IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION 

CIVIL APPEAL NOS.6623 OF 2005 

COMMISSIONER OF CUSTOMS, AMRITSAR
APPELLANT(S)
 
Versus 

M/S. ESS KAY INTERNATIONAL

RESPONDENT(S)
 
O R D E R 

Show cause notice dated 25.11.1999 was issued to the respondent herein on the ground that while export of "knitted wollen shawls (Dyed)" as an obligation under the Advance Licence No.P/L/0021136 dated 08.05.1997, the respondent filed Shipping Bill No.4319 dated 22.05.1999 wherein there was a mis-declaration in respect of the quantity as well as description of the goods. The consignment was seized and taken into possession by the customs staff and action was taken against the respondent when it was found that there was a mis-declaration of goods. Since under the aforesaid Advance Licence, the respondent was also under the legal obligation to export knitted woollen shawls (Dyed) manufactured out of 5,000 kg. wollen yarn which was imported duty free, the appellant demanded excise duty.

In the appeal against the said order, the Customs Excise and Service Tax Appellate Tribunal, New Delhi (for short "CESTAT")  confirmed the findings of the Adjudicating Authority in so far as  they pertained to the mis-declaration in respect of quantity as well as description of the goods in the Shipping Bill No.4319 dated 22.05.1999. However, at the same time, the CESTAT also found that the export obligation was complemented by the respondent when another export consignment on 31.05.1999 which was cleared on 17.07.1999 vide Shipping Bill No.00325/99 dated 31.05.1999 at ICD, Chherata, Amritsar and, therefore, no duty could be demanded on the ground that the respondent had committed breach in the discharge of export obligation.

In so far as mis-declaration in respect of quantity as well as description of the goods in Shipping Bill No.4139 dated 22.05.1999 is concerned, after confirming the findings to that effect, the CESTAT reduced the redemption fine to Rs.3,00,000/- lakhs and personal penalty of Rs.2,00,000/-.

We are not inclined to interfere with the discretionary power exercised by the CESTAT in the given facts and circumstances of the case.

The appeal is accordingly dismissed.


 .........................,J
[A.K. SIKRI]


.........................,J
[ROHINTON FALI NARIMAN] 
New Delhi;
July 16, 2015.

REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 1976 OF 2011
[Arising out of SLP(c) No. 5169 of 2010]

lUnion of India & Ors.
Appellants

Versus

M/s. Ind-Swift Laboratories Ltd.
Respondent

JUDGMENT

Dr. MUKUNDAKAM SHARMA, J.

1. Leave granted.

 2 The present appeal is directed against the judgment and order dated  03.07.2009 in Civil Writ Petition No. 13860 of 2007 passed  by the Punjab & Haryana High Court, whereby the High  Court while interfering with the order of the Settlement  Commission regarding payment of interest on the CENVAT  credit, has held that the appellants herein have wrongly  claimed interest on the CENVAT credit, from the date when  such credit was wrongly availed instead of the date when  such credit was actually utilized. The High Court has further  held that the appellants are not entitled to claim interest on  the amount of Rs. 50 lacs up to 31.01.2007 as the said  amount already stood deposited on 08.03.2006. 

3 The respondent herein, viz., M/s. Ind-Swift Laboratories Ltd., is a  manufacturer of bulk drugs, falling under Chapter 30 of the  First Schedule to the Central Excise Tariff Act, 1985. The  company received inputs and capital goods from various  manufacturers / dealers and availed CENVAT credit on the  duty paid on such materials. On the basis of intelligence  report, the factory premises of the respondent as also its  group companies at different places were searched on  08.03.2006. Searches were also conducted at the offices of  large number of firms in Ghaziabad and Noida which had  allegedly issued invoices without any accompanying goods to  the respondent and its group companies. At the same time  the residential premises of Mr. R.P. Jain and Mr. J.P. Singh,  the Brokers, were also searched and particularly during the  course of search of the residence of Mr. R.P. Jain kachha  ledgers / notebooks / files and cheques issued by the Swift  group to the parties from whom invoices without material  were being received, were recovered. It also appears that the  appellant conducted investigations which indicated that the  respondent had taken CENVAT credit on fake invoices.  Consequently, a show cause notice dated 08.12.2006 was  issued to the respondent, to which a reply was also  submitted by the respondent. The respondent company also  filed applications for settlement of the proceedings and  consequently the entire matter was placed before the  Settlement Commission.

4 Before the Settlement Commission, it was an admitted position  that the case pertained to the period from 27.10.2001 to  31.03.2006. The respondent company also admitted all the  allegations and duty liability as per the show cause notice dated  08.12.2006. The respondent also deposited the entire duty of Rs.  5,71,47,148/-. Since conditions/parameters for the admission of  a case prescribed under Section 32E(1) of the Central Excise Act,  1944 [for short "the Act"] were fulfilled and complied with, the  application of the respondent for settlement was entertained and  the same was proceeded with in terms of Section 32F(1) of the  Act. After considering the records and hearing the parties the  Commission came to the findings that while the wrongful CENVAT  credit was taken from the year 2001 to 31.03.2006, the payments  refunds have been made on 22.02.2006 and on five different  dates in March, 2006 and on 20.11.2006 and, therefore, the  respondent had the benefit of availing the large amount of  CENVAT credit to which they were not entitled. Considering the  said fact, the Commission felt and was of the view that the  appropriate interest liability has to be borne by the respondent on  such wrongful availment of CENVAT credit. Accordingly, the  applications of the respondent were settled under Section 32F(7)  of the Act subject to the following terms and conditions: - 

"(a) The amount of duty relating to wrongful availment  of CENVAT credit is settled at Rs. 5,71,47,148/-. As  the entire amount has already been paid by the  applicant, no further duty remains payable. The Bench  directs that the said amount of deposit by the  applicant shall be appropriated against the amount of  duty settled in this Order. Besides the above, the  inadmissible CENVAT credit of Rs. 78,97,255/-, as  mentioned in para 23(a)(ii) of the show cause notice is  disallowed.

(b) Immunity from interest in excess of 10% simple  interest per annum is granted. Accordingly, the  applicant shall pay simple interest @ 10 % per annum  on CENVAT credit wrongly availed (i.e., Rs.  5,71,47,148/-) from the dates the duty became  payable as per Section 11AB of the Act, till the dates  of payment. Revenue is directed to calculate the  amount of interest as per this order and intimate the  same to the applicant within 15 days of the receipt of  this order. Thereafter, the applicant shall pay the  amount of interest within 15 days of the receipt of the  said intimation and report compliance both to the  Bench and to Revenue."

5 The said order also specifically recorded that full immunity  be granted to the respondent from penalty and prosecution.  Subsequent to the passing of the said order, the respondent  herein filed a miscellaneous application seeking for  clarification contending inter alia that the respondent had  deposited whole amount of duty during investigation without  protest and that, following the final order, the Revenue has  calculated interest liability of the respondent at Rs.  1,47,90,065/- and that the Revenue has calculated the said  interest up to the date of the appropriation of the deposited  amount and not up to the date of payment. It was further  contended that the interest has to be calculated from the date  of actual utilization and not from the date of availment.  Consequently, it was prayed in the said application that the  Settlement Commission may clarify the actual amount of  interest liability of the respondent and extend the period of  payment of interest in the interest of justice and equity. 

6 The said application was taken up for consideration and  after hearing the parties the application was dismissed.  While rejecting the said application the Bench noted that the  final order sets out in very clear terms that the respondent  shall pay simple interest @ 10 per cent per annum on  CENVAT credit wrongfully availed from the date the duty  became payable as per Section 11AB of the Act, till the date  of payment and that the application is misconceived and that  no case of any clarification is made out because interest has  to be calculated till the date of the payment of the duty. It  was also held that the interest is also payable with reference  to the date of availment of CENVAT credit and not from the  date of utilization of a part of the balance of such credit. The  Commission held that such an issue was never raised before  the Settlement Commission at any earlier stage. The  Commission while rejecting the application held as follows: -  "The said show cause notice vide Para 23 thereof  proposes to demand the CENVAT credit availed  fraudulently by the applicant and not the amount of  CENVAT utilized by the applicant. As such, it naturally  follows that the interest is also payable with reference  to the date of availment of CENVAT credit and not  from the date of utilization of a part of balance of such  credit. In any case, this issue was not raised in the  application of settlement or at the time of settlement. In  a query from the Bench, Id. Advocate also not raising  this issue during settlement proceedings. As such, the  Bench finds no justification to go into the practice  adopted by the Revenue in this regard. In any case, it  is a new point that did not arise for decision in the  Final Order and on which the applicant is not seeking  a decision in the garb of seeking a clarification. The  Commission has already decided the issues which  were brought before it through the Settlement  Application. Section 32M of the Central Excise Act,  1944 bars the Commission from re-opening its final  order. Hence, the final order already passed in the  matter was conclusive as to the matters stated therein  and the same cannot be re-opened for the purpose of  deciding the said point raised subsequently."

7. The respondent, however, did not pay the entire amount  in terms of the liability fixed. Consequently, a letter was  issued on 16.08.2007 from the office of the appellant  directing the appellant to pay the balance amount in terms  of the order dated 19.01.2007.

8. The records disclose that immediately on receipt of the  aforesaid letter the respondent filed a Writ Petition in the  High Court of Punjab & Haryana which was registered as  Civil Writ Petition No. 13860 of 2007, praying for quashing  the order dated 31.05.2007 which was passed by the  Settlement Commission on the applications seeking  clarifications and the letter dated 16.08.2007 by which the  office of the appellant requested the respondent to deposit  the balance amount in terms of the order dated 19.01.2007. 

9. The High Court issued notice and heard the parties on  the said Writ Petition. By its judgment and order dated  03.07.2009 the said Writ Petition was allowed by the High  Court holding that Rule 14 of the CENVAT Credit Rules,  2004 [for short "Credit Rules"] has to be read down to  mean that where CENVAT credit has been taken and/or  utilized wrongly, interest should be payable on the  CENVAT credit from the date the said credit had been  utilized wrongly and that interest cannot be claimed simply  for the reason that the CENVAT credit has been wrongly  taken, as such availment by itself does not create any  liability of payment of excise duty. The High Court further  held that on a conjoint reading of Section 11AB of the  Tariff Act and that of Rules 3 & 4 of the Credit Rules,  interest cannot be claimed from the date of wrong  availment of CENVAT credit and that the interest would be  payable from the date CENVAT credit was wrongfully  utilized.

10.Being aggrieved by the aforesaid judgment and order  passed by the High Court the present appeal was filed by  the appellant, which was entertained and notice was  issued to the respondent, on receipt of which, they have  entered appearance. Counsel appearing for the parties  were heard at length when the matter was listed for final  arguments. By the present judgment and order we now  proceed to dispose the said appeal by recording our  reasons. 

11. The facts delineated hereinabove make it crystal  clear that the respondent accepted all the allegations  raised in the show cause notice and also the duty  liability under the said show cause notice dated  08.12.2006. They also deposited the entire duty of Rs.  5,71,47,148/- prior to the issuance of the show cause  notice and, therefore, they requested for settlement of  the proceedings in terms of Section 32E read with  Section 32F of the Act. The said settlement proceedings  were conducted in accordance with law and was  finalized by the order dated 19.01.2007 on the terms  and conditions which have already been extracted  hereinbefore.

12. A bare perusal of the said order would indicate that  the Settlement commission has imposed the liability of  payment of simple interest only @ 10 per cent per  annum on CENVAT credit wrongly availed, that is, Rs.  5,71,47,148/- from the date the duty became payable.  Incidentally, imposition of such simple interest at 10  per cent per annum was the minimum, whereas levy of  interest at 36 per cent per annum was the highest in  terms of the Section11 AB of the Act. Besides, the  allegations made in the show cause notice were  admitted by the respondent which, therefore,  establishes that the respondent had taken wrongful  CENVAT credit from the year 2001 to 31.03.2006 and  the payment has been made only on 22.02.2006 and  on five different dates in March, 2006 and on  20.11.2006, which indicates that the respondent had  the benefit of availing the large amount of CENVAT  credit to which they were otherwise not entitled to.

13.The order of the Settlement Commission also  indicates that full immunities were granted to the  respondent from penalty and prosecution. The  aforesaid order was not challenged by the respondent  in any forum and, therefore, it became final and  conclusive in terms of Section 32M of the Act, which  states that every order of settlement passed under sub-  Section 7 of Section 32F would be conclusive as to the  matters stated therein subject to the condition that  when a settlement order is obtained by fraud or  misrepresentation of fact, such an order would be void.  According to the said provisions, no matter covered by  such order could be reopened in any proceeding under  the Central Excise Act or under any other law for the  time being in force.

14.Although, subsequently, an application by way of  clarification was filed by the respondent, the said  application was, however, not entertained. It was held  that the said application is misconceived, particularly,  in view of the fact that no such issue was raised before  the Commission. Since, however, a Writ Petition was  filed by the respondent challenging only the second  order of the Settlement Commission and the  subsequent letter issued from the office of the  appellant, on the basis of which, High Court even  proceeded to interfere with the first order passed by the  Settlement Commission, we heard the counsel  appearing for the parties on the issue decided by the  High Court also.

15. In order to appreciate the findings recorded by the  High Court by way of reading down the provision of Rule  14, we deem it appropriate to extract the said Rule at this  stage which is as follows:

"Rule 14. Recovery of CENVAT credit wrongly taken or  erroneously refunded: - Where the CENVAT credit has  been taken or utilized wrongly or has been erroneously  refunded, the same along with interest shall be recovered  from the manufacturer or the provider of the output  service and the provisions of Sections 11A and 11AB of  the Excise Act or Sections 73 and 75 of the Finance Act,  shall apply mutatis mutandis for effecting such  recoveries."

16. A bare reading of the said Rule would indicate that  the manufacturer or the provider of the output service  becomes liable to pay interest along with the duty  where CENVAT credit has been taken or utilized  wrongly or has been erroneously refunded and that in  the case of the aforesaid nature the provision of Section  11AB would apply for effecting such recovery.

17. We have very carefully read the impugned judgment  and order of the High Court. The High Court proceeded  by reading it down to mean that where CENVAT credit  has been taken and utilized wrongly, interest should be  payable from the date the CENVAT credit has been  utilized wrongly for according to the High Court interest  cannot be claimed simply for the reason that the  CENVAT credit has been wrongly taken as such  availment by itself does not create any liability of  payment of excise duty. Therefore, High Court on a  conjoint reading of Section 11AB of the Act and Rules 3  & 4 of the Credit Rules proceeded to hold that interest  cannot be claimed from the date of wrong availment of  CENVAT credit and that the interest would be payable  from the date CENVAT credit is wrongly utilized. In our  considered opinion, the High Court misread and  misinterpreted the aforesaid Rule 14 and wrongly read it  down without properly appreciating the scope and  limitation thereof. A statutory provision is generally read  down in order to save the said provision from being  declared unconstitutional or illegal. Rule 14 specifically  provides that where CENVAT credit has been taken or  utilized wrongly or has been erroneously refunded, the  same along with interest would be recovered from the  manufacturer or the provider of the output service. The  issue is as to whether the aforesaid word "OR" appearing  in Rule 14, twice, could be read as "AND" by way of  reading it down as has been done by the High Court. If  the aforesaid provision is read as a whole we find no  reason to read the word "OR" in between the expressions  `taken' or `utilized wrongly' or `has been erroneously  refunded' as the word "AND". On the happening of any  of the three aforesaid circumstances such credit  becomes recoverable along with interest.

18. We do not feel that any other harmonious construction  is required to be given to the aforesaid  expression/provision which is clear and unambiguous as it  exists all by itself. So far as Section 11AB is concerned, the  same becomes relevant and applicable for the purpose of  making recovery of the amount due and payable.  Therefore, the High Court erroneously held that interest  cannot be claimed from the date of wrong availment of  CENVAT credit and that it should only be payable from the  date when CENVAT credit is wrongly utilized. Besides, the  rule of reading down is in itself a rule of harmonious  construction in a different name. It is generally utilized to  straighten the crudities or ironing out the creases to make  a statute workable. This Court has repeatedly laid down  that in the garb of reading down a provision it is not open  to read words and expressions not found in the  provision/statute and thus venture into a kind of judicial  legislation. It is also held by this Court that the Rule of  reading down is to be used for the limited purpose of  making a particular provision workable and to bring it in  harmony with other provisions of the statute. In this  connection we may appropriately refer to the decision of  this Court in Calcutta Gujarati Education Society and  Another v. Calcutta Municipal Corporation and Others  reported in (2003) 10 SCC 533 in which reference was  made at Para 35 to the following observations of this Court  in the case of B.R. Enterprises v. State of U.P. and  Others reported in (1999) 9 SCC 700: -

"81. .............. It is also well settled that first attempt  should be made by the courts to uphold the charged  provision and not to invalidate it merely because one of  the possible interpretations leads to such a result,  howsoever attractive it may be. Thus, where there are  two possible interpretations, one invalidating the law  and the other upholding, the latter should be adopted.  For this, the courts have been endeavouring,  sometimes to give restrictive or expansive meaning  keeping in view the nature of legislation, maybe  beneficial, penal or fiscal etc. Cumulatively it is to  subserve the object of the legislation. Old golden rule is  of respecting the wisdom of legislature that they are  aware of the law and would never have intended for  an invalid legislation. This also keeps courts within  their track and checks individual zeal of going  wayward. Yet in spite of this, if the impugned  legislation cannot be saved the courts shall not  hesitate to strike it down. Similarly, for upholding any  provision, if it could be saved by reading it down, it  should be done, unless plain words are so clear to be  in defiance of the Constitution. These interpretations  spring out because of concern of the courts to salvage  a legislation to achieve its objective and not to let it fall  merely because of a possible ingenious interpretation.  The words are not static but dynamic. This infuses  fertility in the field of interpretation. This equally helps  to save an Act but also the cause of attack on the Act.  Here the courts have to play a cautious role of weeding  out the wild from the crop, of course, without infringing  the Constitution. For doing this, the courts have taken  help from the preamble, Objects, the scheme of the Act,  its historical background, the purpose for enacting  such a provision, the mischief, if any which existed,  which is sought to be  eliminated.......................................... 
.............................................................................. 
..............................................
This principle of  reading down, however, will not be available where  the plain and literal meaning from a bare reading of  any impugned provisions clearly shows that it confers  arbitrary, uncanalised or unbridled power." (emphasis  supplied)"

19. A taxing statute must be interpreted in the light of what  is clearly expressed. It is not permissible to import  provisions in a taxing statute so as to supply any assumed  deficiency. In support of the same we may refer to the  decision of this Court in Commissioner of Sales Tax, U.P.  v. Modi Sugar Mills Ltd. reported in (1961) 2 SCR 189  wherein this Court at Para 10 has observed as follows: -

"10......... In interpreting a taxing statute, equitable  considerations are entirely out of place. Nor can taxing  statutes be interpreted on any presumptions or  assumptions. The court must look squarely at the words  of the statute and interpret them. It must interpret a  taxing statute in the light of what is clearly expressed: it  cannot imply anything which is not expressed; it cannot  import provisions in the statutes so as to supply any  assumed deficiency."

20. Therefore, the attempt of the High Court to read  down the provision by way of substituting the word "OR"  by an "AND" so as to give relief to the assessee is found  to be erroneous. In that regard the submission of the  counsel for the appellant is well-founded that once the  said credit is taken the beneficiary is at liberty to utilize  the same, immediately thereafter, subject to the Credit  rules.

21. An order passed by the Settlement Commission could  be interfered with only if the said order is found to be  contrary to any provisions of the Act. So far findings of  the fact recorded by Commission or question of facts are  concerned, the same is not open for examination either  by the High Court or by the Supreme Court. In the  present case the order of the Settlement Commission  clearly indicates that the said order, particularly, with  regard to the imposition of simple interest @ 10 per cent  per annum was passed in accordance with the provisions  of Rule 14 but the High Court wrongly interpreted the  said Rule and thereby arrived at an erroneous finding.

22. So far as the second issue with respect to interest on  Rs. 50 lacs is concerned, the same being a factual issue  should not have been gone into by the High Court  exercising the writ jurisdiction and the High Court  should not have substituted its own opinion against the  opinion of the Settlement Commission when the same  was not challenged on merits.

23. In that view of the matter, we set aside the order  passed by the Punjab & Haryana High Court by the  impugned judgment and order and restore the order of the  Settlement Commission leaving the parties to bear their  own costs.


.................................................J
[Dr. Mukundakam Sharma]


.............................................J
[ Anil R. Dave ]


New Delhi,
February 21, 2011.

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(s). 1057 OF 2019
(arising out of SLP(C) No. 12471 of 2018)

COMMISSIONER OF CUSTOMS
APPELLANT(S)

Versus

M/S. ATUL AUTOMATIONS PVT. LTD.
RESPONDENT(S)

WITH
CIVIL APPEAL NO(s). 1058 OF 2019
(arising out of SLP(C) No.12704 of 2018)

COMMISSIONER OF CUSTOMS
APPELLANT(S)

Versus

M/S. PARAG DOMESTIC APPLIANCES
RESPONDENT(S)

CIVIL APPEAL NO(s). 1060 OF 2019
(arising out of SLP(C) No.16325 of 2018)

COMMISSIONER OF CUSTOMS
APPELLANT(S)

Versus

M/S. ATUL AUTOMATIONS PVT. LTD.
RESPONDENT(S)

CIVIL APPEAL NO(s). 1059 OF 2019
(arising out of SLP(C) No.16204 of 2018)

COMMISSIONER OF CUSTOMS
APPELLANT(S)

Versus

M/S. PARAG DOMESTIC APPLIANCES
RESPONDENT(S)


JUDGMENT


NAVIN SINHA, J.


Date: 2019.01.24

Leave granted.

2. The respondents during October November, 2016 imported certain consignments of Multi Function Devices (Digital Photocopiers and Printers) (hereinafter referred to as MFDs ).

The Commissioner of Customs held that the imports were in violation of the Foreign Trade Policy framed under the Foreign Trade (Development and Regulation) Act, 1992 (hereinafter referred to as the Foreign Trade Act ) and Rule 15(1)(2) of the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 (hereinafter referred to as Waste Management Rules ). Redemption fine was imposed under Section 125 of the Customs Act, 1962 and the consignment released for re export only. Penalty was also imposed under Section 112(a) along with penalty under Section 114AA of the Customs Act as also penalty was imposed on the Directors.

3. In appeal before the Tribunal, the respondents did not contest that the import was in violation of the Foreign Trade Policy having been made without the necessary prior authorisation. The Tribunal held that the MFDs did not constitute waste under Rule 3(1)(23) of the Waste Management 2 Rules and had a utility life of 5 to 7 years, as certified by the Chartered Engineer. Release of the consignment was directed under Section 125 of the Customs Act as the respondents were held to have substantially complied with the requirements of Rule 13 of the Waste Management Rules read with Schedule VIII Entry 4(j) except for the country of origin certificate. The Tribunal further noticed that earlier also similar consignments of the respondent and others had been released at the Calcutta, Chennai and Cochin ports upon payment of redemption fine. The redemption fine was reduced as also the penalty under Section 112(a) of the Customs Act was reduced including that on the Director also. The penalty under Section 114AA was done away with.

