and this scheme alone which complies with constitutional requirements in that it bifurcates a composite indivisible works contract and takes care to see that .....

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s to utilize the machinery provisions of the States sales tax statutes for purposes of levy and assessment of central sales tax under the Central Act. It was also noticed that the State Government itself had been given power to make rules to carry out the purposes of the Central Act so long as the said rules were not inconsistent with the provisions of the Central Act. It was found that, in fact, the State of Uttar Pradesh had framed such rules in exercise of powers under Section 13(3) of the Ce .....

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ot to rules not being framed at all. The conclusion therefore in paragraph 36(2) of the Delhi High Court judgment is wholly incorrect. Para 36(2) reads as follows :- (2) Service tax can be levied on the service component of any contract involving service with sale of goods etc. Computation of service component is a matter of detail and not a matter relating to validity of imposition of service tax. It is procedural and a matter of calculation. Merely because no rules are framed for computat .....

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d conjectures. This we are afraid is not possible. Before leaving the judgment in Murarilal s case (supra), we wish to add that so far as partnership firms are concerned, the Income Tax Act contains a specific provision in Section 189(1) which introduces a fiction qua dissolved firms. It states that where a firm is dissolved, the Assessing Officer shall make an assessment of the total income of the firm as if no such dissolution had taken place and all the provisions of the Income Tax Act would .....

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who had paid excess duty would not by the self-same reasoning be able to claim such excess amount paid by the deceased. Neither of these reasons are reasons which refer to any provision of law. Apart from this, the High Court went into morality and said that the moral principle of unlawful enrichment would also apply and since the law will not permit this, the Act needs to be interpreted accordingly. We wholly disapprove of the approach of the High Court. It flies in the face of first principle .....

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that sub-clauses (g), (zzd), (zzh), (zzq) and (zzzh) of Clause (105) of Section 65 of the Act would also take within their sweep indivisible composite works contracts. The Supreme Court further concluded that prior the enactment of the Finance Act, 2007 - by virtue of which Section 65(105)(zzzza) of the Act was introduced and Section 67 of the Act was amended - a composite contract was not taxable. This was so because in absence of Rule 2A of the Rules there was no machinery for excluding the n .....

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the said clause cannot cover composite contracts such as the one entered into by the petitioners with the builder. 50. In Maharashtra Chamber of Housing Industry (supra), the Bombay High Court upheld the constitutional validity of the impugned explanation by examining the object of the taxation. The Court held that the legislative competence must be determined with reference to the object of the levy and not with reference to the incidence of tax or the machinery provisions. As indicated a .....

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