![CESTAT Annual Case Digest [Part-16] - TAXSCAN](https://www.taxscan.in/wp-content/uploads/2024/01/CESTAT-Annual-Case-Digest-Part-16-TAXSCAN-1.jpg)
This yearly digest analyzes all the CESTAT stories published in the year 2023 at taxscan.in
The Bangalore Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) held that the appeal before the tribunal should be abated as per Rule 22 of the CESTAT (Procedure) Rules when the National Law Company Law Tribunal (NCLT) approves the resolution plan. The two-member bench comprised of Dr. D. M. Misra, Member (Judicial), and Pullela Nageswara Rao, Member (Technical)
The appellant, Ruchi Soya Industries Ltd, a manufacturer of Edible Refined Oils and Fatty Acids, faced a show- cause notice accusing them of wrongly claiming exemption under Notification No. 3/2006-CE for clearing RBD Palm Stearin at the “Nil” rate of duty. The proposal suggested classifying the product under sub-heading 38231112 of the Central Excise Tariff Act, 1985, and recovering duty, interest, and penalty. The Commissioner (Appeals) upheld the department’s order, prompting the appellant to file an appeal before the tribunal.
The bench observed that the appeal abates once the IRP is appointed and/or the Resolution plan is approved. As a result, the appeal is dismissed in accordance with CESTAT (Procedure) Rules, 1982, Rule 22, and this is the relief/Order that may be issued in accordance with the aforementioned Rule.
The Delhi bench of CESTAT (Customs, Excise and Service Tax Appellate Tribunal) in its recent verdict emphasized the role of Customs Broker in preventing illegal transactions.
SKH Freight Logistics, a customs brokerage agency, was found to have acted on behalf of M/s. Linwood Sales without proper authorization, violating Regulation 10(a) of CBLR.The Customs Broker was implicated in facilitating fraudulent, undervalued exports and failed to comply with various regulations, including advising the exporter on Customs Act provisions and conducting proper client inquiries. The Customs Broker’s failure to verify the correctness of IEC and GSTIN, misrepresentation of company details, and use of forged documents led to findings of violations of Regulations 10(a), 10(b), 10(d)10(k) and 10(n) of CBLR.
The two-member bench, comprising Dr. Rachna Gupta, Member (Judicial), and Hemambik R. Priya, Member (Technical), revoked the appellant’s license based on these violations.
The New Delhi bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that the service tax cannot be levied on the amount paid to the USFDA to obtain their approval for the export of drugs.
Sidmak Laboratories (India) Private Limited, an appellant assessee in the pharmaceutical industry, appealed against the order confirming a service tax demand of Rs. 4,55,734. The adjudicating authority had upheld the demand under the proviso to Section 73(1) of the Finance Act, 1994, along with interest under Section 75. The appeal contested the service tax levy on the amount paid to the USFDA for obtaining approval for exporting drugs.
The two-member bench comprising Dilip Gupta (President) and Subba Rao (Technical) held that the USFDA was a statutory authority mandated by the US laws to regulate the import of pharmaceuticals into the country.
The Chennai Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) held that the on-site emergency medical service set up at the factory of Saint Gobain Galss India Limited could not fall under Input service.
Saint Gobain Glass India Limited had appealed against the denial of CENVAT Credit for Service Tax paid on input services. The dispute arose over services used in setting up the factory before and after 01.04.2011. The department contended that services post this date were ineligible for credit due to changes in the definition of “input service.” The appellant argued that services received before the commencement of production fell under “Erection, Commissioning, and Installation Service,” making them eligible for credit.
The tribunal observed that the appellant availed credit on “Emergency Medical Services” for on-site use. The bench disallowed Cenvat credit on Emergency Medical Services, stating they weren’t proved for personal consumption and couldn’t be considered eligible input services.
The Chennai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) upheld the sanctioning of service tax rebate claim on the advisory service on the grounds of refund eligibility. The two-member bench comprised of Sulekha Beevi (Judicial) and Vasa Seshagiri Rao (Technical)
Sundaram Asset Management Co. Ltd received consideration in inconvertible foreign exchange for advisory services to clients abroad. The Commissioner (Appeals) confirmed the sanctioning of a rebate claim of Rs.48,82,448/- to the assessee. The revenue had appealed against this decision.
The Bench observed that the Commissioner (Appeals) had rightly discussed the issue in detail and held that the refund was eligible to the assessee. Though the decision referred by the Commissioner (Appeals) had analyzed the issues based on a circular of 2009 the reasoning given by the Commissioner (Appeals) was proper and did not require any interference.
The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) quashed the denial of the CENVAT credit on information technologies software services on the grounds of credit eligibility.