4. In the appeal preferred by the Revenue, the High Court held that the MFDs correctly fell in the category of other wastes under Rule 3(1)(23) of the Waste Management Rules read with Part B and Part D of Schedule III Item B1110 dealing with used Multi Function Printer and Copying Machines. Adverting to the provisions of the Foreign Trade Act and the Foreign Trade Policy  framed thereunder, it was held that the MFDs were not prohibited but restricted items for import. Section 11(8) and (9) of the Foreign Trade Act provided for confiscation and redemption of goods imported without authorisation upon payment of market value. The order for release of the goods was upheld subject to execution of a simple bond without sureties for 90% of the enhanced assessed value, with further liberty to the Director General of Foreign Trade (hereinafter referred to as the DGFT ), along with directions.

5. Shri Maninder Singh, learned senior counsel appearing for the appellant submitted that import of the MFDs without authorisation permit and in violation of the Foreign Trade Policy is not in dispute. The imported MFDs having been held to be other wastes , documentation being incomplete under Part D of Schedule III of the Waste Management Rules, re export was rightly ordered under Rule 15 of the Waste Management Rules while imposing redemption fine. Section 125 of the Customs Act could not have been relied upon, in the facts of the case, to hold that fine in lieu of confiscation would suffice for purpose of redemption permitting import. Even if the MFDs were a restricted and not prohibited item, absence of the necessary authorisation under the Foreign Trade Policy would give it the character of a prohibited item. The respondents had been habitual in the illegal import of similar consignments. Merely because on earlier occasions, similar consignments imported in violation of the law may have been released on payment of redemption fine, it did not vest a legal right in the respondent to claim similar relief always. The customs authorities, in the facts of the case, cannot be said to have detained the consignment without justification.

6. Shri Mukul Rohatgi, learned senior counsel appearing for the respondent submitted that MFDs were imported in October November, 2016. The requirement of extended producer responsibility under the E waste (Management) Rules, 2016 was deferred till 30.04.2017 by the Technical Committee under the Ministry of Environment and Forest. In any event, the respondent has obtained the same before release of the consignment. The question for disposal of the imported machine at this stage is premature as it has a utility life of 5 to 7 years.

The consignment was not a prohibited but restricted item.

Section 125 of the Customs Act vests discretion in the authority to levy fine in lieu of confiscation. The discretionary power has to be tampered with reason and has to be read along with the Foreign Trade Act and the policy framed under the same. The Customs Department has consistently in the past been permitting the release of MFDs on levy of redemption fine. The discriminatory treatment with regard to the present consignment is unjustified. The DGFT had declined to issue authorisation certificate. There was substantial compliance with the requirements of Rule 13 of the Waste Management Rules read with Schedule VIII Entry 4(j).

7. We have considered the submissions on behalf of the parties. The MFDs were imported in October November 2016.

They were detained by the customs authorities opining that the imports had been made in violation of the Foreign Trade Policy, 2015 2020 framed under Sections 3 and 5 of the Foreign Trade Act and the Wastes Management Rules.

8. Clause 2.01 of the Foreign Trade Policy provides for prohibition and restriction of imports and exports. The export or import of restricted goods can be made under Clause 2.08 only in accordance with an authorisation/permission to be obtained under Clause 2.11. Photocopier machines/Digital multifunction Print and Copying Machines are restricted items importable against authorisation under Clause 2.31. Indisputably, the respondents did not possess the necessary authorisation for their import. The customs authorities therefore prima facie cannot be said to be unjustified in detaining the consignment. Merely because earlier on more than one occasion, similar consignments of the respondent or others may have been cleared by the customs authorities at the Calcutta, Chennai or Cochin ports on payment of redemption fine cannot be a justification simpliciter to demand parity of treatment for the present consignment also.

The defence that the DGFT had declined to issue such authorisation does not appeal to the Court.

9. Unfortunately, both the Commissioner and the Tribunal did not advert to the provisions of the Foreign Trade Act. The High Court dealing with the same has aptly noticed that Section 11(8) and (9) read with Rule 17(2) of the Foreign Trade (Regulation) Rules,1993 provides for confiscation of goods in the event of contravention of the Act, Rules or Orders but which may be released on payment of redemption charges equivalent to the market value of the goods. Section 3(3) of the Foreign Trade Act provides that any order of prohibition made under the Act shall apply mutatis mutandis as deemed to have been made under Section 11 of the Customs Act also. Section 18A of the Foreign Trade Act reads that it is in addition to and not in derogation of other laws. Section 125 of the Customs Act vests discretion in the authority to levy fine in lieu of confiscation. The MFDs were not prohibited but restricted items for import. A harmonious reading of the statutory provisions of the Foreign Trade Act and Section 125 of the Customs Act will therefore not detract from the redemption of such restricted goods imported without authorisation upon payment of the market value. There will exist a fundamental distinction between what is prohibited and what is restricted. We therefore find no error with the conclusion of the Tribunal affirmed by the High Court that the respondent was entitled to redemption of the consignment on payment of the market price at the reassessed value by the customs authorities with fine under Section 112(a) of the Customs Act,1962.

10. The Central Government had permitted the import of used MFDs with utility for at least five years keeping in mind that they were not being manufactured in the country. The Chartered Engineer commissioned by the customs authorities had certified that the MFDs were capable of utility for the next 5 to 7 years without any major repairs. Considering that at import they had utility, the High Court rightly classified them as other wastes under Rule 3(1)(23) of the Waste Management Rules, which reads as follows :

Other wastes means wastes specified in Part B and Part D of Schedule III for import or export and includes all such waste generated indigenously within the country.

11. Rule 13(2) provides the procedure for import of other wastes listed in Part D Schedule III. Item B1110 of the Schedule mentions used Multifunction Print and Copying Machines (MFDs). Entry 4(j) lists out five documents required for import of used MFDs. The respondents have been found to be substantially compliant in this regard and the requirement for the country of origin certificate has been found to be vague by the High Court. Form 6 has rightly been held to be not applicable to the subject goods.

12. Rule 15 of the Waste Management Rules dealing with illegal traffic, provides that import of other wastes shall be deemed illegal if it is without permission from the Central Government under the Rules and is required to be re exported. Significantly the Customs Act does not provide for re export. The Central Government under the Foreign Trade Policy has not prohibited but restricted the import subject to authorisation. The High Court therefore rightly held that the MFDs having a utility period, the Extended Producer Responsibility would arise only after the utility period was over. In any event, the E waste Rules 2016 certificate had since been issued to the respondents by the Central Pollution Control Board before the goods have been cleared.

13. We therefore find no reason to interfere with the impugned orders. In the statutory scheme of the Foreign Trade Act as discussed, we further find no error in the penultimate direction to the respondents for deposit of bond without sureties for 90% of the enhanced valuation of the goods leaving it to the DGFT to decide whether confiscation needs to be ordered or release be granted on redemption at the market value, in which event the respondents shall be entitled to set off.

14. The appeals are dismissed.



............................CJI.
[RANJAN GOGOI]

............................J.
[NAVIN SINHA]

............................J.
[K.M. Joseph]


NEW DELHI
JANUARY 24, 2019.

IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH

CRM-M-4300-2018

Date of decision: 30.11.2018

Assistant Commissioner, Central Excise Division
Petitioner

Versus

M/s Nova Industries (P) Ltd. and others
Respondents

CORAM: HON'BLE MR. JUSTICE RAMENDRA JAIN

PRESENT:
Mr. Saurabh Goel, Advocate for the petitioner.
Mr. Jagmohan Bansal, Advocate for respondents No. 1 to 7.

RAMENDRA JAIN, J. (ORAL)

Through this petition under Section 482 Cr.P.C., the petitioner has laid challenge to order dated 09.02.2017 (Annexure P-1) of the lower Revisional Court, whereby the application of the petitioner for condonation of delay in filing revision (Annexure P-5) against the judgment dated 06.03.2014 (Annexure P-3), was dismissed.

In nutshell, petitioner field a complaint against respondents, which after holding trial was dismissed vide judgement Annexure P-3 discharging all the accused-respondents.

Being dis-satisfied, the petitioner approached the lower Revisional Court by filing revision (Annexure P-5) along with an application for condonation of delay of 110 days, on the ground that there was a confusion as to where the revision had to be filed. The local empanelled Advocate, had advised them to file revision before this Court.

Therefore, the same was sent to their empanelled Advocate of this Court.

However, he returned the file with advice to file revision before the lower Revisional Court. In this process, delay of 110 days had occurred.

After hearing both the side, the lower Revisional Court, rejected the above plea of the petitioner for condonation of delay and dismissed his application in this regard, vide impugned order dated 09.02.2017 (Annexure P-1).

Learned counsel for the petitioner inter alia contends that initially, their empanelled Advocate before the lower Court had advised them to file revision before this Court, but their Advocate before this Court had returned the file with the advice to file revision before the Sessions Court, as it was having concurrent powers akin to this Court.

The lower Revisional Court, has failed to appreciate that due to difference of opinion of empanelled Advocates, as to before which of the forum revision has to be filed, delay of 110 days occurred.

On the other hand, learned counsel for respondents No. 1 to 7, strongly refuting the above submissions of learned counsel for the petitioner contends that the plea taken by the petitioner is totally misconceived. Rather, the petitioner has tried his level best to mis-guide this Court as well as the lower Revisional Court, by pleading wrong facts and thus, is liable for criminal action. There is no opinion on the file before this Court or before the lower revisional Court as to which of the Advocate had advised the petitioner to file revision before this Court. It is a self-created excuse of the petitioner to hide his mistake of non-filing of revision within the period of limitation. As on date, there is no loss to the State Exchequer, inasmuch as, demand of the petitioner has been dropped by the Customs Excise and Service Tax Appellate Tribunal, (for short -'the Tribunal') vide order dated 30.03.2015. From this angle too, the instant petition is liable to be dismissed.

Having given anxious consideration to the rival submissions, this Court finds the instant petition completely devoid of any merit for the reasons to follow:
The demand raised by the petitioner has already been dropped/cancelled by the Tribunal vide order dated 30.07.2015.

Therefore, the petitioner ought not to have filed the instant petition.

Despite knowledge of above said fact, filing of instant petition by the petitioner, his mala fide action with some ulterior motive and extraneous consideration, best known to him, amounts to grave harassment to the innocent tax payers.

Filing of this petition, amounts to gross abuse of the process of law, inasmuch as, after cancellation of demand raised by him from the respondent, this petition was not maintainable.

There is no legal advice of any of the advocates on the record advising the petitioner to file revision before this Court against impugned order Annexure P-3, discharging the respondents, while dismissing the complaint. The story put forth by the petitioner seems to be completely false and concocted one just to hide his negligence of not filing revision within the period of limitation. The empanelled advocate of the petitioner on 15.07.2014, itself directed the petitioner to file revision before the concerned Sessions Court, but he filed the same on 04.09.2014 and that too after procuring letter dated 11.08.2014 (Annexure P-4) which is a repetition by the same Advocate, who has given his opinion on 15.07.2014, just to make out a case to justify the delay in filing revision beyond the period of limitation. All above acts of the petitioner being not bona fide are liable to be condemned. He is warned to be careful in future with advice not to harass genuine tax payers, taking advantage of his official position.

This Court is flooded with such type of frivolous litigations.

Much water has already flown. Now, it is the need of hour that the official machinery should sensitise itself and may think thousand times before adopting any legal course against any citizen of this country, which un-necessarily made him to suffer for huge expenses towards legal fee and other miscellaneous expenses.

In view of the discussion made above, this petition is dismissed with exemplary costs of Rs. 2,00,000/- (Rupees Two Lakhs) to be recovered from the erring officer from his own pocket.

A copy of this order be sent to the Secretary, Ministry of Finance, Department of Revenue, North Block, New Delhi and Chairman, Central Board of Direct Taxes and Customs, North Block, New Delhi, for recovery of the said costs from the erring officer and deposit the same with the Treasury under the relevant head. Compliance thereof, be sent to the Registry of this Court within two months from today positively, failing which Registry shall place the papers before this Court.

( RAMENDRA JAIN )
JUDGE

November 30, 2018

rishu


IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

VATAP No. 182 of 2017 (O&M)

Date of decision: 20.11.2018

Excise and Taxation Commissioner, Haryana through Excise and Taxation Officer-cum-Assessing Authority, Panipat.

Appellant

Vs.

M/s Mittal Processors Private Limited, G.T. Road, Siwah, Panipat and other
Respondents

CORAM:
HON’BLE MR. JUSTICE AJAY KUMAR MITTAL,
HON’BLE MRS. JUSTICE MANJARI NEHRU KAUL

Present: Ms. Mamta Singla Talwar, DAG, Haryana for the appellant.

Ajay Kumar Mittal,J

1. This order shall dispose of a bunch of 66 appeals bearing VATAP Nos.

182, 189 of 2017, 183, 184, 185, 186, 159, 160, 194, 187, 188, 189, 167, 168, 169, 170, 171, 155, 156, 157, 198, 199, 200, 181, 182, 190, 191, 197, 195, 126, 127, 128, 129, 193, 192, 172, 173, 174, 175, 138, 139, 140, 141, 142, 143, 144, 145, 146, 218, 219, 256, 108, 109, 110, 111, 285, 286, 287, 288, 289, 290, 291, 292, 293, 294 and 295 of 2018, as according to the learned counsel for the parties, the issue involved in all these appeals is identical. However, the facts are being extracted from VATAP No. 182 of 2017.

2. VATAP No. 182 of 2017 has been filed by the appellant-revenue under Section 36(1) of the Haryana Value Added Tax Act, 2003 ( in short, “the HVAT Act”) against the order dated 17.03.2017, Annexure A.3 passed by the Haryana Tax Tribunal, (in short, “the Tribunal”) in STA No. 96 of 2013-14, claiming following substantial questions of law:-

“(a)Whether the Haryana Tax Tribunal being a statutory authority under Haryana Value Added Tax Act, 2003 was justified in holding that the principal of law laid down in present cases shall operate prospectively despite the fact that there is no such provision in HVAT Act, 2003 to this effect?

(b)Whether the Haryana Tax Tribunal being a statutory authority was justified in restricting the power of revenue authorities vested in them under Sections 15 and 17 of the Act ibid to a levy which has been held valid and legal by the Haryana Tax Tribunal itself?

(c)Whether the Haryana Tax Tribunal was justified in restricting the power of Revisional Authority when Section 34 of Haryana Value Added Tax Act, 2003 provides revision in the light of an order of the Haryana Tax Tribunal in similar case?”

3. A few facts relevant for the decision of the controversy involved as narrated in VATAP No. 182 of 2017 may be noticed. M/s Mittal Processors Private Limited-respondent No.1 is a dealer registered under the HVAT Act with the Excise and Taxation Department, Haryana at Panipat. The Excise and Taxation Officer-cum-Assessing Officer Authority, framed scrutiny assessment of respondent No.1- company under Section 15(3) of the HVAT Act as well as under the Central Sales Tax Act, 1956 (in short, "the CST Act") vide order dated 30.03.2011, Annexure A.1, wherein additional demand of ` 5,77,968/- under the HVAT Act was created on account of levy of tax with interest on deemed sales of dyes, chemicals, consumable, machinery parts and packing materials involved in the job works of the third parties. Aggrieved by the order, the respondent-dealer filed an appeal before the first appellate authority i.e. Joint Excise and Taxation Commissioner (Appeals), Rohtak but the same was rejected on 5.3.2013 being devoid of merit. The respondent-company filed appeal before the Tribunal under Section 33 of the HVAT Act which was dismissed by the Tribunal vide order dated 17.3.2017, Annexure A.3 holding that all materials used in the job work/work contract by the respondent are taxable because entire inherent property thereof including that of all chemicals, dyes and colours get transferred to the fabrics. The Tribunal also made it clear that the principle of law laid down in the present cases shall operate prospectively only and the orders already passed by the authorities below by levying tax on lesser quantity of chemicals, dyes and colours or by levying no tax at all on the chemicals shall not be reopened by revision or otherwise. Hence the instant appeals by the revenue.

4. We have heard learned counsel for the appellant-revenue.

5. Learned state counsel argued that once the legal issue was adjudicated by the Tribunal in favour of the revenue, there was no justification in holding it to be prospective in nature as no such direction could be issued by the Tribunal in the absence of any statutory provision under the HVAT Act.

6. It may be noticed that this Court in VATAP No.32 of 2017 (M/s AP Processors, Plot No.103, Sector 24, Faridabad through its partner Shri Arvind Jain vs. State of Haryana through Principal Secretary to Government of Haryana, Excise and Taxation Department, Civil Secretariat, Haryana, Chandigarh), decided on 17.5.2018 has already settled the legal issue against the appellant-revenue. Therein, after considering the relevant statutory provisions and the entire case law on the point, it has been concluded that the chemicals used in the job work are taxable but the pertinent question to be answered would be as to how much of dyes/colours are taxable which is transferred to the fabric when the whole quantity of consumable is not transferred. It has also been held that while determining the actual loss of chemicals, dyes and colours where the fabric or textile undergoes various processes depends upon factual aspect which can be considered only by the Assessing Officer where parties can produce evidence in respect of their respective claims/contentions. Accordingly, the impugned orders passed by the authorities therein were set aside and the matters were remanded to the Assessing Officer to work out the details of quantity of chemicals, dyes and colours that would get washed out in the process of dyeing and printing of fabrics undertaken by the applicant. The operative paras of the judgment read thus:-

"26. Having arrived at the conclusion that chemicals used in the job work are taxable but the pertinent question to be answered would be as to how much of dyes/colours are taxable which is transferred to the fabric when the whole quantity of consumable is not transferred. In the present case, it would be essential to determine the value of consumables transferred in the goods on which tax is leviable. While determining the actual loss of chemicals, dyes and colours where the fabric or textile undergoes various processes depends upon factual aspect which can be considered only by the Assessing Officer where parties can produce evidence in respect of their respective claims/contentions.

27. In the light of legal position enunciated hereinabove, the substantial questions of law as claimed are answered accordingly and the impugned orders passed by the authorities are hereby set aside.

The matter is remanded to the Assessing Officer to work out the details of quantity of chemicals, dyes and colours that would get washed out in the process of dyeing and printing of fabrics undertaken by the appellant. The Assessing Officer would conduct a factual enquiry in this regard after giving liberty to the parties to produce evidence in respect of their respective contentions. Thereafter, he would be at liberty to proceed in the matter for adding the percentage of chemicals, dyes and colours in the value of the turnover which are retained or embedded on the textile or fabrics, as the case may be in accordance with law. The Assessing Officer shall do so after examining the relevant statutory provisions and the case law on the point as noticed hereinabove. All the appeals stand disposed of accordingly.”

7. In the light of the above, since the issue has been decided against the revenue, at this stage, a prayer was made by the learned counsel for the appellant-revenue that as the appellant-revenue is in the process of challenging the judgment in M/s A.P.Processors's case (supra) before the Apex Court, liberty be granted to revive the appeals in case the judgment in the said case is varied or some contrary order is passed by the Supreme Court. It is clarified that in case the judgment in M/s AP Processors's case (supra) is varied or any order is passed against the said judgment in appeal, the appellant-revenue would be at liberty to revive the order passed in the present cases. The present appeals are, however, dismissed. In view of the dismissal of the appeals, the applications for condonation of delay in filing the appeals are left open.

(Ajay Kumar Mittal)
Judge

(Manjari Nehru Kaul)
Judge

November 20, 2018

‘gs’


IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH

Incomplete Case No. 793 of 2018
(Diary No.1640183)

Case Type: Caveat in CEA

Date of Decision: 04.04.2018

Commissioner of Central Excise, Delhi
Appellant

Versus

Yamaha Motors India Pvt. Ltd.
Respondent

Coram: Hon'ble Mr. Justice Rajesh Bindal

Present: None.

Rajesh Bindal, J.

The aforesaid Caveat Application was filed on 28.09.2016 by Sh. Gunjan Rishi, Advocate. The Registry had raised objection in the Caveat Application on 28.09.2016.

As per Rule 9, Chapter 1, Part-A, Volume V, Punjab and Haryana High Court Rules and Orders, the petition on which objections have been raised by the Registry is to be taken back by the counsel/party, who filed it, to be re-filed within a total period of 40 days. The same was not taken back for re-filing after removal of objections. On failure, the case is to be listed before the Court for orders. Note was published by the Registry in the cause list w.e.f. 08.02.2018 to 31.03.2018, whereby the advocates were requested to collect their all cases lying with objections, which were filed upto 31.12.2016 for re-filing after removal of objections.

It was further notified that all pending cases of this type will be listed in Court for appropriate order.

Sub Section 5 of 148-A, Code of Civil Procedure provides that Caveat shall not remain in force after the expiry of 90 days from the date on which it was lodged.

The case was shown in the cause list for 04.04.2018. No one was present.

Keeping in view the aforesaid factual matrix, no further order is required to be passed. The file be consigned to the record.


(Rajesh Bindal)
Judge

04.04.2018

sandeep

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

Sr. No. 106 CEA No. 31 of 2017 (O&M)

Date of decision : 07.05.2018

Commissioner Central Excise Delhi-IV
Appellant

VERSUS

Star Wire India Ltd.
Respondent

CORAM:
HON'BLE MR. JUSTICE RAJESH BINDAL
HON'BLE MR. JUSTICE DEEPAK SIBAL

Present:
Mr. Manav Satija, Advocate, for
Mr. Sharan Sethi, Advocate, for the appellant.

RAJESH BINDAL, J:

Order dated 20.09.2016, passed by the Customs, Excise & Service Tax Appellate Tribunal, Chandigarh (for short the 'Tribunal') in Appeal No. E/1098/2007 has been impugned by filing the present appeal in which the following substantial questions of law have been raised: -

“(i) Whether electricity so generated and cleared to the grid outside the factory be treated as transaction of 'sale' defined in section 2(h) of the Central Excise Act, 1944 as held by the adjudicating authority in its O-I-O or not, as held by the CESTAT in its final order?

(ii) Whether electricity so generated and cleared/sold to the grid outside the factory premises can be treated as captively used for the manufacture of final products and the Cenvat Credit availed on inputs used in the power so generated is admissible under the provisions of Rule 57A, 57B of Central Excise Rules, 1944, 57AB, 57AA of Central Excise (2nd Amendment) Rules, 2000 and Rule 2 and 3 of the Cenvat Credit Rules, 2001 and 2002 and thereby availed inadmissible Modvat/Cenvat credit, as held by the CESTAT in para 7 of the final order?

(iii) Whether the Hon'ble CESTAT, Chandigarh was correct in passing the Final order No. A/61419/2016-EX[DB] dated 20.09.2016 through which department's appeal was dismissed and upheld the O-I-O No. 112-113/CE/Appl/DLH-IV-2006 dated 12.01.2017 passed by the Commissioner (Appeal), not taking into account, the provisions mentioned in Rule 57A, 57B of Central Excise Rules, 1944, 57AB, 57AA of Central Excise (2nd Amendment) Rules, 2000 and Rule 2 and 2 of the Cenvat Credit Rules, 2001 and 2002?

(iv) Whether the judgment of the Hon'ble CESTAT court was sustainable in law?”

A perusal of the order passed by the Tribunal shows that an earlier order deciding an identical issue in Jindal Stainless Ltd. 2009 (239)ELT 49 (Tri.-Del.) has been relied upon. The appellant has not shown whether the revenue challenged the earlier order passed by the Tribunal in Jindal Stainless Ltd. case (supra).

Once earlier view expressed by the Tribunal has been accepted by the department, we do not find that any substantial question of law to arise in the present appeal.

Dismissed.

Consequently, the application for condonation of delay in filing the appeal is also dismissed.


[RAJESH BINDAL ]
JUDGE

[ DEEPAK SIBAL ]
JUDGE

07.05.2018

shamsher


IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH
CEA-10-2012 (O&M)

Date of Decision: 3.12.2018

Commissioner of Central Excise Commissionerate, Panchkula
Appellant.

