Case Law (15817)

IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI

APPEAL NO: E/87658/2019
Arising out of: Order-in-Appeal No. NSK/CEX/000/APPL/310/2017-18 dated 12/03/2018
Passed by: Commissioner (Appeals), Central Tax & CentralExcise, Nasik.

Tirupati Pipe & Allied India Pvt. Ltd.
Appellants

versus

CCGST, Nasik 
Respondent

Appellants – Represented by: Shri Mayur Shroff, Advocate
Respondent – Represented by: Shri A.B. Kulgod, Assistant Commissioner (AR)

Date of hearing: 05/12/2018
Date of pronouncement: 13/02/2019

CORAM
HON’BLE Shri Ajay Sharma, Member (Judicial)

ORDER NO: A/85278 / 2019

The issue to be decided in this Appeal is whether the Appellant is required to reverse/pay back the amount equivalent to the Cenvat Credit contained in respect of inputs received for use in the manufacture of final product, which are lying in stock as on 1.4.20007, as per the proviso of Rule 11(2) & 11(3) of the Cenvat Credit Rules, 2004, before exercising the option for exemption of Excise duty, under notification No.8/2003-CE dated 1.3.2003?

2. The facts of the matter are that the appellant are availing the benefit of Notification No.8/2003-CE dated 1.3.2003 as amended. During the Financial Year 2006-07, the appellant procured/purchased the duty paid raw materials and availed the benefit of Cenvat credit facility under the Cenvat Credit Rules, 2004 on the raw materials procured for manufacturing of M.S. Pipes and paying central excise duty at the appropriate rate on the clearances of final products namely M.S. Pipes as well as raw materials after crossing the exemption limit. The appellant vide its letter dated 1.4.2007 informed that during the year 2006-07, the aggregate value of all excisable goods cleared by them for home consumption comes to Rs.3,84,64,932/-. Therefore during the ensuing financial year 2007-08, they are entitled to avail full exemption from central excise duty, on their clearances upto an aggregate value of Rs.1,50,00,000/- and have therefore opted out of Cenvat/Modvat facility w.e.f. 1.4.2007. They also informed the department about the position of Cenvat credit account as on the date of opting out of Cenvat and balance of inputs and finished goods containing the Cenvat credit lying with them as on 31.3.2007.

3. As per the department, the appellant after given the option letter to the competent authority, have cleared the excisable goods so manufactured at nil rate of duty of central excise including Ed. Cess & H.S. Ed. Cess from their factory by availing the benefit of aforesaid notification, even though they did not fulfill the condition laid down under Rule 11(2) & (3) ibid. The appellant is thus ineligible for benefit of exemption under the aforesaid notification. Accordingly a show cause notice dated 29/30.4.2008 was issued to the Appellant as to why:-

(i)Central excise duty on the excisable goods cleared without payment of duty from the factory by the assessee valued at Rs.1,50,00,000/- on which central excise duty Rs.24,62,478/- including Ed.& H.S.Ed Cess should not be demanded and recovered under Section 11A of Central Excise Act, 1944.

(ii)interest should not be charged/ demanded and recovered under the provisions of section 11AB of Central Excise Act, 1944, and

(iii) penalty should not be imposed upon them under the Sec 11AC of Central Excise Act, 1944 read with rule 25 of Central Excise Rules, 2002 for the contravention of Rule 4,5,6 & 8 of Central Excise Rules, 2002 as they have removed the excisable goods without payment of duty from their factory and do not followed the provisions of rules made thereunder,

The Adjudicating authority dropped the proceedings vide Order-in- Original dated 2.2.2017 while relying upon the decision of this Tribunal vide order No. A/797/09/SMB/C-IV, dated 15.12.2009 in appellant’s own case, on the identical issue, for earlier financial year. The Adjudicating authority also relied upon the decision of the Hon’ble Supreme Court The Adjudicating authority dropped the proceedings vide Order-in-in the matter of CCE, Pune vs. Dai Ichi Karkaria; reported in 1999(112) ELT 353 (SC) while dropping the proceeding initiated by the revenue against the Appellant. On Appeal filed by the Revenue, the Commissioner (Appeals), Central Tax and Central Excise, Nasik vide impugned order dated 27.3.2018 partly allowed the Appeal filed by Revenue and reduced the demand to Rs.8,26,078/- alongwith interest.

4. I have heard ld. Counsel for the appellant and ld. Authorised Representative for the Revenue and perused the records. Ld. Counsel for the Appellant submitted that although on identical issue for the earlier financial year this Tribunal has held in favour of the Appellant but still the ld. Commissioner did not rely upon the same only on the ground that in view of Section 35R (1) & (2) of the Central Excise Act, 1944 the appeal filed by the department against the said order before the Hon’ble High Court of Judicature at Bombay was withdrawn and therefore the said decision of this Tribunal is not binding. He also submitted that the conduct of the ld. Commissioner, amounts to judicial indiscipline. He further submitted that although the issue involved in this matter is also covered in favour of the appellant in view of the law laid down by the Hon’ble Supreme Court in the matter of Dai Ichi Karkaria (supra) and also of the Hon’ble High Court of Punjab & Haryana in the matter of CCE, Chandigarh vs. CNC Commercial Ltd.; 2008 (224) ELT 239 (P&H) but still the ld. Commissioner did not rely upon the same and rather tried to distinguish them on some flimsy ground. The ld. Authorised Representative appearing on behalf of Revenue defended the findings recorded in the impugned order and after reiterating the same, prayed for dismissal of Appeal.

5. From the tenor of the order passed by the Commissioner (Appeals), I am of the view that the course adopted by him is not justified. Judicial propriety demands that when there is an order of higher forum available, that too in assessee’s own case, the same has to be followed by the lower authority unless certain distinguishing features are pointed out by such lower authority or the order of the higher authority is reversed or suspended. Nothing of this sort has happened in the present case. It is true that the department has preferred an Appeal before the Hon’ble High Court against the order of this Tribunal. However, the Appeal was dismissed as withdrawn due to monetary limits. This fact itself is not sufficient to empower the Commissioner to take different view and not to follow the order passed by this Tribunal. The ld. Commissioner was bound to follow the decision of the Tribunal as per the demands of judicial propriety and the impugned order is nothing but the breach of doctrine of judicial discipline and judicial propriety. I am surprised to notice the reasoning given by the ld. Commissioner for not following the decision of this Tribunal in Appellant’s own case on identical issue for the earlier financial year. Otherwise also, the Hon’ble Supreme Court in the matter of Dai Ichi Karkaria (supra) has laid down that the Cenvat credit is indefeasible and there is no one to one correlation between the input credit and final product (duty paid). On the similar issue, a co-ordinate Bench of the Tribunal in the matter of CCE, Chandigarh vs. CNC Commercial Ltd.; 2006(206) ELT 874 (Tri-Del) while dismissing the Appeal filed by Revenue, observed as under:-

“10. Coming to the submission of the learned DR that assessee opting for exemption must fulfil the terms of the exemption, it is to be noted that exemption is in terms of notification issued from year to year and not in terms of Rule 9(2) of Cenvat Credit Rules. There is no reference or incorporation of the condition of Rule 9(2) in those notifications. That apart, Rule 9(2) cannot be interpreted in a manner as to undermine the indefeasibility of Modvat credit. A reading of the said rule would make it clear that what is required in terms of the rule is to determine the Cenvat credit taken on the inputs in stock and debit it from the credit balance, "if any”, lying in assessee’s credit, and further credit balance, "if any”, lapsing and not recall of Modvat credit already utilised correctly. If the Rule contemplated additional cash payment on account of balance in Cenvat credit being insufficient, the Rule would not have qualified the credit balance as balance ”if any”. The addition of those words make it clear that Cenvat credit balance alone is contemplated and no additional payment. An interpretation that requires additional payment if the balance in the credit account is not sufficient to meet debit of Cenvat credit on inputs in stock etc. would be to permit recall of Modvat credit correctly utilised. Such an interpretation goes against the scheme of Cenvat credit and the language of Rule 9(2).”

The aforesaid order of the Tribunal was affirmed by the Hon’ble Punjab & Haryana High Court in the Appeal filled by Revenue in the matter of CNC Commercial Ltd.(supra) and while following the law laid down by the Hon’ble Supreme Court in Dai Ichi Karkaria case (supra), the Hon’ble High Court held as under:-

“5. We have heard the learned Counsel for the appellant-revenue of a considerable length and find that no question of law warranting admission of the appeal would arise. There are findings of fact recorded by the Commissioner (Appeals) as upheld by the Tribunal to the effect that the assessee-respondent had correctly availed and utilized the credit of duty paid by them on those inputs when these final products were chargeable to excise duty. It has further been found that there was no one to one relationship of the inputs used and the final products manufactured and cleared from the factory. It has rightly been held that the credit of duty paid on inputs cannot be confined to a particular raw material to which the credit is related and out of which a final product is manufactured. Therefore, it has been rightly held that the assessee-respondent were not required to reverse the Cenvat credit of Rs. 88,731/- The judgment of the Hon’ble Supreme Court in Dai Ichi Karkaria case has been correctly applied. There is thus no merit in these appeals which are accordingly dismissed.”

6. This Tribunal also while deciding the appeal filed by the appellant for the earlier financial year, vide order No.A/797/09/SMB/C-IV, dated 15.12.2009, relied upon the decision of the Hon’ble High Court in the matter of CNC Commercial Ltd.(supra) and held as under:-

“5. I have gone through the submissions made by both the parties and find that the case of the respondent is squarely covered by the decision of Punjab & Haryana High Court in Commissioner of Central Excise, Chandigarh vs. CNC Commercial Ltd.-2008 (224) ELT 239 (P&H), wherein the Hon’ble High Court has held that in these facts and circumstances, while opting for SSI exemption the assessee is not required to reverse the CENVAT Credit. Following the same ratio, I do not find any merits in the Appeal filed by the Revenue. Accordingly, the impugned order is upheld and the appeal is rejected.”

7. Although the Revenue filed the Appeal against the aforesaid order of this Tribunal, but the same was withdrawn, for whatever reason. The decision passed by this Tribunal or any co-ordinate bench of the Tribunal has binding value and any lower authority is bound by the said decision, unless it is disagreed and referred to a Larger Bench.

8. Therefore in the light of the above mentioned facts and the judicial decisions cited as above, I am of the view that the earlier decision of this Tribunal in Appellant’s own case is perfectly valid and is as per law and there is no reason to differ with the same and the ld. Commissioner has committed an error in not following the same and passing the impugned order. The impugned order is therefore set aside and the Appeal filed by the Appellant is allowed.