The Bench observed that since the input services were used in or concerning the provision of output service exported by the assessee, the benefit of refund provided under Rule 5 of the CCR should be available to it.
The two-member bench comprising Suvenda Kumar Pati (Judicial) and Anil G Shakkarwar (Technical) held that so long as it is not established that services are not utilized, CENVAT Credit cannot be denied.
The New Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that canned pineapple slices are classifiable under CTH 0804, Attracts 30% customs Duty.
Holy Land Marketing Pvt. Ltd. faced an investigation for alleged misclassification of “Canned Pineapple Slices” and incorrect customs duty exemptions. The appellant challenged the adjudication proceedings, emphasizing flaws in the show cause notice handling and contesting the invocation of the extended period. The classification dispute involved conflicting opinions by customs officials, adding complexity to the legal battle.The issue to be decided was whether The Adjudication Authority erred in classifying Canned Pineapple Slices under 0804 attracts 30% Customs Duty.
The two-member bench of the Tribunal comprising Dr Rachana Gupta (Judicial Member) and Hemambika R Priya Member (Technical Member) concluded that classification of the canned pineapple slices would be CTH 0804. However, the demand for differential duty is limited to the normal period only.
The Chandigarh bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the excise duty demand in favor of Suzuki Motorcycle and held that no post-delivery inspection charges would be included in the assessable value for purposes of paying excise duty. The two-member bench comprised of S S Garg (Judicial) and Anjani Kumar (Technical)
Suzuki Motorcycle India Private Limited had contested a demand of Rs.1,31,15,550/- along with interest and equal penalty. The dispute centered around whether pre-delivery inspection (PDI) charges should be included in the assessable value for paying excise duty. The appellant argued against the inclusion of PDI charges.
The Bench observed that in the case of General Motors India Pvt. Ltd, the court held that PDI charges and free ASS charges would not be included in the assessable value under Section 4 of the Central Excise Act to pay excise duty.
The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) observed that Iron Ore Fines are exempted from payment of Customs Duty. The judge bench comprised of Ashok Jindal (Judicial Member) and Rajeev Tendan (Technical Member).
The bench concluded that iron ore fines were exempted from payment of duty vide Notification No.129/08 dated 07.12.2008, no duty was payable on 08.12.2008, therefore, the appellant was not liable to pay duty. Accordingly, the appellant is entitled for the refund claim of the duty paid.
The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) granted relief to the Tata AIG by quashing the denial of service tax credit of approximately 7 crores on the grounds of CENVAT credit eligibility. The two-member bench comprised Suvena Kumar (Judicial) and Anil G Shakkarwar (Technical)
The Bench observed that without opening an assessment of the provision of service extended by the service provider, CENVAT Credits cannot be denied to the recipient who had paid the required Service Tax through the service receiver to avail of the input services.
The Mumbai bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the value of scrap cleared by excise duty cannot be included in the assessable value. The division bench comprised of Dr. Suvendu Kumar Pati, Member (Judicial) and Mr Anil G Shakkarwar, Member (Technical).
M/s. Shilpa Steel & Power Ltd, a manufacturer of rolled products of Iron & Steel, engaged in job work for Steel Authority of India Limited (SAIL), faced a dispute regarding the inclusion of the sale proceeds of scrap generated during job work in the value of rolled products. The Department claimed that the appellant should have included the sale proceeds of the scrap as additional consideration in the value of the rolled products. The appellant’s unsuccessful appeal before the Commissioner (Appeals) brought the matter to the current forum.
The Chandigarh bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) granted relief to Suzuki Motors by quashing the excise duty demand on after-sale services charges on the grounds of PDI exemption. The two-member bench comprised of S S Garg (Judicial) and Anjani Kumar (Technical).
The Bench observed that PDI and three free services are necessary on the part of a customer to remain eligible for any claim under warranty; it was obligatory on the part of the dealer to provide three free services as mentioned under the Warranty Clause and he had no free will to deny them.
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) in Bangalore ruled that once resolution plans receive approval from the National Company Law Tribunal, the appeal would become void. Consequently, Patanjali Food’s appeal has been dismissed by the tribunal. The two member bench comprised of Dr. D. M. Misra, Member (Judicial), and R. Bhagya Devi, Member (Technical).
The bench observed that the appeal abates once the IRP is appointed and/or Resolution plan approved. As a result, the appeal is dismissed in accordance with CESTAT (Procedure) Rules, 1982, Rule 22, and this is the relief/Order that may be issued in accordance with the aforementioned Rule.
The Chandigarh bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the import of steel balls is classifiable under the category of ball or roller bearings.