Versus

M/s Yamuna Gases & Chemicals Ltd., Yamuna Nagar
Respondent.

CORAM:-
HON'BLE MR. JUSTICE AJAY KUMAR MITTAL.
HON'BLE MRS. JUSTICE MANJARI NEHRU KAUL.

PRESENT:
Mr. Amit Goyal, Sr. Standing Counsel for the appellant.
Mr. Amar Partap Singh, Advocate for the respondent.

AJAY  KUMAR  MITTAL, J.

1. This appeal has been filed by the revenue under Section 35(G) of the Central Excise Act, 1944 against the order dated 1.7.2011 (Annexure A-4) passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi.

2. Learned counsel for the respondent submitted that the Central Board of Indirect Taxes and Customs (Judicial Cell) has issued circular/instructions dated 11.7.2018 whereby all the pending appeals in the High Courts where the tax effect is less than Rs. 50 lakhs are required to be withdrawn by the revenue. Learned counsel further stated that the tax effect involved in the present appeal is Rs. 47 lakhs. According to the learned counsel, as per Clause 3 of earlier instructions dated 17.8.2011 which is also applicable to the aforesaid instructions dated 11.7.2018, the adverse judgments relating to the constitutional validity of the provisions of an Act or Rule or where Notification/Instructions/Order or Circular have been held to be illegal or ultra vires, are required to be contested irrespective of the amount of tax involved. Clause 3 of the Instructions dated 17.8.2011 reads thus:-

“3. Adverse judgments relating to the following should be contested irrespective of the amount involved:

(a) Where the constitutional validity of the provisions of an Act or Rule is under challenge.
(b) Where Notification/Instruction/Order or Circular has been held illegal or ultra vires.”

3. However, learned counsel for the appellant was unable to controvert the above noted instructions and pleads that he has no instructions to withdraw the present appeal.

4. After hearing the learned counsel for the parties and in view of the fact that in the present appeal neither the constitutional validity of the provisions of an Act or Rule is under challenge nor Notification/Instruction/ Order or Circular has been held to be illegal or ultra vires and particularly keeping in view the tax effect involved,  this appeal is disposed of accordingly. However, liberty is granted to the revenue to file an application for revival of the appeal in case something survives therein. Needless to say that disposal of the appeal shall not be taken to be affirmation of the decision of the Tribunal on merits and that substantial questions of law have been answered in favour of the assessee-respondent.

(AJAY KUMAR MITTAL)

JUDGE

(MANJARI NEHRU KAUL)
JUDGE

December 3, 2018

gbs

CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SCO 147-148, SECTOR 17-C, CHANDIGARH – 160 017

SINGLE MEMBER BENCH

COURT NO. I

Appeal No. E/60794/2018-Ex[SM]
[Arising out of Order-in-Appeal No. LUD-EXCUS-001-APP-503-18 dated 06.03.2018 passed by the Commissioner (Appeals), Ludhiana]

M/s Veekay Concast Pvt Ltd.
Appellant(s)

 VS

C.C.E., Ludhiana
Respondent(s)

Appearance:
Present for the Appellant(s): Mr. Naveen Bindal, Advocate
Present for the Respondent(s): Mr. Tarun Kumar, A.R.

CORAM:
HON’BLE Mr. Ashok Jindal, Member (Judicial)

Date of hearing/decision: 29.11.2018

FINAL ORDER NO. 63487/2018

Per Ashok Jindal :

The appellant is in appeal against the impugned order wherein the Cenvat credit sought to be denied on the ground that the name of the appellant is not mentioned in the invoices in question and also Cenvat credit sought to be denied on the ground that the appellant has availed Cenvat credit on debit notes cum delivery challans which is not proper document in terms of Rule 9(2) of the Cenvat Credit Rules, 2004.

2. Heard the parties.

3. Considering the fact that in the show cause notice, there is an allegation against the appellant that the credit of Rs. 3,07,949/- was availed on the strength of the invoices on which the name of the appellant was not mentioned and the details of the invoices have been produced. I have gone through the invoices and one of such invoices is extracted herein below for better appreciation of the facts of the case:



On the invoice, the name of the appellant has already been mentioned and in the impugned order also, the authority below has admitted the fact that the name of the appellant is mentioned in the invoice. In that circumstance, the allegation made in the show cause notice is factually incorrect, therefore, no show cause notice was to be issued to the appellant on this ground which caused unnecessary litigation before this Tribunal, which could have been avoided. Therefore, the Cenvat credit cannot be denied.

4. Further, I find that the Cenvat credit sought to be denied on the ground that the Cenvat credit of Rs. 26,239/- has been taken by the appellant on debit notes. I find that the debit note contains all the particulars for availment of the Cenvat credit in terms of Rule 9(2) of the Cenvat Credit Rules, 2004. In that circumstance, the Cenvat credit cannot be denied to the appellant on the strength of debit notes.

5. In these circumstances, I do not find any merit in the impugned order; accordingly, the same is set aside.

6. In result, the appeal is allowed with consequential relief, if any.

(Dictated and pronounced in the open court)

(Ashok Jindal)
Member (Judicial)

RAS’

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

Date of Hearing/Decision: 24.5.2018

Appeal No. C/800/2008-DB
(Arising out of Order-in-Appeal No. CC(A)CUS/292/2008 dated 27.8.2008 passed by the Commissioner of Customs (Appeals), New Delhi)

Victor Components System (P) Ltd. 
Appellant

Vs.

CC, New Delhi
Respondent

Appearance
Ms. Shreya Dahiya, Advocate  - for the appellant
Shri Rakesh Kr., D.R.  - for the respondent

CORAM:
Hon’ble Mr. Bijay Kumar, Member (Technical)
Hon’ble Mr. Ajay Sharma, Member (Judicial)

Final Order No. 52012/2018

Per Bijay Kumar :

This appeal is listed for today’s hearing wherein ld. Counsel for the appellant had stated that vide Stay Order No. C/38/09 dated 13.2.2009, this Tribunal had already remanded back the case to the ld. Commissioner (Appeals) for taking appropriate decision.

2. Ld. DR also agrees to the fact that this appeal has already been decided by this Tribunal vide the aforesaid order. Although, he stated that this is stay order, in fact it is not only a stay order but this is in a way final order.

3. In view of above, the appeal is dismissed as infructuous.

(Dictated & pronounced in open Court)


(Ajay Sharma)               (Bijay Kumar)
Member (Judicial)          Member (Technical)

RM

In The Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad

Appeal No. ST/10279/2017-DB
[Arising out of OIO-BHR-EXCUS-000-COM-092-16-17 Dated 22.11.2016 passed by Commissioner of Central
Excise, Customs and Service Tax-Bharuch]

M/s. Dhir Engineering & Contractors
Appellant

Vs

C.C.E.-Bharuch
Respondent

Represented by:
For Appellant: Shri.A X S Jiwan (Consultant)
For Respondent: Shri. L.Patra (AR)

CORAM:
HON’BLE MR. RAMESH NAIR, MEMBER (JUDICIAL)
HON’BLE MR. RAJU, MEMBER (TECHNICAL)

Date of Hearing/Decision: 12.11.2018

Final Order No. A / 12613 /2018

Per: Ramesh Nair

The appellant is a proprietorship concern. The proprietor Shri. Mukesh Dhir, expired in road accident an intimation to that effect along with death certificate was submitted by his wife to the Commissioner adjudication. However, without considering the back of proprietor the order was passed. The present appeal was filed by Mrs. Sunita Dhir wife of Shri. Mukesh Dhir. In this fact the adjudicating order is not legal as the same should not have been passed against the deceased person.

2. Accordingly, the impugned order is set aside. Appeal is allowed, accordingly.


(Dictated and pronounced in the open court)


(Raju)                            (Ramesh Nair)
Member (Technical)         Member (Judicial)

Prachi

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
SCO 147-148, SECTOR 17-C,
CHANDIGARH-160017

SINGLE BENCH

COURT NO.1

Appeal No. ST/60801/2018
[Arising out of the Order-in-Appeal No. LUD-EXCUS-001-APP-811- 2018 dated 27.03.2018 passed by the CCE (Appeals), Ludhiana]

Date of Hearing/Decision: 02.11.2018

M/s Radiant Textiles Ltd.
Appellant

Vs.

CCE, Ludhiana
Respondent

Appearance
Shri. Kamaljeet Singh, Advocate- for the appellant
Shri. Vijay Gupta, AR. - for the respondent

CORAM: Hon’ble Mr. Ashok Jindal, Member (Judicial)

FINAL ORDER NO: 63372 / 2018

Per Ashok Jindal:

The appellant is in appeal against the impugned order wherein the refund claim has been rejected as time barred in terms of Section 11B of the Central Excise Act, 1944.

2. The facts of the case are that the appellant is engaged in the manufacture of cotton yarn and paying service tax under reverse charge mechanism on freight paid on inward transportation of goods. The appellant found that they were not liable to pay service tax on transportation of cotton yarn in terms of Notification dated 20.06.2012 as amended by Notification dated 11.07.2014, therefore, filed refund claim of the service tax paid by them erroneously. The refund claim was rejected by the authorities below on the ground that the appellant was required to file refund claim within one year from the date of payment of service tax in terms of Section 11B of the Act, therefore, the refund claim was rejected. Against the rejection of refund claim, the appellant is before me.

3. The ld. Counsel for the appellant submits that the Hon’ble High Court of Delhi recently in the case National Institute of Public Finance and Policy Vs. Commissioner of Service Tax in ST Appeal No. 13/2018 dated 23.08.2018 held that if the service tax was not payable by the assessee and the same is paid, in that circumstances, provisions of Section 11B of the Act are not applicable.

4. On the other hand, the ld. AR objected the arguments of the ld. Counsel and relied on the various judicial pronouncements as under
5. I have gone through the judicial pronouncements relied upon by the ld. AR. All these judicial pronouncements pertains either the old rules or the order of this Tribunal but the appellant has produced the latest decision on the Hon’ble Delhi High Court dated 23.08.2018 the latest decision on the issue, therefore, I following the decision of the Hon’ble Delhi High Court in the case of National Institute of Public Finance and Policy (supra) and hold that for the refund claim of service tax which were not required to pay by the appellant, the provision of Section 11B of the Central Excise Act are not applicable.

In that circumstances, I set aside the impugned order and allow the appeal with consequential relief, if any.

(Dictated and pronounced in the open court)

Ashok Jindal
Member (Judicial)

rt

Customs, Excise & Service Tax Appellate Tribunal
SOUTH ZONAL BENCH
BANGALORE

Appeal(s) Involved: E/20920/2018-SM
[Arising out of Order-in-Appeal No. BW-EXCUS-000-APP-165-17-18 dated 21/03/2018 passed by COMMISSIONER OF CENTRAL TAX, BENGALURU WEST , MYSORE (APPEALS) ]

M/s. Toyota Kirloskar Motors Private Limited BANGALORE
Appellant(s)

Versus

Commissioner of Central Tax Commissioner Of Central Tax, Bengaluru West
Respondent(s)

Appearance:
Mr. N. Anand, Advocate
K.S. RAVI SHANKAR, BANGALORE  For the Appellant
Mr. K. B. Nanaiah, Asst. Commissioner (AR) For the Respondent

Date of Hearing: 29/10/2018
Date of Decision: 29/10/2018

CORAM:
HON’BLE MR. S.S GARG, JUDICIAL MEMBER

Final Order No. 21681 / 2018

Per : S.S GARG

The present appeal is directed against the impugned order dated 21.3.2018 passed by the Commissioner (A) whereby the Commissioner (A) has rejected the appeal of the appellant.

2.  Briefly the facts of the present case are that the appellants are engaged in manufacturing of multi-utility vehicle/passenger cars and parts there of falling under Chapter 87 of the First Schedule to Central Excise Tariff Act, 1985 and are availing CENVAT credit of duty paid on input service/inputs and capital goods used in or in relation to the manufacture of their final products under the provisions of the CENVAT Credit Rules (CCR), 2004. During the period from April 2013 to September 2013, the appellant had availed and utilized input service tax credit relating to outdoor catering service. In terms of Rule 2(1)(ii)(c) of CCR, 2004, the services provided in relation to outdoor catering have been excluded from the definition of input service if such services are used primarily for personal use or consumption of any employee. Department entertained a view that appellants are not eligible to avail credit in respect of the said outdoor catering services. It was noticed that during the period from April 2013 to September 2013, the appellants had availed input service tax credit of Rs.49,04,400/- on outdoor catering service. Thereafter, a show-cause notice dated 4.3.2014 was issued proposing to demand and recover the input tax credit availed on said outdoor catering services provided by M/s. Sodex Food Solutions Pvt. Ltd. to the appellant for the said period under Section 11A of the Central Excise Act, 1944 read with Rule 14 of CCR, 2004 along with interest and penalty. The appellant paid the said amount and the same was appropriated in the Order-in- Original. After due process, the original authority confirmed recovery of ineligible credit availed on outdoor catering along with interest. No penalty was imposed as the demand was within normal period. Aggrieved by the said order, the appellant filed appeal before the Commissioner (A) and the Commissioner (A) rejected the appeal of the appellant. Hence, the present appeal.

3.  Heard both sides and perused the records.

4.  Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without appreciating the facts and the law. He further submitted that outdoor catering services fall in the definition of input service as the same is required to be maintained as per the Factories Act.

5.  On the other hand, the learned AR submitted that this issue involved in the present case has been settled by the Larger  Bench of this Tribunal in the case of M/s. Wipro Ltd. vs. CCE reported in 2018-TIOL-3256-CESTAT-Bang.-LB.

6.  After considering the submissions of both the parties, I find that in view of the conflicting decisions during the relevant time, it was finally settled by the Larger Bench in the case cited supra. As per the Larger Bench, the appellant is not entitled to CENVAT credit on outdoor catering services. It is pertinent to mention the findings of the Larger Bench, which is contained in para 7 of the said decision.

“7. After considering the submissions of both the parties and perusal of the material on record, including various decisions relied upon by both sides, we find that it is necessary to note the definition of 'input service' before 1.4.2011 and after 1.4.2011 when the said amendment was made.

Post 1.4.2011 the definition of 'input service' stood thus:

Rule 2(1) "Input Service" means any service,

(I) used by a provider of output service for providing an output service; or

(ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products, up to the place of removal, and includes services used in relation to modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage up to the place of removal, procurement of inputs, accounting, auditing, financing, recruitment apd quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation up to the place of removal; bdt excludes, -

(A) service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (hereinafter reerred as specified services insofar as they are used for —

(a) construction or execution of works contract of a building or a civil structure or a part thereof; or
(b) laying of foundation or making of structures for support of capital goods, except for the provision of one or more of the specified services;

(B)Services 'provided by way of renting of a motor vehicle, insofar as they relate to a motor vehicle which is not a capital goods; or

(BA) Service of general insurance business, servicing, repair and maintenance, insofar as they relate to a motor vehicle which is not a capital goods, except when used by

(a) a manufacturer of a motor vehicle in respect of a motor vehicle manufactured by such person; or
(b) an insurance company in respect of a motor vehicle insured or reinsured by such person; or

(C) such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee;

Prior to 1.4.2011, the definition of 'input service' stood thus:

Rule 2(1) "input service" means any service, -

(i) used by a provider of taxable service for providing an output service, or

(ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal, and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage up to the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing,' recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation up to the place of removal.

7.1 Further, we find that there is no dispute about the fact that all these disputes relates to post 2011. The period involved in the present appeals is admittedly after 2011 and the amendment to the provisions of Rule 2(1) defining the 'input service' came into effect from 1.4.2011 only. The definition of Input service' post amendment contains exclusion clause. The exclusion clause was effective from 1.4.2011 and clause (C) of the said exclusion specifically excludes the services provided in relation to "outdoor catering service". Admittedly, such services prior to 1.4.2011 have been held to be covered by the definition of' input service'. In fact, the need for exclusion would arise only when the services are otherwise covered by the definition. The legislature in its wisdom has excluded certain services from the availment of CENVAT credit w.e.f 1.4.2011, when such services are otherwise covered by the main definition clause of the 'input service'. To interpret, the said input clause, in such manner so as to hold that such services have direct or indirect nexus with the assessee's business and thus would be covered by the definition, would amount to defeat the legislative intent.

7.2 It is well settled that the legislative intent cannot be defeated by adopting interpretation which is clearly against such intent. Further, we find that from the Budget Speech of the Finance Minister dated
28.2.2011 wherein the Hon'ble Minister has categorically stated that due to complexities there has been many legal issues on the availability of credit on a number of inputs or input services which are being rationalized by laying down clear definition so that the scope of inputs and input services that are eligible and those that are not, is clear. Further, we also find from the clarification issued by the Joint Secretary (TRU) explaining the intention of the legislature for the changes brought by way of amendment in the definition of 'input service'. Further, we also note that primarily the service should be first covered under the definition of 'input service' and once the service is not covered due to exclusion clause irrespective of the fact whether the cost of service has been taken as expenditure in the books of accounts does not render the services as an admissible for CENVAT credit. We also find that the food is always mainly for personal consumption only. The canteen provided in the company is mainly for the personal consumption of the employee and it cannot be interpreted in any other way. Therefore, once such services are excluded, whether the employer or employee bears the cost partially or fully, has no bearing on the amendment. Therefore, keeping in view above discussions and the various decisions cited by both the parties, we are of the considered view that the "outdoor catering service" is not eligible for input service credit post amendment dated 1.4.2011 vide Notification No.3/2011 dated 1.3.2011.”

By following the ratio of the above said decision decided by the Larger Bench of the Tribunal, I am of the view that there is no infirmity in the impugned order, which is upheld by dismissing the appeal of the appellant.

(Operative portion of the Order was pronounced in Open Court on 29/10/2018.)

S.S GARG
JUDICIAL MEMBER

rv...

Customs, Excise & Service Tax Appellate Tribunal
SOUTH ZONAL BENCH
BANGALORE

Appeal(s) Involved: ST/21099/2018-SM, ST/21100/2018-SM
[Arising out of Order-in-Appeal Nos. 341 & 342/2018 dated 04/04/2018 passed by the Commissioner of Central Tax, Bangalore-I (Appeals)]

Micron Semiconductor India Pvt. Ltd., Bangalore
Appellant(s)

Versus

Commissioner of Central Tax, Bangalore East
Respondent(s)

Appearance:
Mr. Harish Bindumadhavan, Advocate Bangalore For the Appellant
Mrs. Kavita Podwal, Superintendent,  (AR) For the Respondent

Date of Hearing: 12/10/2018
Date of Decision: 12/10/2018

CORAM:
HON'BLE MR. S.S GARG, JUDICIAL MEMBER

Final Order Nos. 21608 - 21609 / 2018

Per: S.S GARG

These two appeals are directed against the common impugned order dated 04.04.2018 passed by the Commissioner (Appeals) whereby the Commissioner (Appeals) has remanded the matter to the original adjudicating authority for fresh adjudication after giving certain directions to the original authority. Since the issue involved in both the appeals is identical, therefore both the appeals are being disposed of by this common
order. The particulars of both the appeals are given herein below:

Appeal No.    ST/21099/2018    ST/21100/2018
Period of Dispute    April 2015 to June 2015    July 2015 to September 2015
Refund claimed    Rs. 4,87,302/-    Rs. 5,37,298/-
Order-in-Original No.& date    No. 15/2017 dated 27.12.2017    No. 24/2017 dated 12.01.2018
Refund rejected    Rs. 1,85,748/-    Rs. 1,32,194/-
Order-in-Appeal No. & date    341/2018  dated 04.04.2018    342/2018  dated 04.04.2018


2. Briefly the facts of the present case are that the appellant is a wholly owned subsidiary of Micron Technology Inc. USA and is in the business of providing software development, research and development services to Micron Technology Inc. USA in the production of memory devices, storage and imaging conductor. Appellant entered into an agreement with Micron Technology Inc., USA on 12th July 2006 for rendering software development and technical and general services. Appellant has also entered into an agreement with Micron Semiconductor Asia Pvt. Ltd., Singapore for providing Marketing and Sales support services whereby the appellant promotes and markets the products of Micron Technology USA and Singapore. According to the appellant the services rendered by the appellant fall in the category of ‘Information Technology Software Service’ and Marketing and Sales Support Services fall under the category of ‘Business Auxiliary Service’. Appellant filed refund claims as per provisions of Rule 5 of Cenvat Credit Rules 2004 read with Notification No. 27/2012 dated 18.06.2012. Thereafter show-cause notices were issued to the appellant for rejection of refund claim on various grounds. After following the due process, the original authority sanctioned refund of Rs. 3,01,554/- (Rupees Three Lakhs One Thousand Five Hundred and Fifty Four only) and Rs. 4,05,104/- (Rupees Four Lakhs Five Thousand One Hundred and Four only) for the respective period of April 2015 to June
2015 and July 2015 to September 2015. Aggrieved by the said order,
appellant filed appeal for the refund which was rejected on the ground that the services of the appellant relating to Sales and Marketing in respect of the products owned by their principal in India fall in the definition of
‘intermediary service’.

3. Heard both the parties and perused the records.

4. Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same is contrary to the facts of the case and the decisions of various Courts. He further submitted that the impugned order is a non-speaking order and has been passed in violation of the principles of natural justice. He further submitted that the impugned order has failed to even read the Order-in-Original passed on the appellant’s facts let alone make any reference to the Order-in-Original or the facts of the appellant or the grounds of appeal raised by the appellant. He further submitted that the Order-in-Original was passed as a speaking order sanctioning a part of the refund and rejecting a part of the refund. He further submitted that the impugned order discusses general principle pertaining to refund claim and related proceedings, the impugned order merely provides generic guidelines to the Department as to how to adjudicate refund matter. He further submitted that the Order-in-Original has also travelled beyond the allegation in the show-cause notice and therefore not sustainable in law. He further submitted that the impugned order is non-speaking to the extent as the learned Commissioner (Appeals) has neither reasoned the facts provided by the appellant nor provided valid and reasonable reasons in arriving at the conclusion for specific reasons. In support of his submission, he relied upon the following decisions:

a. S.N. Mukherjee Vs. Union of India – 1990 SCR Supl. (1) 44
b. Testeels Ltd. Vs. N.M. Desai, Conciliation Officer and another AIR 1970 Guj.1
c. Excel India Pvt. Ltd. Vs. CST, Bangalore – 2007 (7) S.T.R. 542 (Tri.-Bang.)
d. J.M. Ramachandra & Sons Vs. CEGAT – 2002 (139) E.L.T. 36 (Del.)
e. State of Punjab Vs. Bhag Singh – 2004 (164) E.L.T. 137 (SC)
f. Information Technology Park Ltd. Vs. CST, Bangalore – 2010- TIOL-304-CESTAT-BANG.
g. CCE, Indore Vs. M/s. Engineers Combine – 2009-TIOL-546- CESTAT-DEL.

4.1. He further submitted that the impugned order is passed in gross violation of the principle of natural justice as the said order was passed without affording an opportunity of personal hearing before passing the impugned order. In support of this submission, he relied upon the following decisions:

a. Harman Steel Industries Vs. Commercial Tax Officer, Kancheepuram and another [2006] 146 STC 292 (Mad.)
b. Vummaneni Mineral Water Products (P) Limited Vs. Commercial Tax Officer and others [2005] 139 STC 355 (AP)
c. S.B. International Limited Vs. Commr. of Customs, Calcutta –2004 178 ELT 1123 Cal.
d. Salem Textiles Limited Vs. Superintendent of Central Excise –2004 (178) E.L.T. 102 (Mad.)