(Pronounced in Court on 13/02/2019)


(Ajay Sharma)
Member (Judicial)

arch

Additional Info

  • Date Range (yyyy-mm-dd) Wednesday, 13 February 2019
  • Court/Authority CESTAT
  • Tax Type Central Excise
  • Subject Tirupati Pipe & Allied India Pvt. Ltd. Vs CCGST, Nasik, Mumbai : APPEAL NO: E/87658/2019
  • Petitioner/Appellant Tirupati Pipe & Allied India Pvt. Ltd. Vs CCGST, Nasik
  • Respondent Tirupati Pipe & Allied India Pvt. Ltd. Vs CCGST, Nasik
  • Appl no. or Appl year APPEAL NO: E/87658/2019
  • Supreme Court Location Delhi
  • CESTAT Location Mumbai
  • AAR Location Delhi
  • Authority Supreme Court
  • AAR GST State Location Kerala




IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI

APPEAL NO: ST/87577/2018
Arising out of: Order-in-Appeal No. SM/CGST/CX/Bhiwandi/ APP-68/17-18 dated 04/04/2018
Passed by: Commissioner (Appeals), CGST & CX, Mumbai.


ABM Knowledge Ltd.
Appellants

versus

CC, Mumbai Appeal-III
Respondent

Appellants – Represented by: Shri Mahesh Raichandani, Advocate
Respondent – Represented by: Shri O.M. Shivdikar, Assistant Commissioner (A.R.)

Date of hearing: 15/11/2018
Date of pronouncement: 12/02/2019

CORAM
HON’BLE Shri Ajay Sharma, Member (Judicial)

ORDER NO: A/85280 / 2019

The instant Appeal has been filed from the order dated04/04/2018 passed by Commissioner (Appeals), CGST & CX, Mumbai.

2. The issue involved in this matter is whether the appellant is entitled to avail the input credit on the invoices which are issued in the name of the premises other then the registered premises of the Appellant.

3. I have heard ld. Counsel for the appellant and ld. Authorised Representative for the revenue and perused the records. The Appellants are engaged in providing information technology service and the registered address of the Appellant is at Bandra and they are registered with the Service Tax Department. They availed Cenvat credit on inputs, input services and capital goods during the period 2010-11 to 2013-14 under the provision of Cenvat Credit Rules, 2004. The authorities below have disallowed the Cenvat Credit availed by the Appellant for the input service i.e. renting of immovable property service, on the ground that the invoices were issued in the name of the unregistered premises of the Appellant at Andheri and New Delhi. According to learned counsel appearing for the Appellant, not registering their office at Delhi or Andheri is a procedural lapse and substantive benefit cannot be denied on such procedural lapse and in support of his submission, the ld. Counsel relied upon the decision of the Hon’ble Karnataka High Court in the matter of mPortal India Wireless Solutions (P) Ltd. Vs. Commissioner; reported in 2012(27) STR 134 (Kar.). He submitted that although the appellant has cited the same decision before the ld. Commissioner, which has been recorded in the impugned order, but there is no finding on the same. He further submitted that both the authorities below, while rejecting the claim of the Appellant, have gone beyond the scope of show cause notice and erred in holding that if the Appellant does not opt for centralized registration, they were required to register the premises as “Input Service Distributor” under the provisions of the Service Tax (Registration of Special Category of Persons) Rules, 2005. According to the ld. Counsel, in the facts of the present case no penalty can be levied on the Appellant either under Rule 15(3) of Cenvat Credit Rules, 2004 or under Section 76/78 of the Finance Act, 1994. The ld. Authorised Representative reiterated the findings recorded in the impugned order and submitted that since the Appellant had availed input credit on such services of Renting in respect of unregistered premises, therefore the credit availed on such invoices deserved to be disallowed in view of Rule 9 of Cenvat Credit Rules, 2004.

4. It is not disputed that the appellants are having Service Tax Registration for a single premises i.e. their office at Bandra. However, they availed cenvat credit on input services viz., renting of immovable property service, pertaining to premises other than the registered premises i.e. for the premises at Andheri and New Delhi. It is also not the case of the Revenue that those two premises do not belong to the Appellant. The show cause notice issued to the Appellant did not dispute that the service in question is an input service which has been received, consumed and utilised by the appellants for providing taxable output service. It is the case of the Appellant that the service provider has paid the service tax to the credit of the central government after collecting it from the appellants. Therefore, according to appellant the essential requirements for availment of input credit were satisfied. I have to decide whether the requirement of the registered premises is mandatory or otherwise.

5. I am surprise to find that on the aforesaid issue, although the decision of the Hon’ble Karnataka High Court in the matter of mPortal India Wireless Solutions (P) Ltd. (supra) has been referred by the ld. Commissioner in the impugned order as the submission of the Appellant, but there is no finding on that. The Adjudicating Authority or the Appellate Authority, as the case may be, are suppose to deal with each and every submission raised by the Appellant and when it comes to the decision of the Hon’ble Supreme Court/ High Court or of the Tribunal, they are bound to deal with the same. In the matter of mPortal India Wireless Solutions (P) Ltd. (supra) the question that arises for consideration of the Hon’ble High Court was whether the authorities were justified in refusing to grant Cenvat credit to which the assessee was legally entitled to, only on the ground that he is not registered with the department and the Hon’ble High Court while answering the question in favour of assessee, held as under:-

“7. Insofar as requirement of registration with the department as a condition precedent for claiming Cenvat credit is concerned, learned counsel appearing for both parties were unable to point out any provision in the Cenvat Credit Rules which impose such restriction. In the absence of a statutory provision which prescribes that registration is mandatory and that if such a registration is not made the assessee is not entitled to the benefit of refund, the three authorities committed a serious error in rejecting the claim for refund on the ground  which is not existence in law. Therefore, said finding recorded by the Tribunal as well as by the lower authorities cannot be sustained. Accordingly, it is set aside.”

6. The aforementioned decision of the Hon’ble High Court has been followed by the Tribunal from time to time . The rejection of refund claim on the ground of non-registration had come up before a co-ordinate Bench of the Tribunal in the matter of Commr. Of S.T., Chennai vs. Scioinspire Consulting Services (I) P. Ltd.; 2017 (47) S.T.R. 188 (Tri.Chennai) in which the Tribunal while relying upon the decision of the Hon’ble Karnataka High Court in the matter of mPortal India Wireless Solutions (P) Ltd. (supra) answered the issue in favour of the assessee and the relevant extract of the said order is as under:-

5. Heard both sides and perused the appeal records. Let me first take up the issue of denial of credit on the ground of non- registration of premises. I find that this issue has already been settled by the Hon’ble High Court of Karnataka in the case law relied upon by learned counsel in the case of mPortal India Wireless Solutions (P) Ltd. v. CST, Bangalore - 2012 (27) S.T.R. 134. The said Karnataka High Court’s decision was followed by this very Bench vide Final Order Nos. 40917-40922/2016 [ST/40887 to 40892/2015], dated 9-6-2016 [2016 (45) S.T.R. 242 (Tribunal)] in the case of KLA Tencor Software India Private Ltd. v. CST, Chennai-III. The relevant paragraph of this Bench order is reproduced as under :-

“7. With regard to issue (i), the contention of the appellant is that under Section 69 of the Finance Act, 1994 read with Rule 4 of Service Tax Rules, 1994 registration under service tax legislation is required only for service providers who are liable to pay service tax and the appellant herein is predominantly engaged in the provision of export of service and therefore they are not liable to pay service tax and consequently not required to register with the department. The appellant has placed reliance on the judgment of Karnataka High Court in the case of mPortal India Wireless Solutions Pvt. Ltd. v. ST -2012 (27) S.T.R. 134. The Hon’ble High Court at para-7 of its order has held as follows :-

“7. Insofar as requirement of registration with the department as a condition precedent for claiming Cenvat credit is concerned, learned counsel appearing for both parties were unable to point out any provision in the Cenvat Credit Rules which impose such restriction. In the absence of a statutory provision which prescribes that registration is mandatory and that if such a registration is not made the assessee is not entitled to the benefit of refund, the three authorities committed a serious error in rejecting the claim for refund on the ground which is not existence in law. Therefore, said finding recorded by the Tribunal as well as by the lower authorities cannot be sustained. Accordingly, it is set aside.”

The above ruling of Hon’ble High Court is squarely applicable to the facts of this case.
Another ruling that has been relied on by the appellant is that of Dorling Kindersley (I) Pvt. Ltd. v. CCE & ST, Noida (supra) which is also on the aspect of denial of refund claim on the ground of non-registration and the same was held to be unsustainable. Following these judicial precedents, the first issue is answered in favour of the appellant holding that even though they were not registered prior to 16-6-2008, they are eligible for refund of the unutilized credit which was accumulated prior to registration.”

xxx         xxx         xxx

8. As regards denial of refund on renting of immovable property service on account of non-registration of the premises, I find that the law is well settled. In the case of KLA Tencor Software Private Limited v. CST, Chennai (Final Order Nos. 40917-40922/2016, dated 9-6-2016), it was held that registration is not a mandatory condition to avail refund under the Notifications prescribed by placing reliance on the ruling of mPortal Wireless Solutions Private Limited v. CST, Bangalore - 2012 (27) S.T.R. 134 (Kar.). The ruling of CCE v. Sutham Nylocots- 2014 (306) E.L.T. 255, relied upon by the Revenue, is not applicable to the facts of the present case in as much as it was a case of classification/clandestine removal and credit based on registration is not a prescribed condition in terms of the exemption notification would not automatically entitle Cenvat credit. Since, the ruling of the Madras High Court is not applicable to the facts of the present case and that the ruling of the Karnataka High Court is more akin to the facts of the present case, the refund of Cenvat credit on renting of immovable property is allowed, follow the ruling of the Karnataka High Court.

9. Accordingly, I pass the following order:
(a) xxx
(b) As regards denial of refund on account of non- registration, department appeal is rejected.”

7. The aforementioned decision of the Tribunal was affirmed by the Hon’ble High Court of Judicature at Madras in the matter of Commr. of S.T.-III, Chennai vs. CESTAT, Chennai; 2017 (3) G.S.T.L. 45 (Mad.).

8. The learned Authorised Representative for the Revenue failed to point out any provision in the Cenvat Credit Rules which prescribes that registration of premises is a condition precedent for claiming Cenvat credit and in its absence the claim has to be rejected. There is no such restriction in the Cenvat Credit Rules and in particular Rule 9 which has been relied upon by the Revenue. In the absence of a statutory provision which prescribes that registration is mandatory and that if such a registration is not made the assessee is not entitle to the benefit of refund, both the authorities below have committed an error in rejecting the claim for refund on the ground which is not existence in law. There is no doubt that it is a beneficial provision and it is settled legal principle that any beneficial provision should be interpreted liberally. The Hon’ble Supreme Court in the matter of Mangalore Chemicals & Fertilizers Ltd. Vs. Dy. Commissioner; 1991(55) ELT 437 (SC) has laid down that “there are conditions and conditions. Some may be substantive, mandatory and based on considerations of policy and some others may merely belong to the area of procedure. It will be erroneous to attach equal importance to the non-observance of all conditions irrespective of the purposes they were intended to serve.” There is no dispute that lapse is there on the part of the Appellant but it is merely procedural lapse and due to that substantive benefit of Cenvat Credit cannot be denied to the Appellant. Rule 14 of the Cenvat Credit Rules, 2004 provides for recovery of Cenvat credit wrongly taken. Since in view of the decisions cited above, I am of the view that the Appellant is entitle for input credit, therefore the said Rule 14 is not applicable on the facts of the case. So far as the finding of the ld. Commissioner in the were required to register the premises as “Input Service Distributor” (ISD) under the provisions of the Service Tax (Registration of Special Category of Persons) Rules, 2005, the same is undoubtedly beyond the scope of show cause notice, since there was no allegation regarding the violation of not taking registration as ISD either in the audit report or in the show cause notice.