The Bench observed that the classification made by the assessee under the category of ball or roller bearings and the classification made by the revenue was not as per the law and liable to be deleted.
The two-member bench comprising S S Garg (Judicial) and Anjani Kumar (Technical) held that the impugned order was not legally sustainable and hence liable to be set aside. When the classification and duty demanded in the show-cause notice are set aside, there is no way that the penalty on the assessee’s company and its directors can survive.
The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that the CENVAT credit of service tax cannot be denied at the recipient’s end without opening an assessment at the service provider’s end. The two-member bench comprised of Suvendu Kumar Pati (Judicial) and Anil G Shakkarwar (Technical)
Tata AIG General Insurance Co. Ltd, a provider of general insurance services had received infrastructure facilities and support services from motor car dealers. The company availed input credits against tax payments for these services, including workstations and advertisement services. The appellant appealed a decision by the adjudicating authority that denied CENVAT Credit at the receiver’s end due to the alleged incorrect description of services in the invoices raised by the service provider.
The bench held that CENVAT Credits cannot be denied to the recipient who had paid the required Service Tax through the service receiver to avail the input services.
The Chandigarh bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the Customs duty on the import of steel balls on the grounds of improper classification. The the two-member bench comprised S S Garg (Judicial) and Anjani Kumar (Technical).
Sumit Arora, an importer of “Steel Balls,” appealed against the adjudicating authority’s decision on re- classification and the recovery of differential duty. The appellant argued that er heading 8482 9900, which specifically covered Steel Balls, should take precedence over chapter heading 8714, a general category for parts and accessories of motor vehicles, based on Clause (a) of Rule 3 of General Rules for Interpretation.
The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the sale invoice can be either issued by a company located in a third country or an ASEAN India Free Trade Agreement (AIFTA) exporter.
The Bench observed that the Customs Authority in the importing party shall accept an AIFTA Certificate of Origin where the sales invoice was issued either by a company located in a third country or an AIFTA exporter for the account of the company, provided that the product meets the requirements of these rules.
The two-member bench comprising Sulekha Beevi (Judicial) and Vasa Seshagiri Rao (Technical) held that the assessee was eligible for the Customs duty demand
The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the rejection of the benefit of a preferential trade agreement on steaming non-coking coal import on the grounds of Customs duty benefit eligibility. The two-member bench comprised of Sulekha Beevi (Judicial) and Vasa Seshagiri Rao (Technical)
TCP Limited, the appellant assessee was importing Steaming Non-Coking Coal and filed two Bills of Entry for clearance of the same, and the imported goods were supplied by Coal and Oil Company LLC, Dubai. The assessee appealed against the order passed by the Commissioner (Appeals) for rejection of the concessional rate of duty as per the Preferential Trade Agreement.
The Bench observed that the impugned order rejecting the benefit of the concessional rate of duty as per the Preferential Trade Agreement is not justified.
The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that the service tax liability cannot be demandable only by calculating value without examination of activities and transactions.
The Bench observed that it is essential to establish that the value on which such service tax is calculated is the value under Section 67 of the Finance Act,1994, and the same was derived from the consideration received by the assessee out of the activity which had to satisfy the definition of service under sub-section (44) of Section 65B of Finance Act.
The two-member bench comprising Anil G Shakkarwar (Judicial) and Suvenda Kumar Pati (Technical) held that the assessee had received the consideration by providing service that was missing in the show cause notice and was not liable for the demand raised by the revenue.
The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) directed re-adjudication for recovery of CENVAT credit of excise duty availed on the common input services attributable to exempted activity or trading. The two-member bench comprised of Anil G Shakkarwar (Judicial) and Suvenda Kumar Pati (Technical)
VVF (India) Ltd appealed against the adjudicating authority’s decision, which confirmed the demand for CENVAT credit on input service credit amounting to Rs.51,45,637 and imposed an equal penalty. The appellant argued that they did not avail credit for input services related to trading activities. Additionally, they highlighted credit availed on common input services in the show cause notice.
The Bench observed that the matter needs to be remanded to the original authority with the direction to recover that quantum of CENVAT credit which was part of the CENVAT credit availed on common input services and which was attributable to exempted activity of trading.
The Bangalore bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the appeal can be abated as per rule 22 of the CESTAT procedure rules with effect from the date of approval of the resolution plan by NCLT. The two-member bench comprised of D M Misra (Judicial) and Pullela Nageshwara Rao (Technical).
Tiffins Barytes had appealed against the adjudicating authority’s order confirming the demand of Rs. 41,79,510/- and Rs. 44,59,411/- for the period from 01.04.2006 to 31.03.2007. The dispute pertained to the transportation services provided by a Goods Transport Agency for moving minerals from the mines, both for export to foreign buyers and sales to domestic buyers.