5. On the other hand the learned AR defended the impugned order.

6. After considering the submissions of both the parties and perusal of the material on record, I find that the impugned order has been passed without giving proper reasons and without considering the facts involved in the case. Further I find that the Commissioner (Appeals) has only given general principles for granting the refund without adverting to the facts of the present case. Further I also find that the impugned order has been passed without affording an opportunity of hearing. I also find that in view of the various decisions relied upon by the appellant cited supra, I am of the view that the impugned order which is passed in complete violation of the principles of natural justice and without considering the facts and the grounds of appeal is liable to be set aside and I do so. After setting aside the impugned order, I remand back the case to the Commissioner (Appeals) to pass a De novo order after considering the facts and the grounds of appeal and after affording an opportunity of hearing to the appellant. The Commissioner (Appeals) is directed to dispose of the appeals within a period of three months from the date of receipt of the certified copy of this order. Both the appeals are disposed of by way of remand.

(Operative portion of the Order was pronounced in Open Court on 12/10/2018)

(S.S GARG)
JUDICIAL MEMBER)

iss...

Customs, Excise & Service Tax Appellate Tribunal
SOUTH ZONAL BENCH
BANGALORE

Appeal(s) Involved: C/20837/2015-SM
[Arising out of Order-in-Appeal No. 540-2014 dated 24/12/2014 passed by Commissioner of CUSTOMS , BANGALORE-I( Appeal) ]

Kirloskar Ferrous Industries Ltd, PUNE
Appellant(s)

Versus

Commissioner of Customs Mangalore-cus
Respondent(s)

Appearance:
Shri M.S. NAGARAJA, ADV, BANGALORE  For the Appellant
Dr. J. Harish, Dy. Commissioner(AR)       For the Respondent

Date of Hearing: 11/10/2018
Date of Decision: 11/10/2018

CORAM:
HON'BLE MR. S.S GARG, JUDICIAL MEMBER

Final Order No. 21601 / 2018

Per : S.S GARG

The present appeal is directed against the impugned order dt. 24/12/2014 passed by the Commissioner(Appeals) whereby the Commissioner(Appeals) has accepted the appeal of the Department and set aside the order passed by the Assistant Commissioner of Customs.

2.  Briefly the facts of the present case are that the appellant had entered into Sale Contract dt. 13/03/2010 with M/s. KOWA Company Ltd., Japan for export of iron ore fines in bulk. Accordingly, the appellant had exported 17,000 WMT of iron ore fines with Fe content of 61% as per the final Invoice dt. 26/03/2010 and Shipping Bill dt. 18/03/2010. The appellant paid duty of customs totaling to Rs.37,01,700/- and cess of Rs.18,000/- on the basis of provisional assessment for a quantity of 18,000 WMT of iron ore fines. As per the finalization of assessment of the export goods, the exporter was liable to pay customs duty of Rs.33,64,817/- and cess of Rs.17,000/- whereas the exporter has paid an amount of Rs.37,01,700/- towards export duty and cess of Rs.18,000/-. Therefore there was an excess payment of customs duty of Rs.3,36,883/- and cess of Rs.1000/-. Appellant submitted application on 24/06/2013 for refund of excess customs duty of Rs.3,37,883/- paid on exported goods. Assistant Commissioner vide Order-in-Original dt. 24/07/2013 sanctioned the refund being excess export duty and cess paid. Aggrieved by the said order, Department filed appeal before the Commissioner and the Commissioner(Appeals) allowed the appeal of the Department and set aside the Order-in-Original.

3.  Heard both sides and perused records.

4.  Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without properly appreciating and examining the documents on record. He further submitted that the impugned order is contrary to the judicial pronouncements. He also submitted that the assessment of shipping bills dt. 18/03/2010 was provisional in terms of Section 17 of the Customs Act pending receipt of original documents and chemical examination report. On finalization of the assessment, the Assistant Commissioner sanctioned the refund after examining that the excess customs duty paid by the appellant has not been passed on to the buyer. Learned counsel further submitted that on an identical issue, this Tribunal in the case of Dream Logistics Company India Pvt. Ltd. & others Vs. CC, Mangalore (Cus) [2017- TIOL-1918-CESTAT-BANG] has disposed of a bunch of appeals by allowing the appeals of the assessees. He further submitted that present case is also covered in favour of the assessee by the decision of the Andhra Pradesh High Court in the case of Asia Pacific Commodities Ltd. Vs. ACC, Kakinada-I [2012(280) ELT 481 (AP)].

5.  On the other hand, the learned AR defended the impugned order and submitted that the certificate of Chartered Accountant produced by the appellant is not a proper certificate as the Chartered Accountant has not verified that the excess amount paid has been shown in the accounts of the company as amount receivables. He further submitted that unjust enrichment has to be seen in every case. In support of this submission, he relied upon the decision in the case of Krishan Enterprises Vs. CC(Imports), Mumbai [2009(237) ELT 708 (Tri. Mumbai)].

6.  After considering the submissions of both the sides and perusal of the material on record, I find that on identical issue, this Tribunal in the case of Dream Logistics Co. India Pvt. Ltd. & others (supra) has allowed the appeals of the assessees by relying upon the judgment of the Hon’ble High Court of Andhra Pradesh in the case of Asia Pacific Commodities Ltd. cited supra. This Tribunal in the case of Dream Logistics Co. India Pvt. Ltd. in para 3 has observed as under:-

3. After considering the submissions of both the parties and the perusal of the judgements cited by both the parties I am of the view that the impugned orders are not sustainable in law. Further, I find that the exporters have proved that they have not charged any duty of customs on the FOB price paid by the buyer. From the documents produced by the appellant, namely the sale contract, final invoice, bank certificate of export and realization issued by the bank, it is clearly proved that he has not charged any customs duty from the buyer. It is further noted that the export in the present case is in accordance with internationally accepted commercial terms and a copy of the contract has also been brought on record which contain the terms and conditions and one of the common condition I find in all the sale contracts is that the duty or tax in the country of origin or in the country of destination to be imposed during continuance of this contract increasing the cost of ore to be delivered herein. The same shall be paid by the seller to the extent imposed by the country of origin and by the buyer to the extent imposed by the countries of destination. The invoices show the price for the export goods and the export duty is paid on the price or FOB value of the export goods and invoices do not include the customs duty paid by the exporter. Further the judgments of the Hon’ble High Court of A.P in the case of Asia Pacific Commodities Ltd., cited supra is squarely applicable in the present case and the Hon’ble High Court has analyzed the contract of sales in such cases and has come to the conclusion that the export duty is borne by the seller and is never borne by the buyer. Further the judgement of the Hon’ble High Court has also been followed by this Tribunal in Muneer Enterprises as cited supra wherein this Tribunal has held that when the iron ore was exported on payment of duty on FOB value, the refund of excess customs duty paid does not attract bar of unjust enrichment. Further, I find that the case laws relied upon by learned A.R are not applicable in the facts and circumstances of the present case. All the case laws are in the context of Section 11B of the Central Excise Act except the case of Commissioner of Customs Chennai Vs BPL decided by the Hon’ble High Court of Madras which is under the Customs Act. Even this judgement is in favour of the appellant. Though this judgements relates to import of goods in para 7 of the judgement, the Hon’ble High Court has observed as under:

“7. Section 27 of the Customs Act 1962 provides for the claim for refund of duty. A perusal of the said provision would show that the importer will have to satisfy the authorities while seeking such a claim. In other words, until and unless the importer satisfies the authorities with relevant documents, indicating the fact that it has paid the excess amount and the duty has not been passed on to the customers, such a claim cannot be accepted. Further Section 28C and D of the Act provide for price of goods to indicate the amount of duty paid thereon and presumption that incidence of duty has been passed on to the buyer. Therefore, until the contrary is proved, there is a presumption provided under the statute that the duty has been passed on to the buyer. The above said provisions would clearly establish the fact that it is for the importer to satisfy the authorities that the duty has not been passed on to the buyer and the excess payment had been made by him by absorbing the same.”

7.  Therefore in view of the aforesaid decision, I am of the considered view that the impugned order is not sustainable in law and I set aside the same by allowing the appeal of the appellant with consequential relief, if any, as per law.


(Operative portion of the Order was pronounced in Open Court on 11/10/2018)

S.S GARG
JUDICIAL MEMBER

Raja...

Customs, Excise & Service Tax Appellate Tribunal

SOUTH ZONAL BENCH
BANGALORE

Appeal(s) Involved: C/21592/2018-DB
[Arising out of Order-in-Appeal No. 108-109-2018 dated 18/04/2012 passed by Commissioner of CUSTOMS , COCHIN( Appeal) ]

Travancore Titanium Products, TRIVANDRUM
Appellant(s)

Versus

Commissioner of Customs Cochin- cus, COCHIN
Respondent(s)

Appearance:
Shri G. Shivadass, Advocate LAKSHMI KUMARAN & SRIDHARAN,BANGALORE  For the Appellant
Smt. Kavita Podwal, Superintendent(AR)       For the Respondent

Date of Hearing: 09/10/2018
Date of Decision: 09/10/2018

CORAM:
HON'BLE MR. S.S GARG, JUDICIAL MEMBER
HON'BLE MR. P. ANJANI KUMAR, TECHNICAL MEMBER

Per : S.S GARG

Final Order No. 21597 / 2018

The Registry has issued a defect memo dt. 24/08/2018 directing the appellant to make a mandatory predeposit @ 7.5% / 10% of the total duty demanded in terms of Section 35F of the Central Excise Act, 1944. The learned counsel for the appellant submitted that in the present case, appeal has been filed against the letter dt. 17/01/2018 issued by the Commissioner of Customs, Cochin wherein he has rejected the request for extension of time for installation of machinery imported under EPCG Scheme vide Notification No.97/2004-Cus dt. 17/09/2004 on the ground that the assessee has failed to comply with the directions of the Hon’ble CESTAT vide Final Order No.20036/2015 dt. 05/01/2015. The learned counsel further submitted that there is no consequential demand of duty, interest or penalty involved in the present appeal. Consequently, the mandatory predeposit in terms of Section 35F of the Central Excise Act, 1944 by the appellant is not required in the present case.

2.  After hearing the learned counsel for the appellant, we hold since there is no demand of duty, interest or penalty in the present case and the present appeal is against the letter dt. 17/01/2018, mandatory predeposit under Section 35F is not required. Appeal is taken on record.

3.  Since the issue is in narrow compass, with the consent of both the parties, we have decided to dispose of this appeal at this stage itself.

4.  Briefly, the facts of the present case are that the appellants are a Government of Kerala undertaking and are engaged in the manufacture of Titanium Dioxide, Sulphuric Acid and Potassium Nitrate falling under the Central Excise Tariff Heading Nos. 2823.00, 2807.00 and 28431.90 respectively. The appellants are in the process of installing Pollution Control Equipments and accordingly they applied to DGFT, Trivandrum and obtained 7 EPCG licences to import capital goods viz. equipments of Pollution Control projects at concessional rate of duty under Notification No.97/2004-Cus dt. 17/09/2004. Due to the financial crunch, the appellant could not complete the installation and commissioning of the goods imported for Acid Recovery Plant and Copper Recovery Plant. Thereafter the appellant on 26/11/2008 filed a letter to the Asst. Commissioner of Customs seeking extension of time for installation of goods imported against EPCG licences. The Deputy Commissioner vide order dt. 20/05/2010 rejecting the application for extension of time and demanded the duty foregone on the imported capital goods along with interest. Aggrieved by the said order, appellant filed appeal before the Commissioner(Appeals), who vide Order-in-Appeal dt. 05/06/2012 rejected the appeal on the ground that there was no justification for the delay in installation of the capital goods. Aggrieved by the said order, appellant filed appeal before the CESTAT and the CESTAT vide Final Order No.20036/2015 dt. 05/01/2015 granted extension of time for installation of imported goods till December 2015 considering the genuiness and the bona fide nature of the delay on the part of the appellant. But in spite of the extension given by the Tribunal till December 2015, the appellant could not complete the installation and thereafter sought extension further from the Department and vide the impugned letter dt. 17/01/2018, the Additional Commissioner of Customs rejected the request for further extension of time up to 31/12/2018 on the ground that the appellant has failed to comply with the directions of the CESTAT vide Order No.20036/2015 dt. 05/01/2015. Against the said order, the appellant has filed the present appeal.

5.  Heard both sides and perused records.

6.  Learned counsel for the appellant submitted that the impugned letter dt. 17/01/2018 has been issued in complete violation of the principles of natural justice as the appellant has not been heard and no reasons have been provided in the letter for such rejection. He further submitted that the impugned letter only states that the appellants have failed to comply with the directions of the CESTAT order dt. 05/01/2015. He further submitted that the Commissioner of Customs has failed to provide detailed ground for rejection of the request of the appellant. He further submitted that the appellant has written various letters which are also enclosed along with the present appeal giving the reasons for non-completion of installation but same has not been considered and further the appellants have complied with the Final order dt. 05/01/2015 and informed the Department through various letterd dt. 26/12/2015, 20/01/2016, 21/09/2016, 23/03/2017 and 22/12/2017 clearly explaining detailed progress of the installation and requesting for grant of extension of time. He further submitted that the appellant could not complete the installation on account of shortage of funds and now the Government has released some funds and the appellants are in process of installation and is only praying for some more time to complete the installation.

7.  On the other hand, the learned AR justified the rejection of request for extension of time on the ground that sufficient time has been given to the appellant for installation of the capital goods but they are not completing the installation expeditiously.

8.  After considering the submissions of both the sides and perusal of records, and the previous order of the Tribunal dt. 05/01/2015, we find that the appellants are a Government of Kerala undertaking and is primarily depending upon the funds provided by the Government. The appellants are engaged in the installation of the neutralization plant which found part of the pollution control equipment to be installed on the instructions of the Hon’ble Supreme Court and the appellant’s funds were diverted towards setting up of neutrlisation plant. Further we find that the Tribunal in the earlier order dt. 05/01/2015 has also observed that if there are justification, the appellant can seek further extension depending upon the progress made by the appellant in installation of the capital goods. Since in the present appeal, the only prayer is extension of time up to 31/12/2018 for installation of machinery imported under EPCG scheme, we think it appropriate to grant the extension up to 31/12/2018 and direct the appellant to complete the installation within this period as the appellants were having genuine fund difficulty on account of which they could not complete the installation. In view of this, we dispose of the present appeal by granting them extension of time up to 31/12/2018. Appeal is accordingly disposed of.

(Operative portion of the Order was pronounced in Open Court on 09/10/2018)

P. ANJANI KUMAR
TECHNICAL MEMBER

S.S GARG
JUDICIAL MEMBER

Raja...

Customs, Excise & Service Tax Appellate Tribunal

SOUTH ZONAL BENCH
BANGALORE

Appeal(s) Involved: E/20838/2018-SM
[Arising out of Order-in-Appeal No. BW-EXCUS-APP-139-17-18 dated 22/02/2018 passed by COMMISSIONER OF CENTRAL TAX, BENGALURU WEST , MYSORE (APPEALS) ]

M/s. Wipro Kawasaki Precision
Machinery Private Limited
BANGALORE
Appellant(s)

Versus

Commissioner of Central Tax Commissioner Of Central Tax, Bengaluru West
Respondent(s)

Appearance: Mr. Rajesh. R, Company Representative      For the Appellant
Mrs. Kavitha Podwal, AR      For the Respondent

Date of Hearing: 22/10/2018
Date of Decision: 22/10/2018

CORAM:
HON’BLE MR. S.S GARG, JUDICIAL MEMBER

Final Order No. 21629 / 2018

Per : S.S GARG

The present appeal is directed against the impugned order dated 22.2.2018 passed by the Commissioner (A) whereby the Commissioner (A) has rejected the appeal of the appellant.

2.  Briefly the facts of the present case are that the appellants are engaged in the manufacture and clearance of the excisable goods viz., Excavator Hydraulic Pump, Excavator Pump Spares falling under Chapter subheading 8413 1990 and 8431 4930 of the First Schedule to the Central Excise Tariff Act, 1985. They are availing the facility of CENVAT credit under the provisions of CENVAT Credit Rules, 2004. On gathering intelligence that the appellant have taken Central Excise Registration in April 2012 and are availing CENVAT credit on Customs Education Cess and Customs Secondary Education Cess from July 2012 onwards, the officers of the Headquarters Preventive Unit, Bangalore-III Commissionerate visited the unit and caused necessary verification and called for the details and documents from the appellants by issuing summons. During the course of verification of documents of the appellant, it was noticed that they have availed CENVAT credit on Customs Education Cess and Customs Secondary & Higher Education Cess on inputs like raw material and capital goods which is ineligible as per Rule 3(1)(vi) and (via) of CENVAT credit Rules, 2004 read with Notification No.13/2012 Customs and No.14/2012 Customs, both dated 17.3.2012. The total credit availed by the appellant on Customs Education Cess and Customs Secondary & Higher Education Cess for the period July 2012 to February 2014 was Rs.10,25,279/-. On being pointed out about the said lapse, the appellant reversed the entire credit under dispute along with applicable interest. Thereafter, the department issued a show-cause notice demanding the irregularly availed CENVAT credit along with interest and also proposed penalty and after following the due processes, the adjudicating authority confirmed the demand along with interest and also appropriated the amount already paid and also imposed penalty equivalent to the wrong credit availed under Rule 15(2) of CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. Aggrieved by the said order, appellant filed appeal before the Commissioner (A), who rejected the said appeal. Heard both the parties and perused the records.

3.  Heard Shri Rajesh. R, Company Representative on behalf of the appellant-company and Mrs. Kavitha Podwal, AR for the Revenue.

4.  Learned Company Representative for the appellant submitted that the impugned order is not sustainable in law as the same is contrary to the facts and the law. He further submitted that the appellant had inadvertently availed CENVAT credit on Custom Education Cess and Custom Secondary and Higher Education Cess and on being pointed out by the Department, they have immediately reversed the credit along with interest. He further

submitted that there was no mala fide intention to evade payment of duty and they had taken the credit by mistake as they were not aware of the two exemption Notifications relied upon by the Department. He further submitted that the case of the appellant does not fall under Section 11A(4) of the Central Excise Act, 1944. In support of his submission, he relied upon the following decisions:

(i)  CCE vs. Adecco Flexione Workforce Solutions Ltd.: 2012 (26) STR 3 (Kar.)
(ii) Sarita Steel & Indsutries Ltd. vs. CCE: 2011 (272) ELT 572 (Tri.-Bang.)
(iii) Chandan Tobacco Co. vs. CCE: 2011 (270) ELT 87
(iv) Tinplate Company of India Ltd. vs. CCE: 2010 (256) ELT 595 (Tri.-Kol.)
(v) CCE vs. KPTCL: 2010 (250) ELT 572 (Tri.-Bang.)
(vi) Punj Lloyd Ltd. vs. CCE: 2015 (40) STR 1028 (Tri.- Del.)

5.  On the other hand, the learned AR for the Revenue reiterated the findings in the impugned order.

6.  After considering the submission of both the parties and perusal of the material on record, I find that the appellants have reversed the CENVAT credit on Custom Education Cess and Customs Secondary and Higher Education Cess immediately on being pointed out by the Department along with interest. Further, I find that the appellants have begun their operations just two years before and  were not aware of the two exemption Notifications cited in the notice and they have inadvertently taken the CENVAT credit which was reversed on being pointed out by the Department. Further, I find that the department has not been able to bring any material on record to show that the appellant has a mala fide intention to take the CENVAT credit wrongly. Further, I find that the department vide its Board Circular No.137/46/2015-ST dated 18.8.2015 wherein also the Board has clarified that in cases not involving fraud, suppression of facts, etc., if the assessee pays the tax along with interest either within 30 days from the date of issuance of show-cause notice or before the issue of show-cause notice, then in such cases, proceedings shall be deemed to be concluded. Further, in view of the decisions relied upon by the appellant cited supra as well as the Board Circular cited supra, I am of the view that the penalty imposed on the appellant is not sustainable in law and therefore, I set aside the penalty by allowing the appeal of the appellant with consequential relief, if any.

(Operative portion of the Order was pronounced in Open Court on 22/10/2018)

S.S GARG
JUDICIAL MEMBER

rv...

Customs, Excise & Service Tax Appellate Tribunal
SOUTH ZONAL BENCH
BANGALORE

Appeal(s) Involved:
E/20752/2018-SM, E/20753/2018-SM
[Arising out of Order-in-Appeal No. 146-158/2018 dated 15/02/2018 passed by Commissioner of Central Tax , BANGALORE ( Appeals-I) ]

M/s. Molex ( India ) Pvt Ltd BANGALORE
Appellant(s)

Versus

Commissioner Of Central Tax, Bengaluru East
Respondent(s)

Appearance:
Mr. T.R. Venkateswaran, CA Pricewaterhouse Cooper (P) Ltd  For the Appellant
Mrs. Kavita Podwal, AR       For the Respondent

Date of Hearing: 15/10/2018
Date of Decision: 15/10/2018

CORAM:
HON'BLE MR. S.S GARG, JUDICIAL MEMBER

Final Order No. 21612-21613 / 2018

Per : S.S GARG

These two appeals are directed against the impugned order dated 15.02.2018 passed by the Commissioner (Appeals) wherein the Commissioner (A) disposed of 13 appeals by way of remand to the original authority with certain directions. Out of the 13 appeals remanded vide impugned order dated 15.02.2018, eleven (11) appeals were disposed of by this Tribunal vide its Order dated 29.08.2018 and the all the 11 appeals were allowed. These two appeals were de-linked because issue involved in these two appeals is different and the same has not been dealt with by the Commissioner (A) in its impugned order dated 15.02.2018. In the impugned order passed by the Commissioner, no speaking order has been passed on the issue of short reversal CENVAT Credit in terms of Rule 6(3A)(b)(iii) of the CENVAT Credit Rules, 2004. Since the issue in both these appeals is identical therefore both the appeals are being disposed of by this common order.

2.  Briefly the facts of the present case are that the appellants are engaged in the manufacture and clearance of excisable goods like cable and connectors etc., falling under Chapter 85 of the CETA 1985. The appellants were audited by the officers of the internal audit department and during the course of audit, certain irregularities and discrepancies were noted and thereafter SCNs were issued to the appellant for taking irregular CENVAT Credit and not reversing the CENVAT Credit in terms of formula under Rule 6(3A)(b)(iii) of the CCR 2004. Vide the impugned order, the learned Commissioner (A) has also remanded these two appeals without recording any submissions of the appellants on merit as well as on limitation.

3.  Heard both sides and perused the records of the case.

4.  The learned consultant appearing for the appellant submitted that the impugned order disposing of 13 appeals and remanded the case back to the original authority is not sustainable in law. He further submitted that out of 13 appeals, 11 appeals of the appellant has already been allowed by this Tribunal vide its order dated 29.08.2018. He further submitted that in these two appeals, the issue of short reversal of CENVAT Credit relating to the 02 units of the appellant. He further submitted that the learned Commissioner (A) has not passed the speaking order on the matter of short reversal of CENVAT Credit in terms of Rule 6(3A)(b)(iii) of CCR, 2004. He further submitted that the appellants have rightly reversed the CENVAT Credit as per the formula prescribed in Rule 6(3A). He further submitted that the majority of the demand as confirmed in the Order-in- Original is barred by limitation of time and the same is liable to be set aside. He further submitted that the demand in the present cases relates to the period April 2011 to November 2014 and April 2012 to July 2014 in case of Unit 1 and Unit 2 respectively whereas the SCN was issued on 18.08.2015. He

further submitted that the demand has been confirmed by invoking the extended period of limitation in terms of Section 11A(4) of the Central Excise Act, 1944. He further submitted that the extended period of limitation under Section 11A(4) has been wrongly invoked as no ingredient of the said Section is present in these cases as the appellant has complied with the procedural requirement of law by filing the monthly returns with complete disclosure as required and have maintained documents and registers as required under the provisions of CCR, 2004.