9. In view of the above, the order passed by the ld. Commissioner (Appeals) is set aside and the Appeal filed by the Appellant is allowed.

(Pronounced in Court on 12/02/2019)


(Ajay Sharma)
Member (Judicial)

arch





Additional Info

  • Date Range (yyyy-mm-dd) Tuesday, 12 February 2019
  • Court/Authority CESTAT
  • Tax Type Service Tax
  • Subject ABM Knowledge Ltd. Vs CC, Mumbai Appeal-III, Mumbai : APPEAL NO: ST/87577/2018
  • Petitioner/Appellant ABM Knowledge Ltd. Vs CC, Mumbai Appeal-III
  • Respondent ABM Knowledge Ltd. Vs CC, Mumbai Appeal-III
  • Appl no. or Appl year APPEAL NO: ST/87577/2018
  • Supreme Court Location Delhi
  • CESTAT Location Mumbai
  • AAR Location Delhi
  • Authority Supreme Court
  • AAR GST State Location Kerala

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH : ALLAHABAD

COURT NO. I

C/Stay/70518 & 70517/2018 In APPEAL Nos.C/71388 & 71389/2018 With APPEAL Nos.C/71403-71405/2018-CU[SM]
(Arising out of Order-in-Appeal No. 440, 441 & 442-Cus/APPL/LKO/2018 dated 27/08/2018 passed by Commissioner of Customs, GST & Central Excise (Appeals), Lucknow)

[IN APPEAL Nos.C/71388 & 71389/2018]

Commissioner of Customs, Lucknow Preventive,
Appellants

Vs.

Rajesh Jhamatmal Bhat &
Rajesh Chetandas Vaswani,
Respondents

[IN APPEAL Nos.C/71403-71405/2018]
Shri Rajesh Vaswani,
Rajesh Jhamatmal Bhat &
Murli Asandas Chandiramani
Appellants

Vs.

Commissioner of Customs, Lucknow Preventive
Respondents

Appearance:
Shri Shiv Pratap Singh, Deputy Commissioner (AR) &
Shri Gyanendra Kr. Tripathi, Deputy Commissioner (AR) for Revenue
Shri Kartikeya Narain, Advocate for Assessee

CORAM:
HON’BLE Mr. Anil G. Shakkarwar, Member (Technical)

Date of Hearing : 25/01/2019
Date of Pronouncement : 13/02/2019

FINAL ORDER NOs- 70261-70265 / 2019

Per: Anil G. Shakkarwar

The above stated 5 appeals are arising out of common impugned Order-in-Appeal No. 440, 441 & 442-Cus/APPL/LKO/2018 dated 27/08/2018 passed by Commissioner of Customs, GST & Central Excise (Appeals), Lucknow. Appeal Nos.C/71388 & 71389/2018 were filed by revenue with stay applications. The remaining three appeals have been filed by individuals on whom personal penalties were imposed. Further, impugned gold was allowed to be redeemed on payment of fine.

2. Brief facts of the case as recorded by learned Commissioner (Appeals) are that the officers of Directorate of Revenue Intelligence, Varanasi recovered 2050gm foreign origin gold and foreign origin currency of 17620 Thai Baht from appellant Shri Rajesh Jhamatmal Bhat. Similarly, 2000gm foreign origin gold was recovered from appellant Shri Rajesh Chetandas Vaswani. On the basis of information given by above two appellants DRI Officers intercepted Shri Murli Asandas Chandiramani. The investigations revealed that impugned gold was brought by Shri Shri Rajesh Chetandas Vaswani and Shri Rajesh Jhamatmal Bhat from Bangkok at Gaya International Airport without declaring the same to the Customs under Section 77 of the Customs Act, 1962. From Gaya, the above stated two appellants traveled to Mughalsarai Railway junction and board Sanghmitra Express for Nagpur. The appellant Shri Murli Asandas Chandiramani was alleged to help the other two appellants in alleged smuggling of the impugned gold. Therefore, impugned gold was confiscated and above stated three appellants were imposed with penalties through Order-in-Original dated 30.12.2015. On appeal before learned Commissioner (Appeals), the learned Commissioner (Appeals) took into consideration the provisions of Section 125 of Customs, Act, 1962, ruling by Hon’ble Bombay High Court in the case of Commissioner of Customs Airport, Mumbai Vs Alfred Menezes reported at 2009 (242) ELT 334 (Bom.), decision of this Tribunal in the case of Yakub Ibrahim Yusuf Vs Commissioner of Customs, Mumbai reported at 2011 (263) ELT 685 (Tri.-Mumbai), Union of India Vs Dhanak M. Ramji reported at 2009 (248) ELT 127 (Bom.) ruled by Hon’ble Bombay High Court and this Tribunal’s Order in the case of Commissioner of Customs (Preventive), Lucknow Vs Mazaharul Haq reported at 2016 (341) ELT 450 (Tri.-All.) and held that there was no sufficient ground for absolute confiscation of gold. Therefore, learned Commissioner (Appeals) through the impugned order gave option to redeem the confiscated gold on payment of redemption fine of Rs.25 lakhs to appellant Shri Rajesh Chetandas Vaswani and Shri Rajesh Jhamatmal Bhat. He further ordered payment of applicable duty on the said gold. However, he did not interfere with the penalties imposed on Shri Rajesh Jhamatmal Bhat, Shri Rajesh Chetandas Vaswani and Shri Murli Asandas Chandiramani to the tune of Rs.10 lakhs each under Section 112 of the Customs Act, 1962. Aggrieved by the said order, above stated appellants are before this Tribunal.

3. Revenue is also in appeal before this Tribunal, challenging the order of learned Commissioner (Appeals) which allowed redemption of confiscated gold on payment of redemption fine. The contention of revenue is that the impugned gold should be confiscated absolutely.

4. The remaining three appellants are before this Tribunal contending that the redemption fine is too high and personal penalties are also too high on the appellants. Further, in case of Shri Murli Asandas Chandiramani the contention in the appeal is that the penalty on him was not at all called for.

5. Heard both the sides. Revenue has also filed stay applications, requesting for stay of operation of order of learned Commissioner (Appeals) order. They were also taken up together with the main appeals. Both the sides were allowed to submit written submissions.

6. Written submissions were submitted on behalf of Shri Rajesh Jhamatmal Bhat, Shri Rajesh Chetandas Vaswani and Shri Murli Asandas Chandiramani by learned Counsel Shri Kartikeya Narain. It was stated in the said submission that Shri Rajesh Chetandas Vaswani and Shri Rajesh Jhamatmal Bhat had come out from Gaya International Airport the day before arrest but it did not confirm that they came through Thai Airways with gold bars and it was contended that there was a very tight security and there were so many check points existed at International Airport that it was not possible for the passengers to come out of such tight security with gold bars. He further contended that margin of profit in trade of gold is very less and therefore, for gold valued ot around Rs.1 crore redemption fine of around Rs.25 lakhs was too high. Further, he has contended that there was no finding for imposition of penalty on the above stated three appellants. He has further relied on Final Order No.72932-72934/2018 dated 27.12.2018 passed by this Tribunal in respect of Shri Sanjeeb Kumar @ Pappu Kumar, Shri Ajay Kumar & Shri Umesh Kumar Vs Joint Commissioner, Customs, Lucknow wherein it was held that margin of profit in the trade of gold is very less. He has prayed to wave the penalty on Shri Murli Asandas Chandiramani and prayed to reduce redemption fine and penalty on Shri Rajesh Chetandas Vaswani & Shri Rajesh Jhamatmal Bhat.

7. In their written submissions Revenue has submitted that Shri Rajesh Chetandas Vaswani & Shri Rajesh Jhamatmal Bhat did not declare gold to Customs and with full knowledge brought gold into India. Therefore, the same is liable for absolute confiscation. They further stated that the gold as such is not prohibited under the act but import of the same may be allowed subject to certain restrictions and conditions as envisaged under Notification No.12/2012-Cus dated 17.03.2012 as amended. Revenue further placed reliance on the decision of this Tribunal reported at 2006 (204) ELT 300 (Tri.-Mumbai) and ruling by Hon’ble High Court of Kerala in the case of Abdul Razak Vs Union of India reported at 2012 (275) ELT 300 (Ker.).

8. I have carefully gone through the records of the case and submissions made by both the sides, I understand from the fact of the case as recorded by learned Commissioner (Appeals) through impugned order that two of the appellants in the present matter brought impugned gold from Bangkok to Gaya International Airport without declaring the same to Customs authorities. I cannot find from the whole proceedings as to how the Customs authorities posted at Gaya International Airport could not detect such huge quantity of gold being removed from Gaya International Airport by passengers on their arrival. I am not able to find any submission from the individual appellants explaining as to how they removed gold on arrival from Bangkok or how they procured gold before they were intercepted at Mugalsarai Railway Station. Therefore, I find that none of the case laws relied upon by revenue are applicable in the present case. I, therefore, dismiss both the appeals filed by revenue. Both the stay applications filed by revenue are also dismissed as infructuous.

9. In so far as the appeals filed by the individual appellants are concern, I find that the individual appellants are not in a position to explain how they procured such quantity of gold. Further, they do not have any document to establish licit acquisition of the same. I, therefore, do not interfere with the order of confiscation of impugned gold and imposition of penalty. However, I find that this Tribunal in the above stated case of Shri Sanjeeb Kumar @ Pappu Kumar and others have held that margin of profit in trade of gold is very less. Taking the same into consideration, I reduce redemption fine from Rs.25 lakhs to Rs.15 lakhs. I, further, reduce penalty on Shri Murli Asandas Chandiramani, Shri Rajesh Chetandas Vaswani & Shri Rajesh Jhamatmal Bhat from Rs.10 lakhs each to Rs.5 lakhs each. The impugned order is modified accordingly. Applicable Customs duty on impugned gold shall be paid.

10. In above terms, appeals filed by Shri Murli Asandas Chandiramani, Shri Rajesh Chetandas Vaswani & Shri Rajesh Jhamatmal Bhat are partially allowed.