The Bench pointed out that in the case of Murli Industries Ltd, the court had held that the appeal abated once the invoice registration portal was appointed and/or the Resolution plan was approved. Consequently, the appeal was abated as per Rule 22 of CESTAT (Procedure) Rules.
The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) quashed the service tax demand against Umesh Tilak Yadhav on the grounds of the absence of examination of books of accounts. The two-member bench comprised Anil G Shakkarwar (Judicial) and Suvenda Kumar Pati (Technical).
Umesh Tilak Yadav, appealed against the Commissioner (Appeals) order confirming a service tax demand of Rs.24,43,804/- for the year 2014-15. The show cause notice highlighted a difference of Rs.1,97,71,881/- between the income declared in Income Tax Returns (ITR) and the value of service declared in Service Tax (ST) returns for the same period. The appeal contested the imposition of penalties under various sections.
The Bench observed that based on the difference between the figures reposted in the ST return and the income tax return, it cannot be presumed that the difference was on account of the provision of service and only by calculating the service tax leviable on the said value without further examination of the activities of the appellant and examination of the transactions, service tax cannot be demanded.
The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that no cause to initiate proceedings under Rule 14 of the Cenvat Credit Rules (CCR), 2004 when Cenvat Credit reversed before the issuance of notice.
A two-member bench of Mr C J Mathew, Member (Technical) and Mr Ajay Sharma, Member (Judicial) viewed that the credit of ₹ 14,55,597 had been reversed well before the issuing of notice and there is no cause to initiate
already reversed, and not restorable without prior approval from jurisdictional central excise authorities, does not seem to have occurred to the adjudicating authority as an exercise in futility. In the light of this legal position, the notice itself was void ab initio and, thereby, the penalty. The CESTAT allowed an appeal to the extent of setting aside recovery of ₹ 39,73,256 and of the penalty in full.
The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the CENVAT credit of excise duty is allowable on the renting of immovable property services of corporate office which was considered as an input service.
The Bench observed that in the case of Ramala Sahkari Chini Mills Ltd. v. Commissioner of Central Excise, the court held that all the services which are related to the manufacture of final products are admissible input services that qualify under the definition of input services provided under Rule 2(l) of the CENVAT Credit Rules, 2004. Therefore, the assessee is entitled to the CENVAT Credit on such services. The two-member bench comprising Ramesh Nair (Judicial) and Raju (Technical) quashed the denial of the CENVAT credit which was admissible to the assessee while allowing the appeal filed by the assessee.
The Allahabad bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that any institution issuing any educational qualification that was recognized by law is exempted from the service tax.
The two-member bench comprising P K Choudhary (Judicial) and Sanjiv Srivastava (Technical) held that conduct of degree courses by colleges, universities, or institutions which lead to the grant of qualifications recognized by law would be covered in the negative list and are exempted from service tax.
The Allahabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the service tax demand on the supply of chassis under the Goods Transport Agent (GTA) service on the ground of wrongful inclusion of service category under the supply of tangible goods service.
The two-member bench comprising P K Choudhary (Judicial) and Sanjiv Srivastava (Technical) held that the demand made in the present case after noting the payment of tax as the hand of the service recipient the same transaction goes contrary to Article 265 of the Indian Constitution and hence cannot be sustained.
The Ahmedabad Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) held that the service Auxiliary Service.
The two-member bench of Ramesh Nair, Member (Judicial), and C.L. Mahar, Member (Technical), held that the service provided for the conversion of raw bauxite into calcinated bauxite did not fall under the category of Business Auxiliary Service. Consequently, the bench allowed the appeal filed by the appellant Meena Agency Limited.
The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the service tax demand on waterfront royalty charges by considering it included in the ‘Port Service’.
The two-member bench comprising Ramesh Nair (Judicial) and C L Mahar (Technical) quashed the service tax demand on the grounds of limitation.
The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the service of the order by pasting on the factory gate as the first option is not proper and legal as per section 37 C (1) of the Central Excise Act,1944.
The two-member bench comprising Ramesh Nair (Judicial) and C L Mahar (Technical) held that the service of the order by passing on the factory gate is not proper and legal and liable to be deleted.
The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the clearance of chassis either on physical exports out of the country or to supply to Export Oriented Unit (EOU) is eligible for excise duty exemption.
The two-member bench comprising Sulekha Beevi (Judicial) and Vasa Seshagiri Rao (Technical) held that the assessee was eligible for the excise duty exemption and the CENVAT credit was rightly availed by the assessee.
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