4.1  The learned consultant further submitted that the revenue authorities were fully aware that the appellant has accounted only common input services for reversal under Rule 6(3) of CCR, 2004 since the year 2011. The learned consultant also refer to various intimation letters filed by the appellant with the Central Excise office on regular basis which clearly shows that the assessee has complied with the conditions mentioned under Rule 6(3A)(a) of CCR, 2004. These intimation letters clearly specified the manner in which the CENVAT Credit reversal was made. Further, all the details as required under Rule were furnished along with intimation letter and the same has been duly accepted and acknowledged by the revenue authorities. The learned consultant took me through the various provisions of Rule 6 to show that all the procedural requirements have been complied with by the appellant.

5.  On the other hand, the learned AR fairly conceded that the appellants have been filing intimation letters with the Central Excise Office which has been produced by the appellant on record but she submits that the learned Commissioner (A) while remanding all the 13 appeals has not given any findings with regard to these 02 cases neither on merit nor on limitation. She further submitted that these 02 cases needs to be remanded back to the Commissioner (A) with a direction to give specific findings on the issues involved in the present two appeals.

6.  After considering the submissions of both the parties and perusal of the material on record, I find that there is force in the contention of the appellant that most of the demand is time- barred as there was no suppression of fact on the part of the appellant with intention to evade tax. Further, I find that the appellants have been giving intimation from time to time regarding reversal of CENVAT Credit as per CCR, 2004 but the Commissioner (A) has not given any findings in these two appeals with regard to the issue involved. Therefore, I am of the view that these two appeals need to be remanded back to the Commissioner (A) with a direction to give specific findings on merit as well as on limitation. After considering the submissions of the appellant and after considering all the documents on record both these appeals are allowed by way of remand to the Commissioner (A) to dispose of the appeal within a period of 02 months from the date of receipt of the certified copy of the order. Before disposing of the appeal, the learned Commissioner (A) will follow the principles of natural justice and will give adequate opportunity to the appellant to produce the documents which they intent to produce in support of their claim. Hence, both the appeals are allowed by way of remand.


(Operative portion of the Order was pronounced in Open Court on 15/10/2018)

S.S GARG
JUDICIAL MEMBER

Parveen...

Customs, Excise & Service Tax Appellate Tribunal
SOUTH ZONAL BENCH
BANGALORE

Appeal(s) Involved: E/20496/2018-SM
[Arising out of Order-in-Appeal No. 82/2018 dated 22/01/2018 passed by Commissioner of Central Tax, Bangalore North , BANGALORE-II( Appeal) ]

M/s. Suprajith Automotive Pvt Ltd BANGALORE
Appellant(s)

Versus

Commissioner Of Central Tax, Bangalore North
Respondent(s)

Appearance:
Mr. Raghavendra, Advocate, BANGALORE  For the Appellant
Mr. K.B. Nanaiah, AR       For the Respondent

Date of Hearing: 29/10/2018
Date of Decision: 29/10/2018

CORAM:
HON'BLE MR. S.S GARG, JUDICIAL MEMBER

Final Order No. 21683 / 2018

Per : S.S GARG

The present appeal is directed against the impugned order dated 22.01.2018 passed by the Commissioner (Appeals) whereby the Commissioner (A) has partially remanded the matter to the original authority regarding the CENVAT credit of Rs.2,86,276/- taken on building repair and maintenance and other credits were disallowed.

2.  Briefly the facts of the present case are that the appellants are engaged in the manufacture of automotive cables, classified under Chapter Sub-heading 87082900 of CETA and are also registered as Export Oriented Unit (EOU). On scrutiny of the records by the Department for the period April 2010 to December 2013, it was noticed that the appellants had availed CENVAT credit on missing invoices amounting to Rs.17,62,887/- and ineligible input services like outward transportation, housekeeping, factory extension, rent-a-cab service and excess credit on some invoices. Subsequently, the appellant produced the missing invoices and on verification, it was found that the appellant were eligible for credit on these invoices for an amount of Rs.14,86,290/- and in respect of balance credit of Rs.2,76,597/- the appellant could not produce invoices and the appellant thereafter reversed the amount of Rs.2,76,597/- along with interest and 25% penalty. With regard to the ineligible Service Tax credit on various input services, only on three services- catering service, outward transportation service and rent-a-cab service, credit has been denied by the Commissioner and the appellants have challenged the said denial before this Court. The total amount of CENVAT credit with regard to these three services is, catering service Rs.18,320/-, outward transportation service Rs.3,02,240/- and rent-a-cab service Rs.79,510/-.

3.  Heard both sides and perused the records of the case.

4.  Learned counsel for the appellants has submitted that impugned order denying CENVAT credit on these input services is contrary to the facts and the law. He further submitted that outdoor catering and rent-a-cab services are used as per the statutory requirement and hence to be treated as input services used in or in relation to the manufacture as per the means clause of the definition of input service. He further submitted that the services provided for personal consumption of the employees are only excluded from the purview of „input service‟ definition. However, in the present case, the outdoor catering service is used to boost the energy of the employees to increase the manufacturing capacity and also to avoid wasting of time in production. He also submitted that the credit in respect of outward transportation credit has been denied on the basis of verification conducted at the back of the appellant without furnishing copy of the same to the appellant. It is his further submission that the sample copies of the invoices were verified and the same cannot be relied upon to deny the credit. It is his further submission that the issue pertains to interpretation of the definition of input service which underwent many changes during the past and hence, longer period is not invocable and penalty is not imposable.

5.  On the other hand, the learned AR defended the impugned order.

6.  After considering the submission of both the parties and perusal of the material on record, I find that the Commissioner has denied the CENVAT credit on outdoor catering service on the ground that vide Notification No. 03/2011-CE dated 01.03.2011, the definition of „input service‟ was amended wherein the outdoor catering services were specifically excluded by exclusion clause “C” in the definition under Rule 2(1) of CCR. Also the words “activities relating to business” was removed from the definition of input services. Further, regarding the credit of Rs.79,510/- on rent-a-cab service, the Commissioner (A) has denied the credit on the ground of specific exclusion from the definition of input service and also relying on the Tribunal‟s decision in the case of AET Laboratories Ltd.- 2016 (42) STR 720 (Tri. Bang.). Further, I find that Larger Bench of this Tribunal in the case of Wipro Ltd Vs. CCE, 2010-TIOL-3256-CESTAT Bang-LB has held that outdoor catering service is not an input service after the amendment from 01.04.2011. Further, the denial of credit on rent-a-cab service is also upheld as after the amendment, it is specifically excluded. Regarding the freight outward charges, CENVAT credit has been denied on the ground that the Joint Commissioner found that the invoices submitted on the credit was availed on transportation of export cargo up to the place of destination i.e. outside Indian Territory. Further, I find that the case of the appellant is that he has claimed outward transportation up to the Port of export and has not claimed beyond the Port of loading and the Commissioner (A) has wrongly relied upon the Order-in-Original which is based upon the observation of the Joint Commissioner that in the invoices, the appellant has claimed CENVAT credit on transportation up to the place of destination whereas, in fact, the appellant has only claimed CENVAT credit on transportation up to the Port which is a place of removal in case of export. In view of these facts, I am of the opinion that the case needs to be remanded back to the original authority for the purpose of verifying whether the appellant has claimed CENVAT credit on freight outward up to the place of the Port or beyond. For this purpose, the matter is remanded back to the original authority to verify the same and passed a reasoned order after complying the principles of natural justice. In view of the above discussion, the appeal is partly allowed by way of remand. CENVAT credit on catering service and rent-a-cab service are disallowed and for outward transportation service, the matter is remanded to the original authority. The appeal is accordingly disposed of.

(Operative portion of the Order was pronounced in Open Court on 29/10/2018)

S.S GARG

JUDICIAL MEMBER

Parveen...

Customs, Excise & Service Tax Appellate Tribunal
SOUTH ZONAL BENCH
BANGALORE

Appeal(s) Involved: C/20970/2014-SM
[Arising out of Order-in-Appeal No. 473 & 474/2013 dated 17/12/2013 passed by Commissioner of CUSTOMS , BANGALORE-I( Appeal) ]

Systronics (India) Ltd, BANGALORE
Appellant(s)

Versus

Commissioner of Customs Bangalore-cus
Respondent(s)

Appearance:
Shri R. Sundarajan, CA For the Appellant
Dr. J. Harish, Dy. Commissioner(AR) For the Respondent

Date of Hearing: 12/10/2018
Date of Decision: 12/10/2018

CORAM:
HON'BLE MR. S.S GARG, JUDICIAL MEMBER

Final Order No. 21614 / 2018

Per : S.S GARG

The present appeal is directed against the impugned order dt. 17/12/2013 passed by the Commissioner(Appeals) whereby the Commissioner(Appeals) allowed the Department’s appeal and dismissed the appeal of the appellant.

2.  Briefly the facts of the present case are that the appellants are engaged in the trading of electronic products of various types. The appellant filed Bill of Entry for the material imported for further trading and the same was ultimately sold to local customer under proper invoice after payment of VAT. The appellant submitted a claim for refund of Special Additional Duty (SAD) 4% under Notification No.102/2007-Cus against the imports made and sold domestically. The amount of refund claim is Rs.7,07,129/-. On submission of all the required documents, the appellant received a query from the Department seeking explanation as to the amount of refund claim has not been shown as receivables in the books of accounts of the appellant. The appellant filed the reply to the query raised by the Department stating that the notification does not require that the refund claim to be shown as receivables in the books of accounts and the allegations were raised on the assumptions and presumptions with no corroborative evidence. The Assistant Commissioner passed the order for the refund but credited the refund to the consumer welfare fund under Section 27(2) of the Customs Act on the pretext that the appellant has not passed the test of unjust enrichment because the amount was not shown in the receivables. The appellant filed appeal before the Commissioner(Appeals) against the finding of crediting the refund amount to the Consumer Welfare Fund.

3.  Heard both sides and perused records.

4.  The learned consultant appearing for the appellant submitted that the impugned order rejecting the refund claim on the ground of not showing the same in the receivables is not tenable under the law and is liable to be set aside. He further submitted that this finding is contrary to the circular No.18/2010 dt. 08/07/2010 wherein the Board has clarified that the field formations need not insist on the production of audited balance sheet and Profit & Loss Account. The Circular also states that the production of a CA certificate is sufficient to pass the refund claim. He further submitted that as per the Notification and subsequent Circular, it is not provided that the SAD refund should be shown as receivable in the books of accounts and this condition imposed by the impugned order is not sustainable in law. In support of this submission, the appellant relied upon the Adhmedabad Tribunal decision in the case of MIRC Electronics Ltd. Vs. CC, Ahmedabad [2013(287) ELT 225 (Tri. Ahmd.)] wherein the Tribunal has held “in the absence of any other contrary evidence, the exercise embarked upon by the lower authorities in this case is unwarranted and specifically barred by the CBE&C in the circulars as noted hereinabove”. He further submitted that there is no requirement in the Notification No.102/2007 for the amount of refund claim to be shown as receivable. In the case of Radico Khaitan Vs. CCE [Final Order No.50311/2014], the Hon’ble Delhi Tribunal has decided that when the assessee is otherwise entitled to refund, the claim cannot be rejected on the technical ground that the claim is not shown as receivables in the balance sheet. As regards the test of unjust enrichment, the appellant has produced the Purchase Register for relevant year wherein it has been clearly shown that the amount of Rs.7,07,129/- being the SAD amount has not been included in the purchases for the year. He further submitted that Commissioner(Appeals) has randomly picked up the figure of Rs.5.51 lakhs shown as receivables from the balance sheet and noted that such amount has no relevance in the present case.

5.  On the other hand, the learned AR defended the impugned order.

6.  After considering the submissions of both the parties and perual of the material on record, I find that the only ground on which the SAD refund has been rejected is that the amount of refund has not been shown in the receivables in the accounts of the appellant. Further I find that as per the Notification No.102/2007 and also the subsequent Circular No.18/2010 dt. 08/07/2010, it is not the requirement at all that the said claim should be shown as receivables in the books of accounts. Further I find that Board circular has clarified that field formations need not insist on the production of audited balance sheet and Profit & Loss Account and the certificate of the CA is sufficient to grant the refund claim. In the present case, the CA certificate was produced but the same was not considered. Further I find that in view of the various decisions relied upon by the appellant which clearly states that refund should not be denied merely on technical violations. In view of the above circumstances, I am of the view that the impugned order rejecting the refund claim is not sustainable in law and therefore I set aside the same by allowing the appeal of the appellant with consequential relief, if any.

(Operative portion of the Order was pronounced in Open Court on 12/10/2018)

S.S GARG
JUDICIAL MEMBER

Raja...

Customs, Excise & Service Tax Appellate Tribunal
SOUTH ZONAL BENCH
BANGALORE

Appeal(s) Involved: E/21238/2018-SM
[Arising out of Order-in-Appeal No. MYS-EXCUS-0000-APP-211-17-18 dated 22/02/2018 passed by The Commissioner of Central Tax, Mysore Central Tax Commissionerate, MYSORE (APPEALS) ]

M/s. Kluber Lubrication India Pvt. Ltd, MYSORE
Appellant(s)

Versus

Commissioner Of Central Tax, Mysuru Commissionerate
Respondent(s)

Appearance:
Ms. Neethu James, Advocate LAKSHMI KUMARAN & SRIDHARAN For the Appellant
Dr. J. Harish, AR For the Respondent

Date of Hearing: 29/10/2018
Date of Decision: 29/10/2018

CORAM:
HON’BLE MR. S.S GARG, JUDICIAL MEMBER

Final Order No. 21678 / 2018

Per : S.S GARG

The present appeal is directed against the impugned order dated 22.2.2018 passed by the Commissioner (A), whereby he has rejected the appeal of the appellant.

2.  Briefly the facts of the present case are that the appellants are manufacturers of lubrication preparations and were availing credit on inputs, capital goods and services. It was that during the period 2015-16 they had availed credit on invoices over and above the eligibility i.e., the duty paid against those invoices. The amount of irregular credit so availed was Rs.713052 which was reversed by the appellant on 10.8.2016 to 16.8.2016 along with interest of Rs.118396/-. Further as per the Legal Metrology Act the lubricants less than 25 kg were removed from the purview of MRP but the appellant continued to clear the goods under Section 4(A) thereby short paying duty to the extent of Rs.5941/-. Notice dated 28.10.2016 issued confirming the ineligibility of credit and appropriation of the payments made by them. Based on the fact of the case, the adjudicating authority has confirmed the proposal made in the notice along with interest and penalty. Aggrieved by the Order-in-Original, the appellant filed appeal before the Commissioner (A), who rejected the same.

3.  Heard both the parties and perused the records.

4.  Learned counsel for the appellant submitted that the impugned order is not sustainable as the same is contrary to the binding judicial precedent. She further submitted that the entire demand along with interest was paid prior to the issue of show- cause notice. She further submitted that pursuant to the objections raised by the audit department and even prior to the issuance of audit note, the appellants have paid the entire amount of Rs.7,13,052/- along with interest vide Challan dated
10.8.2016 and 16.8.2016. She further submitted that once the entire demand is paid along with interest before issue of show- cause notice, then the department should not have issued show- cause notice as the case is covered under Section 11(A)(1)(b) read with Section 11A(2) of Central Excise Act, 1944. She further submitted that this issue is no more res integra and has been settled in favour of the assessee in the following decisions:

CCE vs. M/s. Adecco Flexione Workforce Solutions Ltd.: 2012 (26) STR 3 (Kar.)
CCE vs. Gaurav Merchantiles Ltd.: 2005 (190) ELT 11 (Bom.)
CCE vs. Hodek Vibration Technologies P. Ltd.: 2016 (339) ELT 92 (Tri.-Mum.)
Aradhya Steel Pvt. Ltd. vs. CCT: 2018-TIOL-2396-CESTAT- BANG.
Dell International Services India Pvt. Ltd. vs. CCE: 2018-TIOL- 622-CESTAT-BANG.
Bhoruka Aluminium Ltd. vs. CCE: 2017 (51) STR 418 (Tri.- Bang.)
Arcgate vs. CCE, Jaipur: 2017 (5) GSTL 281 (Tri.-Del.)
CCE, Pune vs. Core Fitness Pvt. Ltd.: 2017 (4) GSTL 80 (Tri.- Mum.)
Tata Advanced Materials Ltd. vs. CCE, Bangalore: 2015 (322) ELT 540 (Tri.-Bang.)

4.1  She further submitted that in view of subsection (3) of Section 11A of the Act, which provides that where a Central Excise officer is of the opinion that the amount paid by an assessee under Section 11A(1)(b) of the Act, falls short of the amount actually payable, then he shall proceed to issue a show- cause notice under Section 11A(1)(a) of the Act only in respect of such amount which falls short of the amount actually payable. Therefore, show-cause notice should have been issued only in respect of Rs.5,941/- along with interest being the balance amount payable by the appellant. The appellant shall thereafter paid Rs.5,941/- along with interest of RS.1,782/- vide challan dated 9.5.2018 and the appellant is not contesting the penalty of Rs.5,941/-, which has also been confirmed by the Commissioner (A).

5.  On the other hand, the learned AR defended the impugned order.

6.  After considering the submissions of both the parties and perusal of the material on record and the various decisions relied upon by the appellant cited supra wherein it has been consistently held that once the appellant has paid the duty along with interest before the issue of show-cause notice, then show- cause notice should not be issued. By relying upon the ratio of the above said decisions, I set aside the penalty imposed on the appellant. As far as the penalty of Rs.5,941/- is concerned, the learned counsel for the appellant submitted that she did not press for setting aside the said penalty, therefore, this penalty is confirmed.

7.  In view of the above discussions, the appeal is partly allowed.

(Operative portion of the Order was pronounced in Open Court on 29/10/2018)

S.S GARG
JUDICIAL MEMBER

rv...

Customs, Excise & Service Tax Appellate Tribunal

SOUTH ZONAL BENCH
BANGALORE

Appeal(s) Involved: ST/20656/2018-SM
[Arising out of Order-in-Appeal No. 564-2017-ct dated 22/12/2017 passed by Commissioner of Central Tax,  BANGALORE-II( Appeal) ]

Gopalan Enterprises India Pvt Ltd, BANGALORE
Appellant(s)

Versus

Commissioner Of Central Tax, Bengaluru East
Respondent(s)

Appearance:
Shri PRADYUMNA G.H. ADVOCATE, Banglaore - For the Appellant
Smt. Kavita Podwal, Superintendent(AR)       For the Respondent

Date of Hearing: 11/10/2018
Date of Decision: 11/10/2018

CORAM:
HON'BLE MR. S.S GARG, JUDICIAL MEMBER

Final Order No. 21607 / 2018

Per : S.S GARG

The present appeal is directed against the impugned order dt. 22/12/2017 passed by the Commissioner(Appeals) whereby the Commissioner(Appeals) has rejected the appeal of the appellant.

2.  Briefly, the facts of the present case are that the appellants are engaged in providing taxable services classifiable under construction of residential complex service as defined under the provisions of Section 65(105)(zzzh) of the finance Act, 1994. Intelligence received by the Department indicated that the appellants had not paid applicable service tax and the gross consideration received by them in respect of construction of residential complex services undertaken during the period April 2012 to June 2012. After detailed verification of the records of the appellant and after recording the statements of the Senior Accounts Manager, the Department came to the conclusion that the appellants have misdeclared the taxable value in ST3 returns by not including the cost of undevided share of the land which had resulted in short payment of service tax to the extent of Rs.18,60,336/- which is laible to be recovered along with interest and penalties. Thereafter a show-cause notice was issued demanding service tax amount of Rs.18,60,366/- along with interest and penalties. Appellant filed reply to the show-cause notice inter alia submitting that the actual service tax payable by them was Rs.18,49,462/- as detailed in the computation sheet and they have paid the said amount much before the issuance of show-cause notice and prayed that the proceedings initiated for demand of interest and penalties be waived. After following the due process, the Additional Commissioner confirmed the demand along with interest and penalties. Aggrieved by the said order, appellant filed appeal before the Commissioner(Appeals) who rejected the same.

3.  Heard both sides and perused the records.

4.  Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed by overlooking the provisions of Section 129 of the Finance Act, 2017 and the impugned order is vitiated and is liable to be set aside. He further submitted that when the appeal was pending before the Commissioner(Appeals), Central Government vide Section 129 of the Finance Act, 2017 made amendment to Rule 2A of Service Tax (Determination of Value)Rules, 2006 with retrospective effect providing for exclusion of cost or value in goods and land or undivided share in the taxable value for the period from 1st July 2010 to 30th June 2012. Further as per the said amending section, it was provided that “… no act or omission on the part of any person shall be punishable as an offence which would not have been punishable had this section not come into force”. He further submitted that in view of the amendment made by the Government in 2017, no penalties can be imposed as the issue involved relates to interpretation of legal provisions. He further submitted that failure to pay service tax in question by the appellant was due to reasonable cause and hence penalties are liable to be waived invoking provisions of erstwhile Section 80 of the Act. He also relied upon the following decisions:-

i. CCE&C Vs. Port Officer [2010(19) STR 641 (Guj.)]
ii.Commissioner Vs. Jivanbhai D. Makwana [2010(20) STR 605 (Guj.)]
iii. CCE Vs. Tiger Service Bureau [2011(21) STR 364 (Kar.)]

5.  On the other hand, the learned AR defended the impugned order.

6.  After considering the submissions of both sides and perusal of the material on record and the various decisions relied upon by the appellant cited supra, I find that the appellant has paid the entire service tax before the issuance of show-cause notice and further I find that the Central Government brought amendment in Section 129 and amended Rule 2A with retrospective effect and also provided that no person should be punished for an offence which would not have been punishable had this Section not come into force. Further in view of the decisions relied upon by the appellant, I find that there was reasonable cause for not paying the service tax during the impugned period as there was confusion with regard to legal provisions which was made clear in 2017 by way of amendment in Rule 2A. In view of these circumstances, I am of the opinion that the impugned order is not sustainable in law and therefore I set aside the same by allowing the appeal of the appellant.

(Operative portion of the Order was pronounced in Open Court on 11/10/2018)

S.S GARG
JUDICIAL MEMBER

Raja...

Customs, Excise & Service Tax Appellate Tribunal
SOUTH ZONAL BENCH
BANGALORE

Appeal(s) Involved: ST/20495/2018-SM
[Arising out of Order-in-Appeal No. 18/2018 dated 04/01/2018 passed by Commissioner of Central Tax , BANGALORE-II( Appeal) ]

M/s. Telematics 4u Service Pvt Ltd, BENGALURU
Appellant(s)

Versus

Commissioner Of Central Tax, Bangalore North
Respondent(s)

Appearance:
Mr. Mukesh Shah, CA NNMS & CO.,  For the Appellant
Mr. Gopa Kumar, AR       For the Respondent

Date of Hearing: 30/10/2018
Date of Decision: 30/10/2018

CORAM:
HON'BLE MR. S.S GARG, JUDICIAL MEMBER

Final Order No. 21701 / 2018

Per : S.S GARG

The present appeal is directed against the impugned order dated 04.01.2018 passed by the Commissioner (Appeals) whereby the Commissioner (A) has rejected the appeal of the appellant.