(Pronounced in Court on-13/02/2019)

Sd/-
(Anil G. Shakkarwar)
Member (Technical)

akp

Additional Info

  • Date Range (yyyy-mm-dd) Wednesday, 13 February 2019
  • Court/Authority CESTAT
  • Tax Type Customs duty
  • Subject Commissioner of Customs, Lucknow Preventive Vs Rajesh Jhamatmal Bhat & Rajesh Chetandas Vaswani, Murli Asandas Chandiramani Vs Commissioner of Customs, Lucknow Preventive, Allahabad : C/Stay/70518 & 70517-71388 & 71389-71403-71405/2018-CU[SM]
  • Petitioner/Appellant Commissioner of Customs, Lucknow Preventive Vs Rajesh Jhamatmal Bhat & Rajesh Chetandas Vaswani, Murli Asandas Chandiramani Vs Commissioner of Customs, Lucknow Preventive
  • Respondent Commissioner of Customs, Lucknow Preventive Vs Rajesh Jhamatmal Bhat & Rajesh Chetandas Vaswani, Murli Asandas Chandiramani Vs Commissioner of Customs, Lucknow Preventive
  • Appl no. or Appl year C/Stay/70518 & 70517-71388 & 71389-71403-71405/2018-CU[SM]
  • Supreme Court Location Delhi
  • CESTAT Location Allahabad
  • AAR Location Delhi
  • Authority Supreme Court
  • AAR GST State Location Kerala

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH : ALLAHABAD

COURT NO. I

APPEAL Nos. E/70021 & 70566/2016-EX[DB]
(Arising out of Order-in-Appeal No. GZB-EXCUS-000-APP-0085-15-16 dated 28/09/2015 and Order-in-Appeal No. GZB-EXCUS-000-APP-0305-15-16 dated 09/02/2016 passed by Commissioner (Appeals), Central Excise & Customs, Noida)

M/s Kiwi Foods India Pvt. Ltd.
Appellants

Vs.

Commissioner (Appeals) Central Excise, Noida
Respondents

Appearance:
Shri Nishant Mishra (Advocate) for Appellant
Shri Gyanendra Kumar Tripathi (Asstt. Commr.) AR & Shri Pawan Kumar Singh (Suptd.) AR for Respondent

CORAM:
HON’BLE Mrs. Archana Wadhwa, Member (Judicial)
Hon’ble Mr. Anil G. Shakkarwar, Member (Technical)

Date of Hearing : 30/11/2018
Date of Decision : 30/11/2018

FINAL ORDER NOs. - 72768-72769/2018

Per: Archana Wadhwa

After hearing both the sides, we find that the short issue is involved in the present appeal is as to whether Wafer Biscuits manufactured by the appellants would qualify for exemption in terms of Notification No.11/2011-CE.

2. Learned advocate submits that the periods involved in the present appeals are January to June, 2013 and August, 2013 to March, 2014. He further submits that identical proceedings were initiated against them for subsequent period which stands decided in their favour by Commissioner (Appeals) vide his Order-in-Appeal No. GZB/SVTAX/000/APPL-MRT/370-371/2017-18 dated 22/03/2018.

3. In view of the above developments, it is a common prayer by both the sides to remand the matter to Commissioner (Appeals) for fresh decision in the light of above referred order.

4. Accordingly, we set aside the impugned orders and remand the matter to Commissioner (Appeals) for de novo decision in the light of view taken by him in the said order passed by the same Authority. Appeals are thus disposed of by way of remand.


(Dictated & Pronounced in Court)


Sd/-
(Anil G. Shakkarwar)
Member (Technical)

Sd/-
(Archana Wadhwa)
Member (Judicial)

Lks

Additional Info

  • Date Range (yyyy-mm-dd) Friday, 30 November 2018
  • Court/Authority CESTAT
  • Tax Type Central Excise
  • Subject M/s Kiwi Foods India Pvt. Ltd. Vs Commissioner (Appeals) Central Excise, Noida, Allahabad : APPEAL Nos. E/70021 & 70566/2016-EX[DB]
  • Petitioner/Appellant M/s Kiwi Foods India Pvt. Ltd. Vs Commissioner (Appeals) Central Excise, Noida
  • Respondent M/s Kiwi Foods India Pvt. Ltd. Vs Commissioner (Appeals) Central Excise, Noida
  • Appl no. or Appl year APPEAL Nos. E/70021 & 70566/2016-EX[DB]
  • Supreme Court Location Delhi
  • CESTAT Location Allahabad
  • AAR Location Delhi
  • Authority Supreme Court
  • AAR GST State Location Kerala

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL,
REGIONAL BENCH : ALLAHABAD

E/70654/2017-EX[DB]
(Arising out of Order-in-Appeal No.GZB-EXCUS-000-APP-0546-0547-17-18 dated 21.06.2017 passed by Commissioner(Appeals), Customs & Central Excise, Appeal-II, Noida.)

M/s. Tirupati Structurals Ltd.
APPELLANT(S)

VERSUS

Commissioner of Central Excise & Service Tax, Ghaziabad
RESPONDENT (S)

Appearance
Shri Rajesh Chibber (Advocate) for the Appellant (s)
Shri Rajeev Ranjan, Joint Commr.(A.R.) for the Revenue

CORAM:
MRS. ARCHANA WADHWA, HON’BLE MEMBER(JUDICIAL)
SHRI ANIL G. SHAKKARWAR, HON’BLE MEMBER(TECHNICAL)

DATE OF HEARING: 10.12.2018
DATE OF PRONOUNCEMENT : 15.02.2019

FINAL ORDER NO.70281/2019

Per Mrs.Archana Wadhwa :

As per facts on record, the appellant is engaged in the manufacture of various items including LLDPE/HDPE Plain Lateral Pipe & Tubes and HDPE coupled Sprinkler Pipes and Drip Irrigation Emitting Pipes. The Plain Lateral Pipes and Tubes were being classified by the appellant under chapter 39 whereas Drip Irrigation Pipes were being classified under heading 8424900. The goods falling under chapter 89 were being cleared by them without payment of duty under the claim of exemption in terms of Notification No.12/2012-CE, entry 242. Further, as the appellant was availing Cenvat credit of duty paid on the common Cenvatable inputs, they were reversing an amount equivalent to 6% of value of all exempted goods in terms of the provisions of Rule 6(3) of Cenvat Credit Rules. The pipes classifiable under chapter 39 were being cleared by them on payment of duty by utilizing the Cenvat credit.

2. As per audit objection, it was observed that certain inputs like LDPE and LLDPE are being used exclusively by the appellant in the manufacture of exempted goods and as such they should not have availed any credit in respect of the same inasmuch as Cenvat Credit Rules, 2004 do not allow availing of credit of duty on the inputs exclusively used in the manufacture of exempted goods. As such an objection was raised to the effect that the appellants were not entitled to avail the Cenvat credit in respect of the inputs used exclusively in the manufacture of the exempted items. A further objection as regards the classification of the plain pipes was raised to the effect that the same are not classifiable under chapter 39, but the proper classification of the same is under chapter 84 and the same were also exempted. Accordingly an opinion was formed that the Cenvat credit availed in respect of the inputs which stands utilized for the manufacture of the plain lateral Pipes, which were being cleared on payment of duty, was also not available.

3. Accordingly, the appellants were issued two show cause notices dated 30.09.2014 covering the period from April 2012 to March 2014 and show cause notice dated 24.04.2015 covering the period from April 2014 to January, 2015. Both the show cause notices were adjudicated by the original adjudicating authority, who held that Plain Lateral Pipes are correctly classifiable under chapter 39 and as such were dutiable. Accordingly the proposed denial of credit of Rs.3,29,101.00, raised in respect of the Plain Lateral Pipes was dropped by him. However, in respect of the irrigation pipes, the Additional Commissioner observed that even though the appellant was paying 6% of the value of the said goods at the time of clearance, they were not entitled to the credit availed in respect of the inputs which were exclusively used in the manufacture of the said products. He accordingly confirmed the demand of duty of Rs.5,51,588.00 and appropriated the amount of Rs.4,52,905.00 already deposited by the appellant. He also confirmed the interest in terms of Rule 14 of Central Excise Rules, 2004 and imposed penalty of identical amount upon the appellant.

4. The said order of the Additional Commissioner was appealed against by the Revenue as also by the assessee before Commissioner(Appeals). Revenue appealed the said order on the ground that Plain Lateral Pipes and Tubes were to be classified under chapter 84 in which case they would be exempted from payment of duty vide Entry No.242 of Notification No.12/2012-CE dated 17.03.2012, being used in agriculture and horticulture. In that scenario no Cenvat Credit would be available to the assessee.

The assessee appealed against the said order in respect of the interest confirmed by the original adjudicating authority on the excess Cenvat Credit availed and reversed by them as also on the point of imposition of penalty.

Commissioner(Appeals) accepted the Revenue’s appeal and rejected the assessee’s appeal. Hence the present appeal.

5. After carefully considering the submissions made by both the sides duly represented by Shri Rajesh Chibber, learned Advocate for the appellant and Shri Rajeev Ranjan, learned Joint Commissioner(A.R.), we note that two issues are involved in the present appeal. The first issue relates to availment of Cenvat credit of duty paid on the inputs utilized in the manufacture of Plain Lateral Pipes and Tubes. Whereas the original adjudicating authority has agreed with the appellant that there was no justification for denial of the credit, Commissioner(Appeals) has held that since the said Pipes were also classifiable under chapter 84 and entitled to exemption, no credit was available to the assessee.

We note that there is no dispute on the facts. Admittedly the Plain Lateral Pipes and Tubes were being cleared by the appellant on payment of duty by treating the same as classifiable under chapter 39. As such irrespective of the fact as to whether the said pipes were classifiable under chapter 39 or chapter 84, we are of the view that the credit so availed by the assessee and utilized for payment of duty on the said goods cannot be disallowed to them. The appellants have strongly contended that the duty paid by them on the said pipes was much more than the credit availed by them. Their customers were also not availing the benefit of Cenvat credit of duty paid by the appellant. In such a scenario, it stands strongly contended that they were not benefited by availing the credit and paying duty on the final product.

Revenue is silent about the duty paid by the appellant on the said Plain Lateral Pipes and Tubes. Admittedly the said duty stands paid by them by utilizing the credit, which gets reversed at the time of payment of duty. In such circumstances the further reversal of the credit cannot be sought by the Revenue. If the Revenue was of the view that the said Pipes and Tubes were also exempted, and the appellant is not entitled to avail the credit, then the duty paid by the appellant on their final product was required to be refunded to them or to be adjusted or neutralized against the demand of credit being made. As such we note that the entire situation is revenue neutral. In fact as per the assessee’s claim they have paid much more than the credit availed by them. Accordingly we are of the view that the order of Commissioner(Appeals) upholding demand of Rs.30,29,101.00 is not justified and warranted. The same is set aside.