2.  Briefly the facts of the present case are that the appellants are registered under Service Tax for providing Online Information and Data Retrieval Service, Business Auxiliary Service, Business Support Service and Information Technology Software Service and availing the CENVAT credit on input services. During verification of the records of the unit by the departmental audit team for the period 04/2011 to 09/2015, it was noticed that the appellant, who is registered under Service Tax for providing the above mentioned services, was also engaged in „trading‟ of goods which is an exempted service in terms of the provisions of CENVAT credit Rules, 2004. The appellant had availed the CENVAT credit to the extent of Rs.7,06,861/- on purchase of the devices viz., “CR-200B device”. Since the said device was not used for providing any output service but used only for trading purposes, the availment of CENVAT credit on the said goods was irregular and violated the provisions of Rule 2(K) of the CCR, 2004. Therefore, a SCN dated 22.09.2016 was issued by the Joint Commissioner of Central Excise, Central Excise Audit Commissionerate, Bangalore, demanding duty of Rs.7,06,861/- and interest and with a proposal to impose penalty under Rule 15(3) of the CCR, 2004 read with Section 78(1) of the Finance Act, 1994. After due process, the Assistant Commissioner vide Order-in-Original dated 05.01.2017 confirmed the demand of Rs.7,06,861/- along with interest and also imposed penalty of Rs.7,06,861/- under Rule 15(3) of CCR read with Section 78(1) of the Finance Act, 1994 and also appropriated an amount of Rs.22,807/- already paid. Aggrieved by the said order, the appellant filed an appeal before the Commissioner (A) who rejected the said appeal.

3.  Heard both sides and perused the records of the case.

4.  Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and the law. He further submitted that the impugned order is contrary to the binding judiciary precedents. He further submitted that the appellants are in the business of asset movement tracking and provide information/data to the GTA/logistic companies in order to track vehicles and use the same for their business/delivery scheduling. The services provided by them can be controlled or monitored from a remote location using GPS Technology and to track asset in real time basis, there is a requirement of a hardware i.e. CR-200B device, which gets integrated using unique numbering or identification for tracking. Without these devices, it is not possible to provide telematics services. He further submitted that these devices are procured by the appellant and given on hire/free of cost to the service recipient but the ownership of the devices is not transferred to them. He further submitted that as the devices are used for providing output service, they are eligible to claim CENVAT credit on the input used for providing output taxable services. When the devices are sold to the service recipient, credits are not availed as the same amounts to trading. Learned counsel also submitted that they have disclosed the availment of CENVAT credit in their ST-3 filed for the period in question and hence there was no intention to hide or evade any tax liability. Therefore, invoking the extended period is unsustainable and bad in law. The learned counsel for the appellant admitted that the devices traded by the assessee, no CENVAT credit is taken as per their record but he admitted that the assessee has failed to maintain proper records of inventory used and inventory traded which is only a procedural lapse and substantial benefit should not be denied on the grounds of procedural lapse. He further submitted that due to ambiguity under Karnataka VAT laws on taxability of such transfer of devices to customers, the appellant decided to raise invoices and paid VAT liability. He also prayed that the penalty or interest should not be imposed as there was no intention and the issue relates to interpretation.

5.  On the other hand, the learned AR defended the impugned order.

6.  After considering the submission of both the parties and perusal of the material on record, I find that the only issue involved in the present appeal is whether CR-200B devices submitted to their clients on hire/test basis by the appellant amounts to trading activity or not and further the appellants are entitled to CENVAT credit or not. Further, I find that the arguments of the learned counsel for the appellants that the devices were transferred to the customers on hire/free of cost is not tenable in law because the appellants have issued the invoice on which they have paid VAT under the Karnataka VAT Act. Further, I find that the assessee has not maintained the proper record of inventory used and inventory traded. The learned Commissioner (A) after considering the entire evidences and the grounds raised by the appellant has come to the conclusion that the appellant has not been able to provide documentary evidence to show CR-200B devices in question have been used to provide output service to their clients. Further, the learned Commissioner (A) has observed that the appellant has raised separate invoices for subscription charges and has also discussed about few invoices brought on record. It is pertinent to reproduce the relevant findings of the Commissioner (A) which is contained in Para 13 & 14 which are reproduced here below:

13.  From the above, it is clear that even transfer of the right to use any goods for any purpose would be considered as a deemed sale. Therefore, the levy of VAT or Service Tax on supply of the devices on hire/rent would depend on the nature of the „Transfer‟ of such goods to the customers. Such renting of the devices may be called as transfer of right to use. But if such transfer of right to use involved transfer of both possession and control of the goods to the user of the goods then VAT is payable on such activity as this is considered as deemed Sale. Therefore, I find that there is no ambiguity in the levy of VAT law as claimed by the appellant.

14. It is admitted by the appellant that they have discharged VAT/CST liability on the devices given to the customers on hire/testing basis. So in the present case, the fact that the appellant has discharged VAT on the devices given to the customers in hire/test basis, implies that the transfer involves both possession and control of the devices to the user of the goods and therefore it is to be construed as a „deemed sale‟. Thus when the appellant has discharged VAT/CST on the devices so hired to the customers and it can be construed as a deemed sales, then as a corollary such activity undertaken amounts to trading activity by the appellant in respect of such devices, especially in the absence of any documentary proof to show that output service has also been provided by the appellant in respect of such devices. Since trading activity is an exempted service, the appellant is not eligible to avail CENVAT credit on such devices. In view of the above discussion and findings, I find no infirmity in the impugned order passed by the original authority.

6.1  Further, in view of the reasons given by the learned Commissioner (A), I don‟t find any infirmity in the impugned order wherein it has been held that the appellant is not eligible to avail CENVAT credit on such devices as far as imposition of penalty under Section 78 is concerned, I find that there was ambiguity in the issue and it relates to interpretation of law. Further, I find that the appellants have shown the CENVAT credit taken by them in their returns and it is during audit that lapse was detected. Learned counsel of the appellant relied upon the decision in the case of Carzonrent (India) Pvt. Ltd. Vs. CST, Delhi-I, 2017 (50) STR 172 (Tri. Del.). wherein the Division Bench of the Tribunal has held that:

“We have examined this contention of the appellant with reference to the findings of the Original Authority on the question of time bar. The Original Authority held that the appellant is professionally managed company and it should have followed the provisions of Finance Act, 1994 to comply with the payment of Service Tax in time. He rejected the contention of the appellant with reference to their bona fide belief. We note that in the present case, the dispute involved is liability of the appellant for Service Tax for providing vehicles on long term lease basis to various clients. Admittedly, there is a provision in VAT Law for taxing the deemed sale of motor vehicles in certain cases of long term lease arrangement. It is clear that the tax liability with reference to a particular transaction has to be decided based on the facts of transactions and the applicable tax law. The question whether the lease arrangement entered into by the appellant will be covered by VAT Law or Service Tax had some element of dispute and ambiguity. The original order also examined the contract in detail and applied the various principles evolved in the case laws, more specifically the decision of the Hon‟ble Supreme Court in BSNL (supra) to decide that the activities of the appellant as falling under Service Tax domain. The appellant pleaded that they have discharged the VAT on these transactions during the relevant time. Considering these factual background, we find that the allegation of fraud, suppression and wilful misstatement cannot be sustained in the present case against the appellant. The reasons adopted by the Original Authority are not convincing in terms of the provisions of the Section 73(1) of the Finance Act, 1994.”

6.2  Further, I find that the appellants have provided all the information to the audit party and the matter came to the light during the audit only from the records submitted by the appellant wherein they have disclosed the availment of CENVAT credit there. Therefore, in view of the Division Bench‟s decision cited supra, I am of the opinion that the imposition of penalty under Section 78(1) of the Finance Act is not warranted therefore I confirm the duty along with interest but drop the penalty. Accordingly, the appeal is partly allowed.

(Operative portion of the Order was pronounced in Open Court on 30/10/2018)

S.S GARG
JUDICIAL MEMBER

Parveen...

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

SOUTH ZONAL BENCH
BANGALORE

Appeal(s) Involved:
ST/20640/2018-SM, ST/20641/2018-SM
[Arising out of Order-in-Appeal No. COC-EXCUS-000- APP-285 & 286-2017 dated 31/10/2017 passed by the Commissioner of Central Taxes & Central Excise, Cochin   (Appeals)]

CCS Technologies Pvt. Ltd. Kochi
Appellant(s)

Versus

Commissioner Of Central Tax & Central Excise, Cochin
Respondent(s)

Appearance:
Shri. Krishnan, CA  For the Appellant
Shri. K.B. Nanaiah, Assistant Commissioner (AR)      For the Respondent

Date of Hearing: 05/09/2018
Date of Decision: 15/10/2018

CORAM:
HON'BLE SHRI. P. DINESHA, JUDICIAL MEMBER

Final Order Nos. 21663 – 21664 / 2018

Per: P. DINESHA

These appeals are filed by the assessee. The appellant is engaged in rendering Information Technology Services having administrative office at Panampilly Nagar & branches at Kottayam and Kakkanad. CCS Technologies (P) Ltd. obtained Service Tax Registration No. AABCC1838QST001 in 2008. ST-3 Return was filed for the period October 2013 to March 2014 in April 2014 wherein cenvat credit has been utilized including service tax paid at Kakkanad Branch. There was an audit in the appellant’s premises wherein the Revenue appears to have pointed out that certain invoices with address of the Branch office against which cenvat credit was availed seemed to be ineligible and hence, the same was required to be reversed. Thereafter, the appellant carried out the reversal of cenvat credit, remitted the same with interest under protest and then made a claim for refund. The Revenue issued a show-cause notice on 28.08.2014 proposing to reject the refund claim of the appellant and the show- cause notice culminated in the Order-in-Original dated 18.06.2015 wherein, the adjudicating authority has confirmed the proposals made in the show-cause notice, also imposed penalty and interest as applicable. On appeals, the appellant having not met with success, is in appeal before this forum.

2.  Heard Shri. Krishnan, CA for the appellant and Shri. K.B. Nanaiah, DR for the Revenue, perused the materials on record and also gone through various decisions referred to during the course of hearing. On a perusal of the impugned order, I find that the reason for denial of cenvat credit was that the branch office of the appellant did not hold a Service Tax Registration at the material point of time. Further, I also find that it was one of the contentions of the learned consultant before the lower appellate authority that the branch office of the appellant was an exempted unit in SEZ by virtue of which, there was no liability to service tax. I find that the Hon’ble jurisdictional High Court in the case of mPortal India Wireless Solutions P. Ltd. reported in 2012 (27) S.T.R. 134 (Kar.) after considering the rival contentions has ruled as under:

“6.The assessee is a 100% export oriented unit. The export of software at the relevant point of time was not a taxable service. However, the assessee had paid input tax on various services. According to the assessee a sum of Rs. 4,36,985/- is accumulated Cenvat credit. The Tribunal has categorically held that even though the export of software is not a taxable service but still the assessee cannot be denied the Cenvat credit. The assessee is entitled to the refund of Cenvat credit. Similarly insofar as refund of Cenvat credit is concerned, the limitation under Section 11B does not apply for refund a accumulated Cenvat credit. Therefore, bar of limitation cannot be a ground to refuse Cenvat credit to the assessee.

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.”

2.1. The above decision has been followed by the jurisdictional High Court in a latter decision reported in 2016 (43) S.T.R. 542 (Kar.) in the case of Kyocera Wireless (India) Pvt. Ltd. and also by this very Bench in 2016 (43) S.T.R. 263 (Tri.-Bang.) in the case of Movik Networks India Pvt. Ltd. and in 2016 (42) S.T.R. 79 (Tri.- Bang.) in the case of Broadcom India Research Pvt. Ltd.

3. I find that the issue involved is identical to the one already considered by the jurisdictional High Court and therefore the same is no more res integra. Going therefore by the stare decisis of the above cases, I am of the view that the denial by the lower authorities is incorrect and unsustainable for which reason, I set aside the same. The assessee’s appeals are therefore allowed with consequential benefits, if any.

(Order pronounced in Open Court on 15/10/2018)

(P. DINESHA)
JUDICIAL MEMBER)

...iss/sdd

Customs, Excise & Service Tax Appellate Tribunal
SOUTH ZONAL BENCH
BANGALORE

Appeal(s) Involved:E/20409/2018-SM
[Arising out of Order-in-Appeal No. 12-2017CT dated 02/01/2018 passed by Commissioner of Central Tax, Bangalore North , BANGALORE-II( Appeal) ]

Tractors And Farm Equipment Ltd (tafe Limited For Short)
(engineering Plastic And Tool Room Division) BANGALORE
Appellant(s)

Versus

Commissioner Of Central Tax, Bangalore North
Respondent(s)

Appearance:
Shri T.V. Ajayan, Advocate, Chander Kumar & Associates, For the Appellant
Shri KB Nanaiah, Superintendent(AR)       For the Respondent

Date of Hearing: 16/10/2018
Date of Decision: 16/10/2018

 

CORAM:

HON'BLE MR. S.S GARG, JUDICIAL MEMBER

Final Order No. 21616 / 2018

Per : S.S GARG

The present appeal is directed against the impugned order dt. 02/01/2018 passed by the Commissioner(Appeals) whereby the Commissioner(Appeals) has confirmed the Order-in-Original to the extent of recovery of Rs.3,17,329/- with interest. However the penalty was dropped.

2.  Briefly the facts of the present case are that the appellants are involved in the manufacture of automobile parts and medical equipment parts falling under Chapter 84 of CETA, 1985. They are availing benefit of credit facility in terms of CENVAT Credit Rules, 2004. During the course of audit of records for the period 2011-12 to 2012-13 (up to 12/2012) by CERA Audit, it was observed that the appellant had paid excess duty to the extent of Rs.3,17,327/- (CENVAT-Rs,308,458/-, EC – Rs.5,669/- and SHEC – Rs.3,220/-) by utilising CENVAT and PLA in the month of June 2012. The excess duty paid was subsequently availed suo-motu in the CENVAT account in the month of March 2013, without filling any refund application and due sanction of officer, there is no provision in Central Excise Act, 1944 and rules made there under that allows suo-motu taking of CENVAT credit. Taking of suo-motu credit without applying for refund or in the absence of sanction by the proper officer is improper or inadmissible. The total CENVAT credit of Rs.3,17,327/- taken suo-motu this way appeared to be irregular / ineligible and in violation of Rule 3 of CCR, 2004. On these allegations, a show-cause notice dt. 08.10.2013 demanding duty / CENVAT recovery availed along with interest and proposing imposition of penalty was issued. After due process of law, the adjudicating authority vide Order-in-Original dt. 18/02/2014 confirmed the demand of CENVAT credit of Rs.3,17,327/- which was availed suo motu by the appellant along with interest and also imposed equal penalty. Aggrieved by the said order, appellant filed appeal before the Commissioner(Appeals) who upheld the Order-in-Original with regard to duty and interest but dropped the penalty. Hence the present appeal.

3.  Heard both sides and perused records.

4.  Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same is contrary to the statutory provisions and is passed entirely based on assumptions and presumptions. He further submitted that the excess payment is only a wrong clerical entry in ER1 for the month of June 2012 and the appellant has not availed any irregular or wrong cenvat credit. He further submitted that before taking the suo motu credit, the appellant intimated the Department about this fact vide their letter dt 29/03/2013 duly acknowledged by the Department. He further submitted that the excess payment is only an accounting entry adjustment and there was no necessity to follow Section 11B of the Act. He further submitted that the appellant has also produced a CA certificate to substantiate that the payment was an inadvertent clerical error and there is no unjust enrichment. He further submitted that this issue is no more res integra in view of the catena of decisions relied upon by the appellant wherein it has been held that suo motu adjustment of excess credit wrongly reversed being merely an account entry reversal of an amount paid by mistake is not payment of duty and hence suo motu recredit is permissible under law. He further submitted that it is settled law that procedural

technicalities should not defeat the substantial justice. In support of his submission, he relied upon the following decisions:-

i. Nocil Vs. CCE, Belapur [2015(329) ELT 912 (Tri. Mumbai)]
ii.CCE&ST, Bangalore Vs. Stumpp, Scheule & Somappa P. Ltd. [2015(319) ELT 146 (Tri. Bang.)
iii.Sopariwala Exports Pvt. Ltd. Vs. CCE, Vadodara-I [2013(291) ELT 70 (Tri. Ahmd.)]
iv. Motorola India Pvt. Ltd. Vs. CCE, Bangalore-III [2006(193) ELT 468(Tri. Bang.)]
v. ICMC Corporation Ltd. Vs. CESTAT, Chennai [2014(302) ELT 45 (Mad.)]
vi. Krishna Engineering Ltd. Vs. CESTAT [2016(331) ELT 391 (All)]
vii. Commissioner Vs. S. Subramanyan&Co. [2013(296) ELT A123 (Guj.)]
viii. Vishakapatnam Steel Plant Vs. CCE [2002(149) ELT 708 (Tri. Bang.)]
ix. Vinir Engineering Pvt. Ltd. Vs. CCE, Bangalore [2004(168) ELT 34 (Tri. Bang.)]
x. Veena Diecasters & Engineers Pvt. Ltd. Vs. CCE [2006(203) ELT 133 (Tri. Mum.)]
xi. Serai Kella Glass Works Pvt. Ltd. Vs. CCE, Patna [1997(91) ELT 497 (SC)]
xii. CCE, Bhubaneshwar Vs. Manishree Refractories & Ceramics[1994(73) ELT 746 (Tri.)]
xiii. RCC Sales Pvt. Ltd. Vs. CCE, Hyderabad [2008(223) ELT 53 (Tri.Bang.)]
xvi. CCE, Guntur Vs. Empee Sugar & Chemicals Ltd. [2007(211) ELT 293 (Tri. Bang.)]
xv. Gopi Krishna Processors Pvt. Ltd. Vs. CCE, Jalandhar [2007(210) ELT 529 (Tri. Del.)]
xvi. CST UP Vs. Auriya Chamber of Commerce, Allahabad [1986(25) ELT867 (SC)]
xvii. IOC Vs. CCE, Haldia [2010(262) ELT 639 (Tri. Kolkata)]

5.  On the other hand, the learned AR defended the impugned order.

6.  After hearing both sides and perusal of the material on record and the various decisions relied upon by the appellant, I find that the appellant has taken suo motu credit of the excess amount paid by them.

Further I find that before taking recredit, the appellant has intimated to the Department vide their letter dt. 29/03/2013 duly acknowledged and they have shown the same in their ER1 returns filed for the month of June 2012 and further they have also produced a CA certificate showing that the payment was an inadvertent clerical error and there is no unjust enrichment accruing to the appellant. Further, I find that the ratios of the various decisions relied upon by the appellant clearly show that the excess duty paid can be suo motu adjusted and there is nothing wrong in it. By following the ratios of the above said decisions, I am of the view that the impugned order is not sustainable and the same is set aside by allowing the appeal of the appellant with consequential relief if any.


(Operative portion of the Order was pronounced in Open Court on 16/10/2018)

S.S GARG
JUDICIAL MEMBER

 

Raja...

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH
BANGALORE

Appeal(s) Involved: E/20297/2018-SM
[Arising out of Order-in-Appeal No. 506/2017-CT dated 07/12/2017 passed by the Commissioner of Central Tax, Bangalore-I (Appeals)]

Essilor India Pvt. Ltd., Bangalore
Appellant(s)

Versus

Commissioner of Central Tax, Bangalore North
Respondent(s)

Appearance:
Shri. S. Ramasubramaniam, CA , Bangalore For the Appellant
Smt. KavitaPodwal, Superintendent (AR)          For the Respondent

Date of Hearing: 30/07/2018
Date of Decision: 15/10/2018

CORAM:
HON'BLE MR. P DINESHA, JUDICIAL MEMBER

Final Order No. 21662 / 2018

Per: P. DINESHA

This appeal filed by the assessee relates to the availment of cenvat credit on some of the goods which are found by the adjudicating authority, to be the parts/components or accessories of the machines used for various manufacturing processes by the assessee. A show-cause notice dated 01.06.2016 was issued alleging that the appellant had availed 100% cenvat credit in the following manner, on the above goods, which are falling under Central Excise Tariff Chapter 82, 84, 85 and 90 and that they fall within the meaning of ‘capital goods’ in terms of Rule 2(a) of Cenvat Credit Rules.


Sl. No.   
Period    Amount
(Rs.)
1    2014-15    32,98,283/-
2    2012-13    22,93,141/-
3    2013-14    78,56,370/-


In the same show-cause notice, the adjudicating authority also observes as under:

“4……appeared to be in excess and irregular as per Rule 2,3 and 4(2)(a) of the Cenvat Credit Rules, 2004. However, since the noticee was eligible to avail the remaining 50% of the credit during the subsequent years, the above amount need not be recovered from the noticee …”

2. The adjudicating authority has thereafter proceeded to say that the 50% excess availment of cenvat credit had come to the light only during the audit, was not disclosed voluntarily by the assessee and thus,the assessee was put on notice as to the recovery on the amount of excess availed credit, along with interest and penalty, as applicable. After considering the reply of the assessee as also discussion during personal hearing, the adjudicating authority passed Order-in-Original dated 23.12.2016 wherein he has confirmed the proposals made by him in the show-cause notice and on appeal against the same, the assessee having not been successful, is before this forum by this appeal. During the course of hearing, Shri S. Ramasubramaniam, CA appeared for the appellant and Smt. KavitaPodwal, DR appeared for the Revenue.

3. The contentions of learned consultant could be broadly summarized as below:

(A) The appellant had availed cenvat credit on those items which are mainly in the nature of consumables which are consumed during the process of manufacture;

(B) The definition of ‘input’ excludes capital goods except when the same are used as components or parts in the manufacture of final products;

(C) Merely because the above goods fall under Chapter Heading 82, 84, 85 or 90, they cannot be classified as ‘capital goods’, for which proposition,he relied on the decision of this Bench in the case of M/s.Pattabi Enterprises Vs. CCEx 2013 (292) E.L.T. 78 (Tri. – Bang.);

(D) The goods in question are not parts or components of the machines used for manufacture of the finished products but are only in the nature of consumables which fact has also been observed by the adjudicating authority himself;

(E) The dispute relates to the period April 2012 to August 2014; the show-cause notice having been issued on 01.06.2016 by invoking extended period of limitation without attributing mala fides for which, the learned consultant has relied on the decision of Kolkata Bench of the Tribunal in the case of M/s.Landis + Gyr Ltd. Vs. CCE, Kolkata-V-2013 (290) E.L.T.447 (Tri.-Kolkata);

(F) There is no allegation as to fraud or suppression, etc., and therefore, the invocation of extended period of limitation is bad. Reliance is placed on the decision of Hon’ble Supreme Court in the case of M/s.Uniworth Textiles Ltd. Vs. CCE, Raipur – 2013 (288) E.L.T. 161 (S.C) and also decision of Calcutta High Court in the case of SouravGanguly Vs. Union of India - 2016 (43) S.T.R. 482 (Cal.);

(G) The appellant has been filing its monthly returns regularly and has been including the details of cenvat credit availed for the period April 2012 to August 2014, the Department has been conducting regular audits and therefore, invoking extended period is bad, for which proposition reliance was placed on the following decisions:

i.SipaniFibres Limited Vs. CCE, Bangalore – 2007 (212) E.L.T. 374 (Tri.-Bang.)
ii. Ajay Poly Pvt. Ltd. Vs. CCE, Delhi-I – 2011 (273) E.L.T. 85 (Tri.-Del.)
iii. Shree Shree Telecom Pvt. Ltd. Vs. CCE, Hyderabad – 2008 (232) E.L.T. 689 (Tri.-Bang.)
iv. Switch Gear Control Technics Pvt. Ltd. Vs. CCE – 2009 (240) E.L.T. 78 (Tri.-Bang.)
v.Lear Automotive India Ltd. Vs. CCE – 2013 (291) E.L.T. 411 (Tri.-Ahmd.);

(H) Without prejudice to the above, the show-cause notice itself points out that the impact wasrevenue-neutral which ipso facto proves that there is no scope for suppression and therefore, invoking larger period, when demand is revenue-neutral is bad, as held in following cases:

i. Nirlon Ltd. Vs. CCEx – 2015 (320) ELT 22 (SC)
ii. CCEx Vs. Kitply Industries Ltd. – 2011 (267) ELT 289 (SC)
iii. CCEx Vs. Tenneco RC India Pvt. Ltd. – 2015 (323) E.L.T. 299 (Mad.)
iv. CCExVs. Gujarat Glass Pvt. Ltd. – 2013 (290) E.L.T. 538 (Guj.);

(I) On the imposition of penalty, learned consultant submits that penalty under Section 11AC could be levied only when the assessee is liable to pay duty as determined under Section 11(A) (10); which presupposes the determination of duty liability and hence, where no amount is due from an assessee or no duty is demanded, no penalty under Section 11AC (c) could be levied;

(J) The adjudicating authority having stated that 50% of the cenvat credit shall be treated as excess credit availed, the show-cause notice having not demanded the alleged excess credit nor proposing to appropriate any amount, there is no scope for levying penalty under Rule 15(2) of the Cenvat Credit Rules read with Section 11AC (c) of the Central Excise Act; etc.

4. Per contra, the learned DR Smt. KavitaPodwal supported the findings of the lower authorities. The learned DR also contended that the disputed items having been categorized as ‘capital goods’ within the meaning of Rule 2(a)A(i) and 2(a)(A)(iii) are clearly excluded from the definition of ‘inputs’ which are in the nature of components, spares and accessories. Ld. DR further pointed out that the above goods fall under Chapter 82, 84 and 90 as specified under Rule 2(a) (A) (iii) ibid.

5. I have considered rival contentions, perused the documents placed on record and have gone through the decisions referred to during the course of hearing. As submitted by the learned consultant, show-cause notice proceeds on the basis that the amount need not be recovered from the noticee which only indicates that the impact is revenue-neutral. In this context, I am persuaded by the observations of the Hon’ble Supreme Court in the case ofM/s.Nirlon Ltd. Vs. CCE, Mumbai – 2015 (320) E.L.T. 22 (S.C)wherein, the Hon’ble Apex Court has held as under:

“9. We have ourselves indicated that the two types of goods were different in nature. The question is about the intention, namely, whether it was done with bona fide belief or there was some mala fide intentions in doing so. It is here we agree with the contention of the learned Senior Counsel for the appellant, in the circumstances which are explained by him and recorded above. It is stated at the cost of repetition that when the entire exercise was revenue neutral, the appellant could not have achieved any purpose to evade the duty.

10. Therefore, it was not permissible for the respondent to invoke the proviso to Section 11A(1) of the Act and apply the extended period of limitation. In view thereof, we confirm the demand insofar as it pertains to show cause notice dated 25-2-2000. However, as far as show cause notice dated 3-3-2001 is concerned, the demand from February, 1996 till February, 2000 would be beyond limitation and that part of the demand is hereby set aside. Once we have found that there was no mala fide intention on the part of the appellant, we set aside the penalty as well.”

5.1. From the above, it is clear that when the situation isrevenue-neutral, then no malafide intention could be discerned. In addition, undoubtedly, it is a case where extended period has been invoked by the Revenue and therefore, the burden of proving malafide/suppression is on the Revenue, since, it is the cardinal principle of law that the burden of proof lies on the shoulder of the person alleging it. Moreover, a mechanical reproduction of the language used in the statute would not per se justify the malafide intentions nor the invocation of extended period of limitation. From the perusal bothOrder-in-Original as well as the impugned Order-in-Appeal, I do not find any discussion by the authorities as to how the action of the appellant in availing cenvat credit tantamounts tomalafide intention and suppression of facts or mis-declaration or mis-statement, except pointing out that but for audit, the same would not have come to the notice of the Department. Further, the show-cause notice points out that the internal audit was conducted during August 2014 and September 2014 whereas the show-cause notice was issued on 01.06.2016, after a wide gap. In this context, the findings of the Hon’ble Supreme Court in the case of UniworthTextiles Ltd. (supra) assumes relevancy, the relevant portion of which is extracted below:

“23. In the present case, from the evidence adduced by the appellant, one will draw an inference of bona fide conduct in favour of the appellant. The appellant laboured under the very doubt which forms the basis of the issue before us and hence, decided to address it to the concerned authority, the Development Commissioner, thus, in a sense offering its activities to assessment. The Development Commissioner answered in favour of the appellant and in its reply, even quoted a letter by the Ministry of Commerce in favour of an exemption the appellant was seeking, which anybody would have found satisfactory. Only on receiving this satisfactory reply did the appellant decide to claim exemption. Even if one were to accept the argument that the Development Commissioner was perhaps not the most suitable repository of the answers to the queries that the appellant laboured under, it does not take away from the bona fide conduct of the appellant. It still reflects the fact that the appellant made efforts in pursuit of adherence to the law rather than its breach.

24. Further, we are not convinced with the finding of the Tribunal which placed the onus of providing evidence in support of bona fide conduct, by observing that “the appellants had not brought anything on record” to prove their claim of bona fide conduct, on the appellant. It is a cardinal postulate of law that the burden of proving any form of mala fide lies on the shoulders of the one alleging it. This Court observed in Union of India v. Ashok Kumar &Ors. - (2005) 8 SCC 760 that “it cannot be overlooked that burden of establishing mala fides is very heavy on the person who alleges it. The allegations of mala fides are often more easily made than proved, and the very seriousness of such allegations demand proof of a high order of credibility.”

25. Moreover, this Court, through a catena of decisions, has held that the proviso to Section 28 of the Act finds application only when specific and explicit averments challenging the fides of the conduct of the assessee are made in the show cause notice, a requirement that the show cause notice in the present case fails to meet. In AbanLoyd Chiles Offshore Limited and Ors. (supra), this Court made the following observations :

“21. This Court while interpreting Section 11-A of the Central Excise Act in Collector of Central Excise v. H.M.M. Ltd. (supra) has observed that in order to attract the proviso to Section 11-A(1) it must be shown that the excise duty escaped by reason of fraud, collusion or willful misstatement of suppression of fact with intent to evade the payment of duty. It has been observed :

„...Therefore, in order to attract the proviso to Section 11-A(1) it must be alleged in the show-cause notice that the duty of excise had not been levied or paid by reason of fraud, collusion or willful misstatement or suppression of fact on the part of the assessee or by reason of contravention of any of the provisions of the Act or of the Rules made thereunder with intent to evade payment of duties by such person or his agent. There is no such averment to be found in the show cause notice. There is no averment that the duty of excise had been intentionally evaded or that fraud or collusion had been practiced or that the assessee was guilty of wilful misstatement or suppression of fact. In the absence of any such averments in the show-cause notice it is difficult to understand how the Revenue could sustain the notice under the proviso to Section 11-A(1) of the Act.‟

It was held that the show cause notice must put the assessee to notice which of the various omissions or commissions stated in the proviso is committed to extend the period from six months to five years. That unless the assessee is put to notice the assessee would have no opportunity to meet the case of the Department. It was held :

...There is considerable force in this contention. If the department proposes to invoke the proviso to Section 11-A(1), the show-cause notice must put the assessee to notice which of the various commissions or omissions stated in the proviso is committed to extend the period from six months to 5 years. Unless the assessee is put to notice, the assessee would have no opportunity to meet the case of the department. The defaults enumerated in the proviso to the said sub-section are more than one and if the Excise Department places reliance on the proviso it must be specifically stated in the show-cause notice which is the allegation against the assessee falling within the four corners of the said proviso....”
(Emphasis supplied)

26. Hence, on account of the fact that the burden of proof of proving mala fide conduct under the proviso to Section 28 of the Act lies with the Revenue; that in furtherance of the same, no specific averments find a mention in the show cause notice which is a mandatory requirement for commencement of action under the said proviso; and that nothing on record displays a willful default on the part of the appellant, we hold that the extended period of limitation under the said provision could not be invoked against the appellant.”

6. Going by the above ruling, I am persuaded to hold that the Revenue has grossly erred in invoking extended period of limitation even after being satisfied that it was the case of revenue neutrality and for which reason alone, I set aside the impugned order. Even on merits, admittedly, the goods are covered under CTH 82, 84, 85 and 90 and just for this reason alone the Revenue has sought it to be classified as ‘capital goods’. The arguments of the Ld. Consultant that the above goods were never capitalized in the appellant’s books; that they were consumed during the process of the manufacturing activity of the appellant which only proves that they were not having any enduring benefits, etc., has nowhere been attempted to be dislodged. These facts coupled with the decision of this Bench in the case of M/s.Pattabi Enterprises (supra)would irresistibly point out that because of their characteristic of not having any perpetual/enduring benefit, they cannot be classified as ‘capital goods’ and therefore, they are entitled for availment of CENVAT Credit. For this reason also, I am of the view that the appellant should succeed even on merits.

7. As a result, the assessee’s appeal is allowed on both grounds and the assessee is therefore entitled for consequential benefits also.

(Order Pronounced in Open Court on 15/10/2018)

(P. DINESHA)
JUDICIAL MEMBER)

...iss/sdd

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH
BANGALORE

Appeal(s) Involved: ST/3134/2011-DB
[Arising out of Order-in-Original No. 91/2011 dated 30/09/2011 passed by the Commissioner of Central Excise & Service Tax, Bangalore]

Canara Bank, Bangalore - 560 027
Appellant(s)

Versus

Commissioner of Central Tax, Bangalore South Commissionerate
Respondent(s)

Appearance:
Mr. S. Ananthan & Mrs. Lalitha, CA For the Appellant
Mr. Madhup Sharan, AssistantCommissioner (AR) For the Respondent

Date of Hearing: 04/10/2018
Date of Decision: 04/10/2018

CORAM:
HON'BLE MR. S.S GARG, JUDICIAL MEMBER
HON'BLE MR. P. ANJANI KUMAR, TECHNICAL MEMBER

Per : S.S GARG

Final Order No. 21536 / 2018

The present appeal is directed against the impugned order dated

30.09.2011 passed by the Commissioner of Central Excise and Service Tax whereby the Commissioner has confirmed the demand of service tax amounting to Rs. 10,55,38,108/- (Rupees Ten Crores Fifty Five Lakhs Thirty Eight Thousand One Hundred and Eight only) along with interest under Section 75 and penalty of Rs. 10,000/- (Rupees Ten Thousand only) under Section 77 and equal penalty under Section 78 of the Finance Act, 1994. Briefly the facts of the present case are that the appellant is a Banking company and is providing various services falling under the category of ‘Banking and Other Financial Services.’ The bank charges commission on the same and offer the same to service tax. The appellant also incurred expenditure on behalf of the customer while offering the services and gets it reimbursed from the customer. Since it was only a reimbursement of expenses, the same was not offered to tax and the bank have not collected any tax from the customers. Based on the audit observation, a show-cause notice was issued alleging short payment of tax by the appellant. The contention in the show-cause notice was that the postal and telegram and swift charges collected by the bank as out of pocket expenses during the period from April 2005 to March 2010 were liable for service tax under the category of ‘Banking and other Financial Services’ and the same were liable to be included in the value of taxable services. Appellant contested the show-cause notice by filing a detailed reply alleging that the bank had not rendered any service under the category of ‘Banking and Other Financial services’ in relation to the charges reimbursed by the customers. The expenses incurred were debited to Profit and Loss Account of the Bank and on recovering the same from the customers the expenditure is offset by crediting this amount to the concerned expenditure account. The appellant has also taken the ground that the entire demand is barred by limitation.

After following the due process, the learned Commissioner confirmed the demand along with interest and penalty. Hence the present appeal.

2.  Heard both the parties and perused the records.

3.  Learned consultant appearing for the bank submitted that the impugned order is not sustainable in law as the same is contrary to the binding judicial precedent. He further submitted that the expenses reimbursed cannot be included in the value of taxable services. He further submitted that the learned Commissioner failed to appreciate that the bank had not rendered any service under the category of ‘Banking and Financial Services’ in relation to the charges reimbursed to the bank. He further submitted that there was no suppression of fact and the reimbursement of expenses were shown in their accounts and therefore no penalty is leviable on the appellant. He further submitted that the issue involved in the present case is no more res integra and has been settled by various decisions of the Tribunal, High Court and Supreme Court. In support of his submissions, he relied upon the following decisions:

a. Intercontinental Consultants & Technocrats (P) Ltd. – [2018] 91 taxmann.com 67 (SC)
b. Duttmenon Dunmorrsett. – 2018 (7) TMI 1539 – Delhi High Court
c. Feroke Agencies Kallai Heights – 2018 (5) TMI 671 –CESTAT Bangalore
d. Askar Timbers – 2018 (7) TMI 1535 – CESTAT Bangalore
e. Central Bank of India – 2018 (8) TMI 24 – CESTAT Chandigarh
f. National Trades & Agencies – 2018 (6) TMI 1358 – CESTAT Bangalore
g. State Bank of India, Andhra Bank – 2018 (6) TMI 1428 – CESTAT Hyderabad
h. Rajasthan Renewable Energy Corporation Ltd. – 2016 (12) TMI 342 – CESTAT New Delhi
i. Quality Council of India – 2016 (3) TMI 404 – CESTAT New Delhi
j. Sankhla Udyog – 2014 (12) TMI 614 – CESTAT New Delhi k. Bharat Sanchar Nigam Ltd. – 2017 (11) TMI 213 – CESTAT Bangalore
l. Vulcan Industrial Engg. Co. P. Ltd. – 2005 (11) TMI 111 – CESTAT, Mumbai
m. MP Water & Power Management Institute – 2009 (1) TMI 17 – CESTAT New Delhi
n. Bank of India – 2017 (4) TMI 896 – CESTAT Hyderabad

4.  On the other hand, the learned AR defended the impugned order.

5.  After considering the submissions of both the parties and perusal of the material on record and the various decisions relied upon by the appellants cited supra, we find that the only issue to be decided in the present case is whether the reimbursement of expenses is to be included in the value of taxable service or not during the relevant period. This issue was examined by the Hon’ble Supreme Court elaborately in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. reported – 2018-TIOL-76-SC-ST and the Hon’ble Supreme Court has held that reimbursable expenses are not to be included in the value of taxable service for the purpose of service tax. It is pertinent to reproduce the relevant findings of the Apex Court which is reproduced herein below:

“(21) Undoubtedly, Rule 5 of the Rules, 2006 brings within its sweep the expenses which are incurred while rendering the service and are reimbursed, that is, for which the service receiver has made the payments to the assessees. As per these Rules, these reimbursable expenses also form part of 'gross amount charged'. Therefore, the core issue is as to whether Section 67 of the Act permits the subordinate legislation to be enacted in the said manner, as done by Rule 5. As noted above, prior to April 19, 2006, i.e., in the absence of any such Rule, the valuation was to be done as per the provisions of Section 67 of the Act.
22) Section 66 of the Act is the charging Section which reads as under: ST/490/2008-DB 6 "there shall be levy of tax (hereinafter referred to as the service tax) @ 12% of the value of taxable services referred to in sub-clauses .....of Section 65 and collected in such manner as may be prescribed."

23) Obviously, this Section refers to service tax, i.e., in respect of those services which are taxable and specifically referred to in various sub-clauses of Section 65. Further, it also specifically mentions that the service tax will be @ 12% of the 'value of taxable services'. Thus, service tax is reference to the value of service. As a necessary corollary, it is the value of the services which are actually rendered, the value whereof is to be ascertained for the purpose of calculating the service tax payable thereupon.

24) In this hue, the expression 'such' occurring in Section 67 of the Act assumes importance. In other words, valuation of taxable services for charging service tax, the authorities are to find what is the gross amount charged for providing 'such' taxable services. As a fortiori, any other amount which is calculated not for providing such taxable service cannot a part of that valuation as that amount is not calculated for providing such 'taxable service'. That according to us is the plain meaning which is to be attached to Section 67 (unamended, i.e., prior to May 01, 2006) or after its amendment, with effect from, May
01, 2006. Once this interpretation is to be given to Section 67, it hardly needs to be emphasised that Rule 5 of the Rules went much beyond the mandate of Section 67. We, therefore, find that High Court was right in interpreting Sections 66 and 67 to say that in the valuation of taxable service, the value of taxable service shall be the gross amount charged by the service provider 'for such service' and the valuation of tax service cannot be anything more or less than the consideration paid as quid pro qua for rendering such a service.

25) This position did not change even in the amended Section 67 which was inserted on May 01, 2006. Sub-section (4) of Section 67 empowers the rule making authority to lay down the manner in which value of taxable service is to be determined. However, Section 67(4) is expressly made subject to the provisions of subsection (1). Mandate of sub-section (1) of Section 67 is manifest, as noted above, viz., the service tax is to be paid only on the services actually provided by the service provider.
26) It is trite that rules cannot go beyond the statute. In Babaji Kondaji Garad, this rule was enunciated in the following manner: "Now if there is any conflict between a statute and the subordinate legislation, it does not require elaborate reasoning to firmly state that ST/490/2008-DB 7 the statute prevails over subordinate legislation and the byelaw, if not in conformity with the statute in order to give effect to the statutory provision the Rule or bye-law has to be ignored. The statutory provision ahs precedence and must be complied with."

27) The aforesaid principle is reiterated in Chenniappa Mudaliar holding that a rule which comes in conflict with the main enactment has to give way to the provisions of the Act.

28) It is also well established principle that Rules are framed for achieving the purpose behind the provisions of the Act, as held in Taj Mahal Hotel: "the Rules were meant only for the purpose of carrying out the provisions of the Act and they could not take away what was conferred by the Act or whittle down its effect."

29) In the present case, the aforesaid view gets strengthened from the manner in which the Legislature itself acted. Realising that Section 67, dealing with valuation of taxable services, does not include reimbursable expenses for providing such service, the Legislature amended by Finance Act, 2015 with effect from May 14, 2015, whereby Clause (a) which deals with 'consideration' is suitably amended to include reimbursable expenditure or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service. Thus, only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax. Though, it was not argued by the learned counsel for the Department that Section 67 is a declaratory provision, nor could it be argued so, as we find that this is a substantive change brought about with the amendment to Section 67 and, therefore, has to be prospective in nature. On this aspect of the matter, we may usefully refer to the Constitution Bench judgment in the case of Commissioner of Income Tax (Central)-I, New Delhi v. Vatika Township Private Limited (2015) 1 SCC 1 = 2014-TIOL-78-SC-IT-CB wherein it was observed as under:

"27. A legislation, be it a statutory Act or a statutory rule or a statutory notification, may physically consists of words printed on papers. However, conceptually it is a great deal more than an ordinary prose. There is a special peculiarity in the mode of verbal communication by a legislation. A legislation is not just a series of statements, such as one finds in a work of fiction/non- fiction or even in a judgment of a court of law. There is a technique required to draft ST/490/2008-DB 8 a legislation as well as to understand a legislation. Former technique is known as legislative drafting and latter one is to be found in the various principles of "interpretation of statutes". Vis-a-vis ordinary prose, a legislation differs in its provenance, layout and features as also in the implication as to its meaning that arise by presumptions as to the intent of the maker thereof.

28. Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in force and not tomorrow's backward adjustment of it. Our belief in the nature of the law is founded on the bedrock that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his plans have been retrospectively upset. This principle of law is known as lex prospicit non respicit: law looks forward not backward. As was observed in Phillips v. Eyre [(1870) LR 6 QB 1], a retrospective legislation is contrary to the general principle that legislation by which the conduct of mankind is to be regulated when introduced for the first time to deal with future acts ought not to change the character of past transactions carried on upon the faith of the then existing law.

29. The obvious basis of the principle against retrospectivity is the principle of "fairness", which must be the basis of every legal rule as was observed in L'Office Cherifien des Phosphates v. Yamashita-Shinnihon Steamship Co. Ltd. Thus, legislations which modified accrued rights or which impose obligations or impose new duties or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect; unless the legislation is for purpose of supplying an obvious omission in a former legislation or to explain a former legislation. We need not note the cornucopia of case law available on the subject because aforesaid legal position clearly emerges from the various decisions and this legal position was conceded by the counsel for the parties. In any case, we shall refer to few judgments containing this dicta, a little later." 30) As a result, we do not find any merit in any of those appeals which are accordingly dismissed.”

5.1. Further we find that by following the ratio of the Apex Court decision in the Intercontinental Consultants and Technocrats Pvt. Ltd., the Tribunal in the various cases cited supra has held in favour of the assessee.

Further we find that in the case of Andhra Bank Vs. Commr. of Central Excise cited supra, Division Bench of this Tribunal has followed the Apex Court decision in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. and allowed the appeal of the appellant-bank. Therefore, by following the ratios of the above said decision, we are of the considered view that the impugned order is not sustainable in law in view of the decision of the Apex Court cited supra. Consequently, we set aside the impugned order by allowing the appeal of the appellant with consequential relief, if any.

(Operative portion of the Order was pronounced in Open Court on 04/10/2018)

(P. ANJANI KUMAR)
TECHNICAL MEMBER

(S.S GARG)
JUDICIAL MEMBER)

iss...

Customs, Excise & Service Tax Appellate Tribunal
SOUTH ZONAL BENCH
BANGALORE

Appeal(s) Involved:
ST/271/2009-DB, ST/973/2010-DB, ST/1023/2010-DB

[Arising out of Review Order No. 7/2009 dated 23/01/2009 passed by the Commissioner of Service Tax, Bangalore]
[Arising out of Order-in-Original (De novo) No. 07/2010 dated 19.02.2010 passed by the Commissioner of Service Tax, Bangalore]
[Arising out of Order-in-Original (De novo) No. 07/2010 dated 19.02.2010 passed by the Commissioner of Service Tax, Bangalore]

C.C.E & C.S.T.-Bangalore Service Tax- I
Appellant(s)

Versus

Keerthi Estates Pvt. Ltd.,Bangalore
Respondent(s)

Appearance:
Mr. Pradyumna G.H., Advocate For the Appellant
Mr. K. Murali, Superintendent (AR)  For the Respondent

Date of Hearing: 04/10/2018
Date of Decision:10/10/2018

CORAM:
HON'BLE MR. S.S GARG, JUDICIAL MEMBER
HON'BLE MR. P. ANJANI KUMAR, TECHNICAL MEMBER

Final Order Nos. 21594 - 21596 /2018

Per : S.S GARG

The present appeal is directed against the De novo order passed by the Commissioner dated 19.02.2010 whereby the Commissioner of Service Tax has confirmed the demand of service tax on the appellant. The Revenue has also filed two appeals against the impugned order challenging the non-imposition of penalty under Section 78 of the Act. All the three appeals are being disposed of by this common order. The facts of the case in the assessee’s appeal is that the appellant-assessee is engaged in the business of developing residential complex and are registered under service tax w.e.f. 06.07.2005 as per Section 69 of the Act for said Construction of Residential Complex Service. On the basis of intelligence gathered, the officers of DGCEI, Bangalore conducted the investigation and recorded the statement of authorized signatory of the appellant. The appellants were proceeded alleging non-payment of service tax under the category of ‘Construction of Residential Complex Service’ for the period 16.06.2005 to 31.01.2007. On completion of the investigation, show-cause notice dated 02.07.2007 demanding service tax of Rs. 1,21,60,938/- (Rupees One Crore Twenty One Lakhs Sixty Thousand Nine Hundred and Thirty Eight only) was made. An amount of Rs. 60,33,021/- (Rupees Sixty Lakhs Thirty Three Thousand and Twenty One only) was paid by the appellant after initiation of proceedings was proposed to be appropriated against the demand. The said show-cause notice was adjudicated by Commissioner of Service Tax vide Order-in-Original dated 23.01.2009 wherein the service tax demanded in the show-cause notice was confirmed along with interest and penalties under Section 76 and 77 of the Finance Act were also imposed. Aggrieved by the said order of the Commissioner, the appellant preferred an appeal before CESTAT assailing that the demand was unsustainable in view of the clarification issued by the Board. Tribunal vide Final Order No. 1193/2009 dated 09.10.2009 remanded the case to the Commissioner with a direction to examine the issue in the light of Board’s Circular No. 108/2/2009-S.T. dated 29.01.2009. After the remand, the Commissioner of Service Tax passed De novo Order-in-Original dated 19.02.2010 and held that the appellants are liable to pay service tax as demanded in the show-cause notice. Aggrieved by the said order, the appellants have filed the present appeal.