6. As regards second issue of payment of interest and imposition of penalty, we find that admittedly the appellant, after availing the Cenvat credit in respect of the common inputs, was clearing its exempted final product by paying 6% of the value of the said product. The Revenue’s only grievance is that some of the inputs were exclusively used in the manufacture of the said exempted products and as such the appellant should not have taken credit at all in respect of the same. On being pointed out by the Revenue, the appellant immediately reversed the said disputed credit, before issuance of the show cause notice itself. The said deposit is not being contested by the appellant. Their only contest is to confirmation of interest on the ground that the credit wrongly availed by them was lying unutilized in their accounts and as such there could be no occasion for the Revenue to confirm the interest. For the above proposition they have relied upon the Karnataka High Court’s decision in the case of C.C.E. v. Bill Forge (P) Ltd. [2012 (279) ELT 209 (Kar.)] as also many other decisions.

We note that there is no dispute about the fact that the wrongly availed credit was not being used by the assessee inasmuch as there was sufficient balance in their credit account at the time of reversal of the excess availed credit. The Hon’ble Karnataka High Court in the above-referred judgement of Bill Forge (P) Ltd. (supra) has held that in case the excess and wrongly availed Cenvat credit does not stand utilized, and is subsequently reversed, the same would not call for any interest liability. As such we find no reasons to uphold the confirmation of interest.

Similarly in respect of the imposition of penalty we note that the appellant was clearing their final exempted product on payment of 6% or 8% of the value of the goods in terms of the provisions of Rule 6. The availment of credit on the inputs which stand exclusively utilized in the manufacture of the final exempted products along with availment of duty paid on the other common Cenvatable inputs could be on account of a bona fide belief that inasmuch as they are clearing their exempted final product on payment of 8% of the value of the same, they were entitled to the benefit. Such credit was being availbed by them by reflecting the same in their Cenvatable account and the due returns were also being filed, in which case no mala fide can be attributed to them. Revenue has also not advanced any evidence to the contrary to show that such credit was being availed with a mala fide intention. The demand also stands raised by invoking the longer period of limitation. However, as the appellant is not disputing the said payment by them by reversing the credit, we, while upholding the said demand, set aside the penalty imposed upon the appellant.

7. In a nutshell the demand of Rs.30,29,101.00 is set aside. However, demand of Rs.5,51,588.00 is upheld, as not contested, but the interest confirmed and penalty imposed on the said count is set aside.

Appeal is disposed of in above manner.


(Pronounced in the open Court on 15.02.2019.)


SD/                            
(ANIL G. SHAKKARWAR)               
MEMBER(TECHNICAL)                     

(ARCHANA WADHWA)                                                                                                                                                                                MEMBER (JUDICIAL)

sm

Additional Info

  • Date Range (yyyy-mm-dd) Friday, 15 February 2019
  • Court/Authority CESTAT
  • Tax Type Central Excise
  • Subject M/s. Tirupati Structurals Ltd. Vs Commissioner of Central Excise & Service Tax, Ghaziabad, Allahabad : E/70654/2017-EX[DB]
  • Petitioner/Appellant M/s. Tirupati Structurals Ltd. Vs Commissioner of Central Excise & Service Tax, Ghaziabad
  • Respondent M/s. Tirupati Structurals Ltd. Vs Commissioner of Central Excise & Service Tax, Ghaziabad
  • Appl no. or Appl year E/70654/2017-EX[DB]
  • Supreme Court Location Delhi
  • CESTAT Location Allahabad
  • AAR Location Delhi
  • Authority Supreme Court
  • AAR GST State Location Kerala

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH : ALLAHABAD

COURT NO. I

APPEAL No.ST/70207/2016-CU[DB]
(Arising out of Order-in-Appeal No.228/ST/Alld./2015 dated 23/11/2015 passed by Commissioner (Appeals), Customs, Central Excise & Service Tax, Allahabad)

M/s Omica Associates
Appellant

Vs.

Commissioner (Appeals), Central Excise & Service Tax, Allahabad
Respondent

Appearance:
Shri Rakesh Kumar, (Adv.) for Appellant
Shri Gyanendra Kumar Tripathi, Assistant Commissioner (AR), for Respondent

CORAM:
HON’BLE Mrs. Archana Wadhwa, Member (Judicial)
Hon’ble Mr. Anil G. Shakkarwar, Member (Technical)

Date of Hearing/ Decision : 10/12/2018

FINAL ORDER NO.72886 / 2018

Per: Archana Wadhwa

After hearing both the sides, we find that Commissioner (Appeals) has dismissed the appeal on the point of time bar after observing that impugned order was passed on 27.01.2014 whereas the appeal stands filed on 16.09.2014 after a period of 8 months from the date of passing of the impugned order. Inasmuch as there was a delay beyond the period for which Commissioner (Appeals) is empowered to condone, he rejected the appeal.

2. There is no dispute about the date of passing of the order as also the date of filing the appeal. The appellants have not taken a stand that the impugned order was received by them late. As such, we fully agree with Commissioner (Appeals) that the appeal filed beyond the period of 8 months from the date of passing of the order is barred by limitation. The said issue is no more res-integra and stands settled by the Hon’ble Supreme Court decision in the case of M/s Singh Enterprises V/s Commissioner of Central Excise, Jamshedpur reported at 2008 (221) E.L.T. 163 (S.C.) laying down that the Commissioner (Appeals) has no powers to condone the delay of more than 30 days. As such, we find no infirmity in the impugned order of the Commissioner (Appeals).

3.Appeal is accordingly rejected.


(Pronounced & Dictated in Court)

Sd/-        
(Anil G. Shakkarwar)
Member (Technical)


Sd/-
(Archana Wadhwa)
Member (Judicial)

Nihal

Additional Info

  • Date Range (yyyy-mm-dd) Monday, 10 December 2018
  • Court/Authority CESTAT
  • Tax Type Service Tax
  • Subject M/s Omica Associates Vs Commissioner (Appeals), Central Excise & Service Tax, Allahabad, Allahabad : APPEAL No.ST/70207/2016-CU[DB]
  • Petitioner/Appellant M/s Omica Associates Vs Commissioner (Appeals), Central Excise & Service Tax, Allahabad
  • Respondent M/s Omica Associates Vs Commissioner (Appeals), Central Excise & Service Tax, Allahabad
  • Appl no. or Appl year APPEAL No.ST/70207/2016-CU[DB]
  • Supreme Court Location Delhi
  • CESTAT Location Allahabad
  • AAR Location Delhi
  • Authority Supreme Court
  • AAR GST State Location Kerala

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.2, R.K. PURAM,
NEW DELHI-110066

BENCH-DB

COURT –IV

Service Tax Appeal No. ST/57880/2013-CU [DB]
[Arising out of Order-in-Original No.07/2013-ST-COMMR dated 01.03.2013 passed by the Commissioner, Central Excise, Jaipur-I]

M/s. G.N. Buildev Pvt. Ltd.
Appellant

Vs.

C.C.E., Jaipur-I
Respondent

Present for the Appellant : Mr.A.K. Prasad, Advocate
Present for the Respondent: Mr.R.K. Maji, D.R.

CORAM:
HON’BLE MR. V.PADMANABHAN, MEMBER (TECHNICAL)
HON’BLE MRS. RACHNA GUPTA, MEMBER (JUDICIAL)

Date of Hearing/Decision: 05.02.2019

FINAL ORDER NO. 50232/2019

PER: V.PADMANABHAN

The present appeal is against the Order-in-Original No.7/2013 dated 25.02.2013. The Adjudicating order confirmed the service tax demand of Rs.60,45,479/- besides, interest under Section 75 and penalties under Sections 76 & 78 of the Finance Act, 1994. The appellant was engaged in construction activity and was registered with the Service Tax Department for providing the services of Commercial or Industrial Construction as well as of Construction of Residential Complex Service defined under Section 65 (25b) as well as Section 65 (91a) of the Finance Act, 1994, read with Sections 65 (zzq) and 65 (105) (zzzh) thereof. The appellant was filing ST-3 returns periodically for the taxable services rendered under the above categories. The dispute covers the period 2006-07 to 2010-11. The Departmental Officers, during the course of audit of the appellant records, noticed that the appellant was discharging the Service Tax liability under the categories registered, after availing the benefit of exemption under Notification No.1/06-ST dated 01.03.2006. The Sl. No.7 of the above Notification provided for abatement of 67% of the gross amount received and the appellant remitted tax on the balance 33%.

2. With effect from 01.06.2007, the Finance Act, 1994 introduced the Section 65 (105) (zzzza) for the service “Works Contract Service”. The Departmental officers formed the opinion that the services rendered by the appellant would be classifiable under Works Contract Service (WCS) after its introduction w.e.f 01.06.2007. The appellant was requested to provide various contracts/ work orders/ agreements of the orders executed by them. After perusal of the agreements submitted, the Department issued show cause notice dated 21.10.2011 in which it was proposed to deny the benefit of abatement claimed by the appellant under Notification No.1/2006 ibid for the reason that the appellants did not submit for examination all the agreements under which service was provided. After taking the preliminary view that the service provided would be under WCS w.e.f. 01.06.2007, demand for service tax was raised without allowing the benefit of the Composition Scheme under Works Contract “Composition Scheme” for payment of Service Tax) Rules 2007.

3. After the due process of adjudication the adjudicating authority issued the impugned order. After examination of the submissions made by the appellant, the adjudicating authority concluded that the appellant will not be liable for payment of service tax to the extent of Rs.44,21,213/- which was the service tax demanded, for the services provided to educational institutions. The balance amount of service tax amounting to Rs.60,45,479/- was ordered to be paid. This order is under challenge in the present appeal.

4. The appellant is represented by Shri A.K.Prasad, ld. Advocate and Revenue is represented by Shri. R.K. Maji, ld. D.R.

5. The arguments advanced on behalf of the appellant are summarized below:-

The ld. Advocate submitted that the activity undertaken by the appellant was in the form of construction services, which involved both the supply of goods and providing the service. As such, services rightly classifiable under the works contract service under section 65 (105) (zzzza) of the Act, w.e.f. 01.06.2007. He submitted that the services provided, for which service tax was discharged under the category of Commercial or Industrial Construction Service, will not be liable to payment of any service tax for the period prior to 01.06.2007, in view of the decision of the Hon’ble Supreme Court in the case of Larsen & Toubro reported in 2015 (39) STR 913 – (SC) in which the Apex Court has laid down the ratio that any composite service in the nature of WCS can be levied to service tax only w.e.f. 01.06.2007 that too under WCS category only. Hence, he submitted that the demand prior to that date is liable to set aside.

6. He specifically drew our attention to the fact that the appellant was registered with the Department for providing services under Commercial or Industrial and residential complex services. Further, he submitted that the appellant was filing ST-3 returns periodically in which they have reported that they were paying service tax under the above category after availing the benefit of abatement under Notification 1/2006. In view of the above, he submitted that the Department was not entitled to charge the appellant on the ground of suppression. As such, he said that the benefit of time bar is to be extended to the appellant. Further, he submitted that the levy of service tax under WCS was also the subject matter of several disputes which came to be concluded only with the issue of the judgment of Apex Court in the case of L & T. Consequently, he asserted that no demand will survive for the period beyond the normal time limit.

7. In respect of the demand, covered within the normal time limit, he submitted that the appellant will be entitled to the benefit of the Works Contract Composition Scheme. He submitted that the adjudicating authority has declined to extent the benefit of the Composition Scheme by taking the view that the appellant did not file the option to claim the benefit as per the Rule 3 of the Composition Rules. He further argued that the stand of the Department that the appellant’s services were to be classified under WCS, came to be known to the appellant only with the issue of show cause notice and hence in reply to show cause notice they have claimed the benefit of the Composition Scheme. In any case, he submitted that for the procedural violation of not submission of option, the substantial benefit of the composition scheme cannot be denied. In this connection he relied on several decisions including ABL Infrastructure Pvt. Ltd. vs. CCE, Nasik reported in 2015 (38) STR 1185 (Tri. Mum.) as well as Satish Kumar and Company vs. CCE & ST, Jaipur-I reported in 2018 (6) TMI 1085. He submitted that if the benefit of the composition scheme is extended to the appellant, no demand of service tax may survive. He also submitted that if any demand survives, the same is to be worked out with the cum-tax benefit.

8. Ld. D.R while justifying the order conceded that after the decision of the Apex Court in the case of L & T, (supra), the demand for the period prior to 01.06.2007 will not survive. However, he submitted that the appellant had failed to submit all the relevant contracts for verification to the Departmental officers. In the absence of verification of the contract, he submitted that the demand raised for the period subsequent to 01.06.2007 is liable to be upheld.

9. We have heard both the sides at length and perused the record.

10. The appellant has admittedly provided construction services. After perusal of some of the contracts whose copies were submitted by the appellant, the adjudicating authority himself has recorded the conclusion that the services provided by the appellant will be classifiable under the category of Works Contract Service w.e.f. 01.06.2007. In view of the decision of the Hon’ble Apex Court in the case of L & T (Supra), the demand of service tax for the period prior to 01.06.2007 is liable to be set aside.

10.1. Next we examine the claim of the appellant that the demand beyond the normal period of limitation under section 73 of the Finance Act is liable to be set aside on the ground of time bar. It is on record that the appellant was already registered with the Department for providing various services. They have also been filing ST-3 returns periodically in which they have declared the value of services provided and the fact that they were paying the Service tax under the category of commercial or industrial construction services, after availing the benefit of the Notification No.01/2006. The Department appears to have taken the view that the activities are more appropriately classifiable under the category of Works Contract Service, only during the course of audit of the records. As such, we find force in the argument of the appellant saying that there is no ground for alleging suppression. Further, we note that the assessment of the services in which the contracts are composite in nature came to be finally settled only by the Hon’ble Supreme Court in the case of L & T. The adjudicating authority obviously did not have the benefit of the decision of the Apex Court while passing the order in the year 2013. As such, we set aside the demand on the ground of time bar for the period beyond the normal time limit.

10.2 We now examine the claim of the appellant that they will be entitled to the benefit of Works Contract Service (Composition Scheme), after classification of the activities of the appellant under the WCS. The reason cited by the adjudicating authority for not allowing the Composition Scheme is that the appellant has failed to fulfil the requirement of Rule 3 of the Composition Rules. Rule 3 ibid specifies that the service provider is required to opt for payment of service tax under the Composition Rules by exercising such option in respect of a works contract prior to payment of service tax in respect of the said contract and the option so exercised shall be applicable for the entire works contract and shall not be withdrawn until the completion of the said works contract.

11. Admittedly, the appellant has not exercised such an option until filing the reply to the show cause notice. But the question to be decided is whether non-fulfilment of the conditions of Rule 3 will render the appellant ineligible for the benefit of the Composition Scheme. The appellant has cited several decisions to support his stand that they will still be eligible for the benefit particularly in view of the decisions of the Tribunal in the case of ABL Infrastructure Pvt. Ltd. vs. CCE, Nasik reported in 2015 (38) STR 1185 (Tri. Mum.) as well as Bridge and Roof Co. (India) Ltd. vs. CCE, Jaipur reported in 2012 (27) STR 406 (Tri.-Del.). The thrust of the above decisions is to the effect that the non- exercise of the option for payment of tax under the Composition Scheme cannot be held as a reason to deny the benefit of the competition scheme since it is in the form of only a procedural requirement. As such, we hold that the appellant will be entitled to the Composition Scheme subject to fulfilment of the other conditions. The service tax liability of the appellant is required to be re-calculated after extending the benefit of Composition Scheme and after allowing them the cum-duty benefit as held by Hon’ble Supreme Court in the decision in the case of 2009 (14) STR J49 (S.C.).

12. In the result, we order as follows:-

(1) We set aside the demand for service tax beyond the normal period of limitation.

(2) For the demand of Service Tax falling within the normal time limit, the services, already classified by the adjudicating authority under WCS, will be entitled to the benefit of the Composition Scheme. The demand, if any, is to be re-calculated with cum-tax benefit and the appellant will be entitled to the consequential benefit if any.

13.The appeal is disposed of in the above terms.


[Dictated and Pronounced in the open Court]


(RACHNA GUPTA)                
Member (JUDICIAL)                

(V.PADMANABHAN)                                                                                                                                                                                         MEMBER (TECHNICAL)

Anita

Additional Info

  • Date Range (yyyy-mm-dd) Tuesday, 05 February 2019
  • Court/Authority CESTAT
  • Tax Type Service Tax
  • Subject M/s. G.N. Buildev Pvt. Ltd. Vs C.C.E., Jaipur-I, New Delhi : Service Tax Appeal No. ST/57880/2013-CU [DB]
  • Petitioner/Appellant M/s. G.N. Buildev Pvt. Ltd. Vs C.C.E., Jaipur-I
  • Respondent M/s. G.N. Buildev Pvt. Ltd. Vs C.C.E., Jaipur-I
  • Appl no. or Appl year Service Tax Appeal No. ST/57880/2013-CU [DB]
  • Supreme Court Location Delhi
  • CESTAT Location Delhi
  • AAR Location Delhi
  • Authority Supreme Court
  • AAR GST State Location Kerala


IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH : ALLAHABAD

COURT NO. I

Appeal No. ST/55871/2014-CU[DB]
(Arising out of Order-in-Original No. 22/Commr./Meerut-I/2014 dated 20/06/2014 passed by Commissioner of Central Excise & Customs, Meerut-I)

M/s Ess Ell Motors Limited
Appellant

Vs.

Commissioner, Central Excise, Service Tax, Meerut-I
Respondent

Appearance:
Shri Vineet Kumar Singh (Advocate) for Appellant
Shri Rajeev Ranjan (Additional Commissioner) AR for Respondent

CORAM:
HON’BLE Mrs. Archana Wadhwa, Member (Judicial)
Hon’ble Mr. Anil G. Shakkarwar, Member (Technical)

Date of Hearing : 27/11/2018
Date of Decision : 27/11/2018

FINAL ORDER NO 72705 / 2018

Per: Archana Wadhwa

The short issue involved in the present appeal is as to whether the value of the goods, on which the VAT has already been paid, used in providing repairing of motor vehicle in the appellant’s authorized service station, would form part of the value of the transport services falling under the staid category or not.

2. We note that identical issue stands decided by the various precedent decisions of the Tribunal. Reference can be made to Ketan Motors Ltd. vs. Commissioner of Customs, Central Excise & Service Tax, Nagpur, reported at 2014 (33) S.T.R. 165 (Tri.-Bom.). The same stands followed by this Bench in the case of M/s Doon Valley Motors vs. Commissioner of Central Excise and Service Tax, Meerut vide Final Order No. 71998/2018-CU[DB] dated 20.08.2018. As such by following the said decision, the demand of duty on the said count is set aside.

3. We are further informed by the learned Advocate that part of the demand to the extent of Rs.2,22,493/- is under the category of Business Auxiliary Services, which are not being disputed by them and they have already deposited the same.

4. In view of the above, we set aside the impugned orders except to the extent of Rs.2,22,493/- and allow the appeal, accordingly.


(Dictated and pronounced in Court)


Sd/-
(Anil G. Shakkarwar)
Member (Technical)

Sd/-
(Archana Wadhwa)
Member (Judicial)

Ankit

Additional Info

  • Date Range (yyyy-mm-dd) Tuesday, 27 November 2018
  • Court/Authority CESTAT
  • Tax Type Service Tax
  • Subject M/s Ess Ell Motors Limited Vs Commissioner, Central Excise, Service Tax, Meerut-I, Allahabad : Appeal No. ST/55871/2014-CU[DB]
  • Petitioner/Appellant M/s Ess Ell Motors Limited Vs Commissioner, Central Excise, Service Tax, Meerut-I
  • Respondent M/s Ess Ell Motors Limited Vs Commissioner, Central Excise, Service Tax, Meerut-I
  • Appl no. or Appl year Appeal No. ST/55871/2014-CU[DB]
  • Supreme Court Location Delhi
  • CESTAT Location Allahabad
  • AAR Location Delhi
  • Authority Supreme Court
  • AAR GST State Location Kerala

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.2, R.K. PURAM,
NEW DELHI-110066

BENCH-SM

COURT – IV

Excise Appeal No. E/53073/2018 [SM]
[Arising out of Order-in-Appeal No. BHO-EXCUS-002-APP-110-18-19 dated 03/05/2018 passed by the Commissioner(Appeals), CGST & Central Excise, Raipur]

B S Sponge Pvt Ltd
Appellant

Vs.

C.C.E. & S.T., Raipur
Respondent

Present for the Appellant : Mr. Himanshu Bansal, Advocate
Present for the Respondent: Mr. P.R. Gupta, DR

CORAM:
HON’BLE MRS. RACHNA GUPTA, MEMBER (JUDICIAL) Date of Hearing/Decision: 08.02.2019

FINAL ORDER No. 50231/2019

PER: RACHNA GUPTA

Present Appeal is an outcome of second round of adjudication by Commissioner(Appeals). The appellant is aggrieved of the later Order-in-Appeal No. 002 dated 03.05.2018 vide which the structural steel items as that of Ms angle, Ms channels, Ms joists, chequered plate, etc. are denied cenvat credit for want of proof to have been used in or in relation to the manufacture of capital goods or components, spares and accessories of the capital goods specified in terms of Rule 2(a) of Cenvat Credit Rules, 2004.

2. The factual matrix relevant for the purpose is that the appellant is engaged in manufacture of sponge iron and is also availing credit on various capital goods as well as inputs. The Department on the basis of the intelligence observed that the appellant availed cenvat credit on various structural items (as above) which are used in factory premises for the fabrication of supporting structures of kiln, burning chamber, conveyor gallery, fabrication of walkways of platform, staircases, shed, etc. Alleging the same as the wrongly availed cenvat credit that SCN No. 1519 dated 07.02.2006 was served upon the appellant proposing the recovery of Rs. 25,95,873/- as allegedly wrongly availed cenvat credit alongwith the interest at the appropriate rate and the proportionate penalty. The said proposal was rejected initially vide Order-in-Original No. 80 dated 21.09.2007. Being aggrieved, Department preferred an Appeal before Commissioner(Appeals) however the same was also dismissed vide Order-in-Appeal No. 31 dated 26.03.2008.