2. Heard both the parties and perused the records.

3.  The learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and the law on the point. He further submitted that this issue has been settled in favour of the assessee by various decision of the Tribunal. He further submitted that it is on record that the appellants had entered into Development Agreements with landowners in terms of which the appellants were conferred the rights to develop the property at their own cost and deliver certain portion of the constructed complex along with common areas, amenities and car parking areas. He further submitted that till the construction of residential complex was completed, the property belonging to the appellant as a Power of Attorney Holder and hence in terms of Board’s Circular No. 108/2/2009-ST dated 29.01.2009, the construction services were deemed to be for the self (i.e. the builder/developer) and the service tax was not leviable during the said material period. He further submitted that in order to put an end to various disputes an explanation was added to Section 65(105)(zzzh) of the Finance Act, 2010 whereby the “Construction of a Complex which is intended for sale, wholly or partly, by a builder or any person authorized by the builder before, during or after construction (except in cases for which no sum is received from or on behalf of the prospective buyer by the builder or a person authorized by the builder before the grant of completion certificate by the authority competent to issue such certificate under any law for the time being in force) shall be deemed to be service provided by the builder to the buyer.” He further submitted that after the explanation was added by Finance Act 2010 levy of Service Tax on Construction of a Complex by a builder or a developer became taxable only from 01.07.2010. He further submitted that the Board Circular No. 151/2/2012 ST dated 10.02.2012 wherein it is made clear in para 2.1(A) that construction service provided by the builder/developer for the period prior to 01.07.2010 was not taxable in terms of Board Circular No. 108/2/2009-ST dated 29.01.2009. He further submitted that this issue has been considered by the Tribunal in various decisions and in one of the decisions in the case of CCE, Chandigarh Vs. U.B. Construction (P) Ltd. – 2013 (32) S.T.R. 738 (Tri.-Del.) wherein it is held that levy of service tax on the services rendered by a builder is prospective from 01.07.2010 by virtue of explanation added to Section 65(105)(zzzh) of the Finance Act, 2010. He further relied upon the decision of Krishna Homes Vs. CCE, Bhopal reported in 2014 (34) S.T.R. 881 (Tri.-Del.) wherein the Tribunal relying upon the decision of the Hon’ble Supreme Court in the case of Larsen & Tourbo Ltd. as reported in 2014 (34) S.T.R. 481 has held that works contract involving transfer of immovable property is taxable only from 01.07.2010. The decision of the Krishna Homes has been followed by CESTAT, Chennai in the case of Vijay Shanthi Builders Ltd. Vs. CST, Chennai – 2018 (9) G.S.T.L. 257 (Tri.-Chennai) wherein the demand for the period 16.06.2005 to 31.03.2007 was set aside.

4.  On the other hand the learned AR reiterated the findings of the impugned order. He further submitted that the Department has filed two appeals against non-imposition of penalty under Section 78 of the Act.

5.  After considering the submissions of both the parties and perusal of the material on record, we find that the appellant is engaged in the Construction of Residential Complex in terms of the Development Agreements entered with land owners and prospective buyers. The period of dispute is from
16.06.2005 to 31.01.2007. Further we find that an explanation was added for the Finance Act 2010 in Section 65(105) (zzzh) of the Finance Act 1994 whereby it was clarified that levy of service tax on construction of complex by builder will be taxable only from 01.07.2010 and further the Board vide its Circular dated 10.02.2012 clarified that prior to 01.07.2010 service tax is not chargeable from builders/developer. Further we find that this issue has been considered by the Division Bench of this Tribunal in the case of CCE Vs. U.B. Construction (P) Ltd. cited supra wherein the Tribunal in para 5 has observed as under:

“5. In Maharashtra Chamber of Housing Industry v. Union of India - 2012 (25) S.T.R. 305 (Bom.), the validity of the „Explanation‟ added to Sections 65(105)(zzq) and (zzzh) was challenged on several grounds. The Bombay High Court, also considered the issue whether the explanation was prospective or retrospective in operation and ruled that the explanation inserted by the Finance Act, 2010 brings within the fold of taxable service a construction service provided by the builder to a buyer where there is an intended sale between the parties whether before, during or after construction; that the „Explanation‟ was specifically legislated upon to expand the concept of taxable service; that prior to the explanation, the view taken was that since a mere agreement to sell does not create any interest in the property and the title to the property continues to remain with the builder, no service was provided to the buyer; that the service, if any, would be in the nature of a service rendered by the builder to himself; that the explanation expands the scope of the taxable service, provided by builders to buyers pursuant to an intended sale of immovable property before, during or after the construction and therefore the provision is expansive of the existing intent and not clarificatory of the same; and is consequently prospective.”

5.1.  Further we find that in the case of Krishna Homes, the Division Bench of the Delhi Tribunal in para 9 has held as under:

“9. In view of the above, though in view of the Apex Court judgment in the case of M/s. Larsen & Toubro Limited and Others v. State of Karnataka & Others (supra), the agreements entered into by a builder/promoter/developer with prospective buyers for construction of residential units in a residential complex against payments being made by the prospective buyers in instalments during construction and in terms of which the possession of the residential unit, is to be handed over to the customers on completion of the residential complex and full payment having been made, are to be treated as works contracts, it has to be held that during the period of dispute, there was no intention of the Government to tax the activity in terms of such contracts a builder/developer with prospective customers for construction of residential units in a residential complex. Such works contracts involving transfer of immovable property were brought within the purview of taxable service by adding explanation to Section 65(105)(zzzh) w.e.f. 1-7-2010, and therefore, it has to be held that such contracts were not covered by Section 65(105)(zzzh) during the period prior to 1-7-2010.”

6.  Similarly the Chennai Bench of the Tribunal in the case of Vijay Shanthi Builders Ltd. has followed the decision of Krishna Homes and has held that the service tax is not chargeable on construction of residential complex during the period prior to 01.07.2010. In view of the various decisions cited supra, we are of the considered view that prior to 01.07.2010 builders/developers are not liable to pay service tax for the Construction of Residential Complex Service and in the present case, the period involved is from 16.06.2005 to 31.01.2007. Consequently, we hold that the impugned order is not sustainable in law and we set aside the same by allowing the appeal of the appellant with consequential relief, if any. Since we have allowed the appeal of the appellant, the two appeals filed by the Revenue seeking imposition of penalty under Section 78 is not maintainable and are hereby dismissed.

(Order pronounced in Open Court on 10/10/2018)

(P. ANJANI KUMAR)
TECHNICAL MEMBER


(S.S GARG)
JUDICIAL MEMBER)

iss...

Customs, Excise & Service Tax Appellate Tribunal
SOUTH ZONAL BENCH
BANGALORE

Appeal(s) Involved: ST/231/2009-DB
[Arising out of OIO No. 22-2008 dated 17/12/2008 passed by Commissioner of Central Excise , BELGAUM ]

Ishwar Electric Co (r/b Shri V.c.abbegeri Proprietor),DHARWAD
Appellant(s)

Versus

C.C.,C.E.& S.T-Belgaum
Respondent(s)

Appearance:
Shri N. Anand, Advocate, K.S. RAVI SHANKAR For the Appellant
Shri Madhup Sharan, Asst. Commissioner(AR)          For the Respondent

Date of Hearing: 26/09/2018
Date of Decision:

CORAM:
HON'BLE MR. S.S GARG, JUDICIAL MEMBER
HON'BLE MR. P. ANJANI KUMAR, TECHNICAL MEMBER

Final Order No.      / 2018

Per : S.S GARG

The present appeal is directed against the impugned order dt. 17/12/2008 passed by the Commissioner of Central Excise whereby the Commissioner has partly allowed the appeal of the appellant.

2.    Briefly the facts of the present case are that the appellants are engaged in executing the work of electrification work for various government and semi-government departments. The electrification contracts executed by the appellant are in the nature of works contract as defined and understood under the state Sales Tax law of Karnataka and is duly registered under the State VAT Law. Based on the intelligence, the officers of the Service Tax Department visited the premises of the appellant and verified the records and found that the appellant had not paid service tax for the period from 16/06/2005 to 31/03/2007 and not filed ST3 returns for the period from 16/06/2005 to 30/09/2005 and filed NIL returns for the period from 10/2005 to 03/2007. Thereafter a show-cause notice dt. 15/02/2008 was issued demanding service tax in the category of ‘erection, commissioning and installation’. The appellant contested the show-cause notice by filing the detailed reply and submitted that the contracts executed by him were in the nature of works contract on which he has paid VAT / Sales Tax as works contract and the said contracts could not be subjected to levy of service tax under ‘erection, commissioning or installation service’ and the activity was covered under works contract as defined in Section 65(105) (zzzza) of the Finance Act, 1994 inserted w.e.f. 01/06/2007. After following the due process, the Commissioner partly confirmed the demand in the show-cause notice.

3.    Heard both sides and perused records.

4.    Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same is contrary to the statutory provisions and also contrary to the binding judicial precedents. He further submitted that the Commissioner has failed to appreciate that the appellant is engaged in the activity of works contract and is paying the VAT and is duly assessed as works contract dealer in respect of contracts executed for HESCOM and other clients. He further submitted that the works contract is subject to levy of service tax only from 01/06/2007 and in the present case, the period involved is from 16/06/2005 to 31/03/2007 and therefore he is not liable to service tax under the category of ‘erection, commissioning and installation servie’. He further submitted that the Hon’ble Apex Court in the case of CCE Vs. Larsen & Toubro Ltd. [2015(39) STR 913 (SC)] has held that works contracts are chargeable to service tax only from 01/06/2007. He further submitted that the issue involved in the present case is no longer res integra and has been settled by various decisions, in favour of the appellant.

i.  Diebold Systems Pvt. Ltd. Vs. CST [2008(9) STR 546 (Tri.Chennai)]
ii.  Malar Constructions Vs. CCE [2008(10) STR 156 (Tri. Chennai)]
iii.Air Liquide Engg. India Pvt. Ltd. Vs. CC&CE [2008(9) STR 486 (Tri. Bang.)]
iv.  Blue Star Ltd. Vs. CCE [2007(5) STR 353 (Tri. Bang.)]
v.  Blue Star Ltd. Vs. CCE [2008(10) STR 188 (Tri. Bang.)]
vi.  Jyoti Ltd. Vs. CCE [2008(9) STR 373 (Tr.)]

4.2.   He further submitted that the appellant is entitled to the benefit of Notification No.45/2010-ST dt. 20/07/2010 issued under Section 11C of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 and is not liable to service tax under this notification. He further submitted that the Tribunal has consistently held in favour of the assessee by extending the benefit of Notification No.45/2010-ST by holding that no service tax is recoverable if the service rendered is in relation to transmission and distribution of electricity. The various case laws are given herein below:-

i.  U.P. Rajkiya Nirman Nigam Ltd. Vs. CCE [2016(41) STR 967 (Tri. Del.)]
ii.  Noida Power Co. Ltd. Vs. CCE [2014(33) STR 383 (Tri. Del.)]
iii.CCE Vs. Sri Rajyalakshmi Cement Products [2017(52) STR 309 (Tri. Hyd.)]
iv.  Maharashtra State Electricity Distribution Co. Ltd. Vs. CCE [2017(49) STR 91 (Tri. Mum.)]
v.  CCE Vs. HT Associates [2016(45) STR 305 (Tri. Mum.)]
vi.  Hyderabad Power Installations (P) Ltd. Vs. CCE [2016(45) STR 217 (Tri. Hyd.)]
vii. K. Shanmugavelu Vs. CCE [2015(39) STR 704 (Tri. Chennai)]
viii. Kedar Constructions Vs. CCE [2015(37) STR 631 (Tri. Mum.)]
ix.  Shri Ganesh Enterprises Vs. CCE [2014(35) STR 348 (Tri. Bang.)]
x.Purvanchal Vidyut Vitran Nigam Ltd. Vs. CCE [2013(30) STR 259 (Tri. Del.)]

5.    On the other hand, the learned AR defended the impugned order.

6.    After considering the submissions of both the parties and perusal of the material on record and the various decisions relied upon by the appellant cited supra, we find that the issue involved in the present case is no more res integra and has been settled by the Apex Court in the case of Larsen and Toubro Ltd. cited supra wherein the Hon’ble Apex Court has held that works contract is taxable only from 01/06/2007 and in the present case, the period involved is 16/06/2005 to 31/03/2007 and therefore the service tax cannot e levied on the works contract service which is rendered by the appellant in the present case. Further the appellant’s case is squarely covered by the Notification No.45/2010-ST whereby the exemption of service tax was given to the taxable services relating to transmission and distribution of electricity. Further we find that the Division Bench of this Tribunal in the case of Purvanchal Vidyut Vitran Nigam Ltd., the Tribunal considered the Notification No.45/2010 and has held in para 14 as under:-

14. On careful reading of the aforesaid notification we find that this notification exempts the services relating to transmission and distribution of electricity provided by the service provider to the service receiver from the incidence of levy of service tax. Admittedly, the assessee is engaged in transmission and distribution of electricity after purchasing the same from U.P. Power Corporation Limited. Since the assessee is selling electricity to the consumer, in our view for billing the consumer for electricity consumed it is essential to install the electricity meter having capacity to withstand the load provided to the consumer. Thus, any activity or service like erection, commissioning and installation of meters as also technical testing and analysis can easily be termed as the service relating to the transmission and distribution of electricity provided by the service provider to the service receiver. Thus, in our considered view such service, which is subject matter of this appeal, would be squarely covered under the exemption provided under Notification referred to above. We may note that similar view was taken by the coordinate Bench of this Tribunal in the matter of M.P. Power Transmission Company Limited v. CCE, Bhopal [2011 (24) S.T.R. 67 (T)] in relation to interpretation of similar exemption Notification No. 11/2010-S.T., dated 27-
2-2010 which is pari materia to the Notification No. 45/2010-S.T., dated 20-7-2010. In view of the discussion above, we do not find any merit in the appeal of the Department which is accordingly dismissed. The appeals as well as stay applications filed by the assessee are allowed and the demand confirmed by the impugned order are set aside.

7.    By following the ratio of the decisions cited supra, we are of the considered view that the appellant’s case is squarely covered by the decision of the Apex Court in the case of Larsen and Toubro Ltd. and other cases cited supra and therefore by following the ratios of the said decisions, we are of the considered view that the impugned order is not sustainable in law and therefore the same is set aside by allowing the appeal of the appellant with consequential relief, if any.

(Order was pronounced in Open Court on …………………)

P. ANJANI KUMAR
TECHNICAL MEMBER

S.S GARG
JUDICIAL MEMBER

Raja...

Customs, Excise & Service Tax Appellate Tribunal
SOUTH ZONAL BENCH
BANGALORE

Appeal(s) Involved: ST/20627/2018-SM
[Arising out of Order-in-Appeal No. BEL-EXCUS-000-APP- MSC-008-17-18 dated 27/11/2017 passed by Commissioner of Central Tax , BELGAUM]

M/s. Shivashakti Sugars Ltd Belgaum
Appellant(s)

Versus

Commissioner Of Central Tax And Central Excise, Belgaum
Respondent(s)

Appearance:
Mr. V.B. Gaikwad, Advocate For the Appellant
Mr. K.B. Nanaiah, AR       For the Respondent

Date of Hearing: 17/10/2018
Date of Decision: 17/10/2018

CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER

Final Order No. 21637 / 2018

Per : S.S GARG

The present appeal is directed against the impugned order dated 27.11.2016 whereby the Commissioner (Appeals) has rejected the appeal of the appellant.

2.  Briefly the facts of the present case are that the appellants are engaged in the manufacture of sugar and molasses falling under Chapter 17 of the Central Excise Tariff Act, 1985. During the course of auditing of the records of appellants, the audit party raised the objection that, they are required to pay the Service Tax of Rs.2,14,654/-/- under reverse change mechanism under the category of Manpower Supply Agency Service on the charges paid to the manpower supply agencies during the period from July 2012 to September 2013. On being pointed out by the audit, the appellant paid the Service Tax of Rs.2,14,654/- vide challan dated 03.04.2014. Subsequently, a SCN dated 08.02.2016 demanding Service Tax along with interest and penalties was issued to the appellant and after the receipt of SCN, the appellant also paid interest of Rs.52,883/- vide challan dated 31.03.2016. Thereafter, following the due process, the Assistant Commissioner vide OIO dated 15.11.2016 has confirmed the demand for Service Tax of Rs.2,14,654/- under Section 73(2) of the Act and also appropriated already paid Service Tax against the said demand and also ordered for interest and appropriated the amount of Rs.52,883/- paid against the demand of interest and also imposed penalties of Rs.2,14,654/- under Section 78 and Rs.10,000/- under Section 77(1)(a) of the Act. Aggrieved by the said order, the appellant filed the appeal whereby the Commissioner (A) has rejected the appeal. Hence, this appeal.

3.  Heard both sides and perused the records of the case.

4.  Learned counsel for the appellants submitted that the impugned order is not sustainable in law as the same has been passed without properly appreciating the provisions of the Act and the rules and without considering the decisions rendered by various Courts on this issue. He further submitted that during the initial period of introduction of reverse charge mechanism, there was no clarity about the scope of the manpower supply service and they were under the belief that the contractors appointed by them are basically doing the various jobs in relation to manufacturing of their final products by utilizing their own manpower and hence will not be treatable as manpower supply service providers and hence the omission on their part of not paying the Service Tax on the charges paid to the said contractor took place. He further submitted that when the auditing officers explained them the taxability of the said charges, they have paid the Service Tax immediately. He further submitted that manpower supply service is specifically covered in the definition of input service and is related to their manufacturing activity and therefore the credit of the same was immediately available to the appellants, if the same would have been paid by them on due dates under reverse charge mechanism and hence the transaction was revenue neutral. He further submitted that when the present transaction is revenue neutral, there is no malafide intention which can be inferred and extended period cannot be invoked. In support of this submission, he relied upon the following decisions:

(i) Nirlon Ltd. Vs. CCE, 2015 (320) ELT 22 (SC).
(ii) CCE Vs. Tenecco RC India, 2015 (323) ELT 299 (Mad.).
(iii) Punjab Chemicals & Corp Protection Ltd. Vs. CCE, 2017 (47) STR-345.
(iv) Persistent System Ltd. Vs. CCE, 2016 (45) STR-177.
(v) Reliance Industries Ltd. Vs. CCE, 2016 (44) STR-82.
(vi) Satish Kumar Contractor Ltd. Vs. CCE, 2018 (3) TMI-1429.

4.1  He further submitted that the Commissioner (A) is not denying the fact that the manpower service is an input service and the appellants are eligible for credit, if tax paid but he simply holding that, since they have not declared the facts in the ST-3 returns and have not paid the tax, therefore, they are guilty of suppression of facts with malafide intention to evade payment of tax. He further submitted that mere omission to disclose or mere non-payment of tax not treatable as suppression of facts and extended period cannot be invoked. For this submission, he relied upon the following decisions:

(i) Uniworth Textiles Ltd. Vs. CCE, 2013 (288) ELT-161 (SC).
(ii) Bharat Hotels Ltd. Vs. CCE, 2018 (12) GSTL-368 (Del.).
(iii) Bordubi Engneering Works Vs. UOI, 2016 (42) STR-803 (Gau.).
(iv) Simplex Infrastructure Ltd. Vs. CCE, 2016 (42)STR-634 (Cal.).
(v) Roma Henny Security Services Pvt. Ltd. Vs. CCE,2018 (8) GSTL-239 (Del.).
(vi) K.T. Murukan Vs. CCE, 2017 (5) GSTL-248 (Ker.).

4.2  He also submitted that the Commissioner (A) has wrongly relied upon the decision in the case of JSW Steels Ltd. and Jindal Vijaynagar Steel Ltd. as the facts in those cases were entirely different and the tax liability in those cases has arisen on account of clandestine clearances. He further submitted that no penalty can be imposed if the transaction is revenue neutral. In support of this submission, he relied upon the following decisions:

(i) Ashok Iron Works Pvt. Ltd. Vs. CCE, 2018 (9) TMI-1497.
(ii) Marvelous Metals Pvt. Ltd. Vs. CCE, 2018 (4) TMI-1462.
(iii) Jain Irrigation Vs. CCE, 2015 (40) STR-752.

5.  On the other hand, the learned AR defended the impugned order.

6.  After considering the submission of both the parties and perusal of the material on record and the various decisions relied upon by the appellant cited supra, I find that the appellant paid the Service Tax vide challan dated 03.04.2014 before the issuance of SCN at the direction of the auditing officer. The appellant has also paid interest vide challan dated 31.03.2016 after receipt of the SCN. Further, I find that during the impugned period, the reverse charge mechanism was introduced and there was no clarity regarding the manpower supply service but when the auditing officers explained the taxability to the appellant, the appellant paid the Service Tax before the issuance of SCN and also paid interest after receiving the SCN. Further, I find that the manpower supply service is covered under the definition of input service and the input credit is available to the appellant and thereby making the whole transaction as revenue neutral. In view of the various decisions cited supra, no malafide intention can be inferred if the transaction is revenue neutral and extended period can also not be invoked. Further, I find that the impugned period of dispute is from July 2012 to September 2013 whereas the SCN was issued on 08.12.2016 which is beyond the normal period of one year. Further, I find that the only ground on which the Commissioner (A) has invoked the extended period is that the appellants have not disclosed the said fact in their return and thereby suppress the material facts. Further, I find that in the case of Uniworth Textiles Ltd. cited supra, it has been held by the Hon’ble Apex Court that mere non-payment of duty is not equivalent to collusion or wilful mis-statement or suppression of facts. Further, I find that when the transaction is revenue neutral, no penalty can be imposed in view of the decision in the case of Jain Irrigation System cited supra. Therefore, by following the ratio of the above said decisions, I am of the view that imposition of penalty under Section 77 and 78 are not sustainable in law and therefore, I set aside the penalty relying upon the decisions cited supra. Accordingly, the appeal is allowed with consequential relief, if any.


(Operative portion of the Order was pronounced in Open Court on 17/10/2018)

S.S GARG
JUDICIAL MEMBER

Parveen...

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