2.1 The Department still preferred an Appeal before this Tribunal. Vide Final Order No. A/53584 dated 15.09.2014 that the matter was remanded back to the original adjudicating authority directing it to re-examine the issue in the light of various decisions as mentioned in the Order. After affording the opportunity of hearing to the assessee as well, it is in furtherance of the said direction of remand that the original adjudicating authority vide Order No. 15/34 dated 31.10.2017 has confirmed the demand as was proposed vide SCN dated 07.02.2006. Being aggrieved, the assessee preferred an Appeal. Vide impugned Order, the Appeal has been rejected. Resultantly, the assessee/ appellant is before this Tribunal.

2. I have heard Mr. Himanshu Bansal, Ld. Advocate for the appellant and Mr. P.R. Gupta, Ld. DR for the Department.

3. It is submitted on behalf of the appellant that though decision of Vandana Global Ltd. Vs. C.C.E., Raipur 2010 (253) E.L.T. 440 (Tri.- LB) is directed to be looked into vide the aforesaid Final Order but the said decision stands over-ruled by the decision of the Hon’ble High Court, Chhattisgarh. Thus, while placing reliance upon said decision of Vandana Global Ltd. (supra), in the impugned Order, an error has been committed by Commissioner(Appeals). It is further impressed upon that even in the absence of decision of Chhattisgarh High Court that initially the Department itself vide the earlier Order-in-Original dated 26.03.2008 had granted the benefit of credit treating the disputed articles as the inputs. It is impressed upon that the impugned articles have been used no doubt to create a foundational support but for such machinery of the appellant without which the final product i.e. the sponge iron cannot be manufacture and the machine manufacturing the final product cannot function without the said support. Resultantly, the authorities at the second round of litigation have committed an error while ignoring the principle of user test. Ld. Counsel has relied upon these two decisions of Hon’ble Apex Court wherein the “user test”/ principle has been discussed i.e. in the case of C.C.E., Coimbatore Vs. Jawahar Mills Ltd. 2001 (132) E.L.T. 3 (S.C.) and its subsequent adjudication C.C.E., Jaipur Vs. Rajasthan Spinning & Weaving Mills Ltd. 2010 (255) E.L.T. 481 (S.C.). Based on these submissions, Order under challenge is prayed to be set aside. Appeal is prayed to be allowed.

4. Ld. DR while rebutting these arguments has placed reliance upon para 6.2 of the Order under challenge where the Commissioner(Appeals) has clearly appreciated that there is no evidence produced by the appellant in support of their contention. Neither a Charter Engineer’s Certificate nor the relevant drawings nor even the documents pertaining to receipts issued and consumption of these steel items produced. In the absence of the evidence, the Commissioner(Appeals) had no option but to hold that the structural steel items have not been proved to be used in or in relation to the manufacture of capital goods. Thus there is no infirmity in the Order. Appeal is prayed to be dismissed.

5. After hearing both the parties and keeping in view the various Orders at each stage of this litigation and the case law as relied upon by the appellant, I am of the opinion that the issue has been dealt by various adjudicating authorities and it has now been clearly settled that structures like Ms angle, Ms channels, Ms joists, chequered plates or similar steel structures used in fabrication of supporting structures if are merely the civil structures for supporting the machines/ apparatus used in manufacture of final product stands excluded from the definition of capital goods. But if such structures satisfies the “user test” principle as appreciated by Hon’ble Apex Court in Rajasthan Spinning & Weaving Mills Ltd. (supra) case, all these structural items are as good as spare parts of the capital goods as mentioned in Clause 3 of Section 2(a) of Cenvat Credit Rules, 2004 and thus are eligible inputs/ capital goods for availing credit. The final product in the present case is the sponge iron for which the kiln, burning chamber, conveyor gallery, fabrication of walkways of platform, staircases, shed, etc. are the essential machineries. As per appellant, none of these machinery can put to use unless and until the impugned structure is there to support the said machinery as the machinery cannot be held suspended in the air. Thus, these structures are not merely the structural support to these machines but very much become the integral part of these machines manufacturing the final product.

The perusal of earlier Order-in-Original reflects that the Department had initially observed that, all the machines in sponge iron plant can become operational or can function only when the design and layout parameters are met. Such design and layout parameters specify the location, height, angle of inclination of the machines and alignment with other related machinery so that the desired result are obtained from the machinery. The kiln, cooler, hopper or material handling system in a sponge of iron plant cannot be suspended in air. Only the structural support for all these machines can facilitate the desired location, height, angle of inclination of the machine. In the absence of the structural support neither the machine can be installed nor it can function nor it can be aligned with other related machinery to produce desired results.” It was also noticed that the appellant had submitted Chartered Engineer’s Certificate dated 26.08.2007 regarding goods manufactured using impugned structural steel and the use of goods so manufactured, as is apparent from para 11 of the said Order.

Once, the documents in the form of certificates and even in the form of designs and layout were already produced on record at the first stage of litigation it was highly unreasonable on part of the Commissioner(Appeals) to reject the Appeal merely on the ground of lack of the primary evidence as that of Chartered Engineer’s Certificate, designs and layout etc. Also there was produced a report of Superintendent, Central Excise Range, Raigarh dated 11.09.2007 at the first round of litigation itself. It was verified in this report as well that concerned capital goods/ supporting structures are essential part of the plant and machinery without which the sponge iron plant cannot function and consequently final product cannot be manufactured. The extract of said report has been reproduced in Order dated 21.09.2007 as was announced at the first stage of impugned notification. Ignoring all those documents at the subsequent round of litigation is highly inappreciable on part of the Department. Such ignorance rather supports that the Department at second round of litigation was biased and presupposed for the adjudication to be decided against the appellant.

Thus, I am of the opinion in the given circumstances the impugned steel articles, the way they have been used to for the kiln, after burning chamber, conveyor gallery, fabrication of walkways of platform, staircases, shed, etc., the machines for manufacturing final products they are as good as the component/ spare/ accessories to such machines and as such are the available inputs for the cenvat credit as has been availed by the appellant. I also draw my support from the decision of Hon’ble High Court, Madras in the case of C.C.E. Vs. India Cements Ltd. 2014 (310) E.L.T. 636 (Madras) wherein it is held as follows:
“5. The Tribunal held that the assessee satisfied the user test. The Tribunal, while allowing the appeal, followed the earlier order of this Court and the law laid down in the case of Commissioner of Central Excise, Jaipur v. Rajasthan Spinning & Weaving Mills Ltd., reported in 2010 (255) E.L.T. 481) and in paragraph Nos. 7 and 8, held as follows :

8. After considering the use of the goods in question, in our considered view, the present case is covered by the decision of the Hon’ble Madras High Court in appellant’s own case as referred above. We have also noticed that the Hon’ble Supreme Court in the case of Rajasthan Spinning and Weaving Mills Ltd. (supra) allowed Modvat credit on MS channels, steel plants etc. as capital goods used for erection of chimney for diesel generating set. The findings of the Commissioner that these are structures fixed to earth with concrete foundations and are immovable appears to be beyond the scope of the show cause notice. So, the case of M/s. Triveni Engineering & Industries Ltd. – 2000 (120) ELT 440 (Tri.-LB) as relied upon by the learned AR is not applicable in the present case.”

6. In view of entire above discussion, I hold that Commissioner(Appeals) has committed an error while ignoring the evidence which was already brought on record and has also committed an act of judicial indiscipline while ignoring the decisions of Hon’ble Apex Court squarely applicable to the given facts and circumstances. Commissioner(Appeals) Order reflects that the appellant brought to the notice of the Commissioner (Appeals) about report prepared by the Range Superintendent, Raigarh dated 11.09.2007. About physical verification of various capital goods manufactured by the appellant and reporting them to the concerned capital goods/ supporting structures are essential part of the plant of machinery without which sponge iron cannot function and consequently final product cannot be manufacture. Commissioner(Appeals) has been silent about this submission of the appellant rather has ordered the dismissal of appeal for want of any Chartered Engineer’s Certificate to be produced by the appellant. As already discussed above, the said certificate was made available to the adjudicating authority at the first round of litigation itself. In view of entire above discussion, the Order under challenge is hereby set aside. Appeal accordingly stands allowed.


[Dictated and pronounced in the open Court]


(RACHNA GUPTA)
Member (JUDICIAL)

D.J.

Additional Info

  • Date Range (yyyy-mm-dd) Friday, 08 February 2019
  • Court/Authority CESTAT
  • Tax Type Central Excise
  • Subject B S Sponge Pvt Ltd Vs C.C.E. & S.T., Raipur, New Delhi : Excise Appeal No. E/53073/2018 [SM]
  • Petitioner/Appellant B S Sponge Pvt Ltd Vs C.C.E. & S.T., Raipur
  • Respondent B S Sponge Pvt Ltd Vs C.C.E. & S.T., Raipur
  • Appl no. or Appl year Excise Appeal No. E/53073/2018 [SM]
  • Supreme Court Location Delhi
  • CESTAT Location Delhi
  • AAR Location Delhi
  • Authority Supreme Court
  • AAR GST State Location Kerala

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
West Block No. 2, R.K. Puram,
New Delhi – 110 066.

Date of Hearing : 3.10.2018
Date of Pronouncement: 15.2.2019

Appeal No. C/50389/2017-DB
(Arising out of Order-in-Original No. 15/2004 dated 25.6.2004 passed by the Commissioner of Customs, ICD, TKD, New Delhi)

M/s G & G Enterprises 
Appellant

Vs.

CC, ICD, TKD, New Delhi
Respondent

Appearance
Shri Rajesh Rawal, Advocate  - for the appellant
Shri R.K. Manjhi, DR  - for the respondent

CORAM:
Hon’ble Mr. Anil Choudhary, Member (Judicial)
Hon’ble Mr. Bijay Kumar, Member (Technical)

Final Order No. 50243/2019

Per Bijay Kumar :

The present appeal is against the Order-in-Original No. 15/2004 passed by the ld. Commissioner, ICD, TKD, New Delhi. Being aggrieved by the impugned order, the appellant is before this Tribunal.

2. Briefly stated that facts of the case are that the appellant are, engaged in importing automobile motor parts such as Heat Exchanger, Condenser and magnetic clutch assemble. The Customs entertained a view that the appellant had been importing these items at heavily under  invoiced price including parts of air conditioner, accordingly the officer of SIB, New Custom House, New Delhi visited the premises of the appellant and resumed two Bills of Entry viz. Bill of Entry No. 113121 dated 17.11.1997 and Bill of Entry No. 10080 dated 17.1.1998. The appellant had imported the consignment of aforestated parts and the same were cleared after assessment and examination by the Customs. It was found during the investigation that the appellant has imported heat exchanger, filter drier, magnetic clutch assembly declaring the value of Rs. 9.40, 14.91 and 497 per piece respectively. On comparison of this import price with the other Bills of Entry for identical/similar goods imported by M/s Sanden Vikas (India) Ltd., it was noticed that the goods imported under above stated two Bills of Entry were under invoiced. The details of the contemporary import price stated to be made by the appellant and those by M/s Sanden Vilas (India) are detailed below:

 
    Sanden Vikas (I) Ltd    M/s G & G Enterprises      
Bill of Entry No. & Date    605118 dt. 9.12.97    113121 dt. 17.11.97      
Item    Heat Exchanger Condenser    Heat exchange condenser      
Unit Price    US $ 45.60 (FOB)    Sing $ 4 (C&F)      
              
Bill of Entry No. & Date    5914 dt. 17.11.97    10080 dt. 17.1.98 & 113121 dt. 17.11.97      
Item    Filter Dryer    Filter Dryer      
Unit Price    Sing. $ 7.15 (C&F)    Sing. $ 0.6 (CIF)     


company was recorded under Section 108 of the Customs Act, 1962 (for short, Customs Act). Shri G.R. Batra, in his statement stated that they have filed those Bills of Entry for the imports of the consignment of automobile parts such as heat exchanger, filter dryer, magnetic clutch assembly from M/s Formula Intertrade Co. Ltd., Thailand as per the price declared in the export invoice. He also stated that the product imported by the appellant was not branded one, and was also of inferior quantity when compared with those of M/s Sanden Vikas (I) Ltd. Not only that, he could also negotiate a discounted price to the extent of 30% from the supplier however, he could not submit the country of origin certificate. In the country of origin certificate, it was agreed by Shri G.R. Batra that the same indicated origin of Japan. It was explained by him that heat exchanger and condenser imported by them at Singapore $4 per piece after mutual meeting in China. However, same has been embossed made in the Japan in order to get market popularity. Similarly, filter dryer which had also been imported Singapore $ 7.15 per piece by M/s Sanden Vikas at the strength of invoice of M/s Product International Pvt. Ltd., Singapore but the same is not comparable with the import by the appellant.

4. However, the Show Cause Notice was issued to the appellant importer demanding duty of differential duty rejecting the declared price and also imposing penalty and interest as per Customs Act. The importer were also proposed for confiscation under Section 11(m) of  Customs Act.

5. Ld. Advocate on behalf of the appellant contests the impugned order on the ground that the order has been passed without affording personal hearing to the appellant. The appellant contacted the adjudicating authority and requested for the personal hearing however was surprised, to find the order dated 2.3.2010 after getting a call from Supdt. for recovery for the payment of dues.

6. It was also said that the goods imported by the appellant are not identical goods but are of different quality. The appellant has imported the goods of Chinese origin however, comparison is being made with those of reputed brand of Japanese origin. It was also submitted by ld. Advocate that initially the country of origin certificate was submitted showing the Japanese origin which was later on, corrected by the supplier stating clearly that the same of the Chinese make. It was also submitted that in his statement Shri G.R. Batra has never accepted that the item imported by the appellant are of Japanese origin and same are branded goods. Ld. adjudicating authority failed to take into consideration the various averment made by the appellant. It was also submitted that in this case assessment has already been made under provisions of Section 17 of the Customs Act and the consignment were cleared on payment of duty in the year 1997 and 1998. However, demand has been raised in 2002 after the lapse of 4/5 years. The assessed Bill of Entry was not appealed against by the department and, therefore, is not open to the Revenue to raise the demand under the provisions of Section 28 of the Customs Act as there was no mis- declaration on their part. Reliance was placed on the decision of Hon’ble Supreme Court in the case of Collector of Central Excise, Kanpur Vs. Flock (India) Pvt. Ltd. - 2000 (120) ELT 285 (SC) and Priya Blue Industries Ltd. Vs. CC (Pre.). – 2004 (172) ELT 145 (SC). Ld. Advocate therefore, argued that the impugned order is , therefore, not sustainable.

7. On the other hand, ld. DR on behalf of Revenue reiterated the grounds contained in the impugned order for confirmation of demand.

8. We have heard the parties and considered the rival submissions. In this case, it is fact that the appellant has imported consignment namely heat exchanger, filter dryer, magnetic clutch assembly from Thailand and Singapore were not branded one. The Revenue is attempting and comparing the quality product imported by M/s Sanden which is reputed supplier and the imported goods are branded one. We also find that the import in this case has already been assessed finally and cleared after examination thereof. The demand cannot be raised after the gap of 4/5 years on the basis of alleged contemporaneous import price. It is on record that the alleged contemporaneous price of M/s Sanden Vikas was available with the assessing officer at the time of import but the same was not considered at that time considering these to be of different quality. The reliance cannot be placed on the same contemporary price after such a long period. We also find in this case the goods were not liable for confiscation as proposed in Show Cause Notice and held in the impugned order in view of above.

9. We also find that the appellant had imported Condenser during same period vide Bill of Entry No. 3446 dated 21.7.1997 and 3515 dated 25.7.2997 from Air Cargo Complex, Trivandrum. These imports were also compared with the import price vide Bill of Entry No. 605118 dated 9.12.1997 imported by M/s Sanden Vikas India. The aforesaid import made by the appellant travelled to Hon’ble CESTAT in G.R. Batra Vs. Commissioner of Customs, Trivandrum – 2006 (206) ELT 843 (Tri.-Del.), wherein it is held as under :

“5. We have considered the submissions made by both the sides. In this case, the value of the condensers imported by the appellants were enhanced solely on the ground that the condensers imported by M/s. Sanden Vikas India Limited, Faridabad from M/s. Sanden Corporation, Japan were valued at US $ 45.60 per piece. We find that M/s. Sanden Vikas India Limited, Faridabad had imported condenser from Sanden Corporation, Japan where identification mark for these condenser are 001Z-RU26692E and these have been described as the component as per part No. IS-087860 whereas the condenser imported by the appellant are described as M.P. parts condenser by M/s. Uniden Systems (S) PTE Ltd., M-part condenser by M/s. Pely Auto Aircon Parts PTE Ltd. The country of origin is not mentioned for comparing the value of these condensers imported by the appellants. There is no examination report available on the bill of entry with the department to show that these are branded goods and manufactured by M/s. Sanden Corporation, Japan. No contemporaneous invoice of any other importer was taken into consideration for coming to the conclusion that these condensers imported by the appellants are not of the value as declared by them in the bill of entry and in the invoices. We find that when the goods were cleared from Customs these were cleared after finalisation of provisional assessment and department has taken about six months for investigation before finalisation of assessment of these goods at the time of clearance from the customs. They could not get any invoice of a price other than the prices declared by the appellant. Even the invoice of import of condensers from M/s. Sanden Corporation by M/s. Sanden Vikas India Limited, Faridabad was also available with the department but they have not utilized this. After four years of the clearance of the goods the investigation was initiated and statement of the representative of the CHA and the statement of the Prop. of the importing concern was recorded. These statements were used in the adjudication to show that the importer as well as the CHA has stated that the condenser imported by the appellants were identical to those imported by M/s. Sanden Vikas, Faridabad. We find that nowhere in the statement of CHA this fact has been stated. Revenue also could not show this after verification of the statement. We find that in the statement of Shri G.R. Batra, Prop, of the appellant concern, it is stated that “I have been shown a copy bill of entry No. 113121 dated 17-11-1997 filed by my company along with invoice No. 57521 dated 30-10-1997 issued by M/s. Uniden Systems (S) PTE Ltd., Singapore and corresponding country of origin certificate. It is true that in the country of origin certificate the manufacturer of goods have been mentioned as M/s. Sanden Corporation, Japan. I have also shown invoice No. 09520 dated 5-12-1997 issued by M/s. Sanden Corporation, Japan. It has been seen that the item heat exchanger which we have imported at the price of Singapore $ 4.00 per piece is being compared with Sanden condenser supply at a price of US $ 45.60 per piece. It is evident that the heat exchange condenser imported by us at Singapore $ 4.00 per piece is actually made in China with the made in Japan embossing on his sticker because of marketing gimmick. This is not made in Japan item invoice from supplier will be submitted to the custom shortly”. Thus, from this statement it is clear that neither Shri G.R. Batra, Prop. of the importing concern nor the CHA has ever accepted that the condenser imported by the appellant concern are of Japanese origin and they are branded goods of Sanden Corporation. Therefore, their prices cannot be compared with the stray import made by M/s. Sanden Vikas India Limited under one bill of entry for a small quantity of 240 branded condenser. There is no other evidence by which the transaction value would have been rejected after finalisation of the assessment by the customs. Therefore, on facts itself we do not find any merit in the order confirming the demand. Therefore, we do not find it necessary to give our views on other contentions raised in the defence.

6. The order of the Commissioner is therefore set aside and appeal is allowed with consequential relief, if any, to the appellants.

The Revenue’s appeal against this order before Hon’ble Supreme Court was dismissed in Civil Appeal No. 3391/2006, wherein it is held as under:

“The issue is as to whether the value of condenser imported by the respondent is $ 4 per pipe as declared by the respondent-assessee or it is to be taken at $45.6 per piece which was declared by the Revenue. The Tribunal has recorded the findings that goods in question imported were of China in original whereas the Department wanted to compare the same with the goods imported from Japan for the purpose of claiming the aforesaid value. On that ground, the Tribunal rejected the case of the Revenue and further recorded that since no other evidence is produced by the Revenue to arrive at the transaction value, the value as declared by the assessee-respondent is accepted. These are mere findings of fact and no question of law arises for consideration.

2. The appeals are, accordingly, dismissed.”

We find that the impugned order is not sustainable in view of aforesaid judgement, in respect of all items imported by the appellant.

10. We, thus, hold that the impugned order is bad in law and not sustainable. Accordingly, we set aside the impugned order and allow the appeal with consequential benefit as per law.


(Pronounced in Court on 15.2.2019)


(Anil Choudhary)                 
Member (Judicial)                

(Bijay Kumar)                                                                                                                                                                                           Member (Technical)

RM

Additional Info

  • Date Range (yyyy-mm-dd) Friday, 15 February 2019
  • Court/Authority CESTAT
  • Tax Type Customs duty
  • Subject M/s G & G Enterprises Vs CC, ICD, TKD, New Delhi, New Delhi : Appeal No. C/50389/2017-DB
  • Petitioner/Appellant M/s G & G Enterprises Vs CC, ICD, TKD, New Delhi
  • Respondent M/s G & G Enterprises Vs CC, ICD, TKD, New Delhi
  • Appl no. or Appl year Appeal No. C/50389/2017-DB
  • Supreme Court Location Delhi
  • CESTAT Location Delhi
  • AAR Location Delhi
  • Authority Supreme Court
  • AAR GST State Location Kerala
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