![CESTAT Annual Digest 2023 [Part 17]](https://www.taxscan.in/wp-content/uploads/2024/01/CESTAT-Annual-Digest-2023-Part-17.jpg)
This yearly digest analyzes all the CESTAT stories published in the year 2023 at taxscan.in
The New Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the modification of already existing machinery if installed capacity gets increased by more than 25% is eligible for excise duty exemption under exemption notification. The two-member bench comprising Rachna Gupta (Judicial) and Subba Rao (Technical) held that the benefit of clause 2(b) of Notification No. 50/2003 was wrongly denied to the assessee.
The Bench observed that the benefit of notification is available to the unit existing before 07.01.2003 if the increase in its installed capacity by 25% or more has been effected after 07.01.2003 and in the case of Commissioner of Customs & Central Excise Vs. Uttaranchal Iron & Ispat Ltd, the court held that the modification of already existing machinery if the installed capacity gets increased by more than 25%, the assessee shall be entitled to the benefits of Notification No.50/2003-CE dated 10.06.2003.
The two-member bench of the New Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) comprising Rachna Gupta (Judicial) and Subba Rao (Technical) quashed the denial of excise duty exemption on clearance of flock fabric.
IIT Roorkee had been assigned to study the matter and submit a report on it. The bench relied on the Indian Institute of Technology (IIT) Roorkee Report to reach its conclusions.
The Bench observed that the denial and the demand of duty were not as per the law the demand was presumptive and baseless and the IIT report had established that the installed capacity of the assessee’s unit was enhanced by more than 25% after 07.01.2003.
The two-member bench (Technical) Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) comprising Ashok Jindal (Judicial) and Rajeev Tandon quashed the penalty imposed on confiscation of spare parts of goods for non-compliance of post import regulations on the ground of insufficient evidence. The assessee had appealed against the order passed by the Commissioner (Appeals) for confiscation of the goods for non-compliance with the post-import conditions of the Project Import Regulations and imposition of penalty on the assessee.
The Bench observed that claiming a refund of the legitimate amount due to them, was no favor being solicited from the department but seeking back what rightly belongs to the assessee.
The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) granted relief to the Eveready Industry by quashing the excise duty demand on the clearance of primary batteries on the ground of absence of manufacturing under section 2(f) of the Central Excise Act,1944. The two-member bench comprised of Muralidhar (Judicial) and Anpazhakan (Technical).
The Bench observed that the activity of mere packing and labeling undertaken by the assessee would not amount to “manufacture” in terms of Section 2(f) of the Central Excise Act. Accordingly, the demand confirmed in the impugned order was not sustainable. Since the demand was not sustainable, the question of demanding interest and imposing a penalty does not arise.
The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that re- enhancement of value for assessment purposes, undertaken when the goods were already assessed and exercise for enhancement of declared value was already undertaken at the time of assessment was patently illegal and unjustified. The two-member bench comprised of Ashok Jindal (Judicial) and Rajeev Tandon (Technical)
The bench observed that no re-enhancement of value was possible once the value of goods was enhanced and duty paid thereon and Reassessment was not possible once earlier assessment had become final, without undertaking any appeal or review.
The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld the quashing of the confiscation of silver ornaments and silver boondi on the grounds of the absence of evidence of smuggling. The two-member bench comprised of Ashok Jindal (Judicial) and Rajeev Tandon (Technical).
The Bench observed that the confiscation of goods and the penalty imposed against the use were not as per the law and there was no evidence proved by the revenue that the goods were smuggled in nature and the quashing of the confiscation of goods and penalty was as per the law and liable to be upheld.
The Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) quashed the rejection of the declared unit value of imported auto parts on the ground of absence of undervaluation. The two-member bench comprising Ashok Jindal (Judicial) and Rajeev Tandon (Technical) held that transaction value had been rejected, arbitrarily, as the department was not able to adduce any sustainable evidence on the matter.
Value assessment) of the Customs Valuation Rules 2007 applies exclusively to cases where the buyer and seller are related. The current adjudication order did not include such a determination. Therefore, employing this methodology for the valuation of various imported items such as radiators, cylinder blocks, crankshafts, etc., was not legally authorized.
The Hyderabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) observed that the hiring of vehicles to the Andhra Pradesh State Road and Transport Corporation (APSRTC) is not liable for sales tax, and the tribunal set aside the Demand-Cum Show Cause Notice (SCN). The two member bench of the Tribunal comprised of Mr. Anil Choudhary, Member (Judicial) and A.K Jyothishi, Member (Technical).
The issue to be decided was whether the hiring of vehicles/buses by appellants to the Andhra Pradesh State Road Transport Corporation (APSRTC) falls under the “Rent a Cab” service and is thus chargeable to service tax. The bench concluded that the appellant’s vehicle hiring is deemed a “Transfer of Right to Use,” not falling under “Rent a Cab Service.” Scrutiny of judgments, circulars, and agreements concludes APSRTC maintains control.
The Chennai Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT), while granting relief to Ramco Cement, held that CENVAT credits of service tax paid on outward transportation of finished products from the factory to the place of dealers and buyers should not be denied. The two-member bench comprised of Sulekha Beevi C.S, Member (Judicial), and Vasa Seshagiri Rao, Member (Technical).
The department contends that a certain credit is not eligible, asserting that the activity of outward transportation from the place of removal does not fall within the definition of input service according to Rule 2(l) of CENVAT Credit Rules 2004. Following this, a show-cause notice was issued, proposing to disallow the credit for the period January 2007 to February 2008, along with interest and a penalty under Rule 15(3) of CENVAT Credit Rules 2004.
The appellant, displeased with the department’s decision, appealed to the Commissioner (Appeals), who upheld the order. The appellant’s counsel argued that the definition of ‘input services’ was amended from “from the place of removal” to “up to the place of removal” effective from 1/4/2008, and the matter had already been addressed in the appellant’s previous case. The department, affirmed the findings of the lower authorities.
Therefore, it was held that the CENVAT credits of service tax paid on outward transportation of finished products from the factory to the place of dealers and buyers should not be denied.
The Mumbai Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) ruled that coaching for competitive entrance examinations, provided to students seeking admission in engineering and medical Kumar Pati (Member – Judicial) and Anil G. Shakkarwar (Member-Technical).
The appellant, asserting exemption under Sr. No. 9 of Notification No. 25/2012-ST, filed an appeal, contending that the adjudication order was based on earlier legislation and thus inapplicable to the present one.
The department claimed that the services provided by the appellant are taxable under “Commercial Training or Coaching Services” and “Renting of Immovable Property Service.” Demands for the period from April 2015 to June 2017 were made in a follow-up show-cause notice dated April 6, 2018, leading to a confirmation of duty, interest, and penalty under Section 78 of the Finance Act, 1994.
The Mumbai Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) held that no service tax is levied on coaching provided to students for competitive entrance examinations to gain admission to engineering and medical colleges.
The two-member bench, Dr. Suvendu Kumar Pati (Member – Judicial) and Anil G. Shakkarwar (Member – Technical), relied on the decision in M/s. Shri Chaitanya Educational Committee Vs. CC, CE & ST, stating that the definition of “educational institution” in Section 66D of the Finance Act, 1994, exempts such activities from service tax.
The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that the transformers constitute ‘inputs’ in terms of rule 2(k) of the Cenvat Credit Rules (CCR), 2004.
The two-Member Bench of the Tribunal comprising CJ Mathew (Technical Member) and Ajay Sharma( Judicial Member) observed that “The impugned goods constitute ‘inputs’ in terms of rule 2(k) of CENVAT Credit Rules, 2004, rejection of claim for restoration of credit is not tenable. Accordingly, the applications are restored to the original authority for disposal in terms of section 11B of Central Excise Act, 1944” the Bench concluded.
The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), granted service tax exemption as services were provided to SEZ unit. The two Member Bench of the Tribunal comprised of S.K.Mohanty, Member(Judicial) and M. M. Parthiban, Member (Technical).
The two hospitals involved in this case, namely GPPH and MAIDS, are operated by the Government of N.C.T. We have scrutinized the agreements between the Appellant and G. B. Pant Hospital, a government entity of N.C.T., New Delhi. The agreement was made by the service recipient on behalf of the President of India, indicating that the hospital in question is a Government Hospital.
The two hospitals involved in this case, namely GPPH and MAIDS, are operated by the Government of N.C.T. We have scrutinized the agreements between the Appellant and G. B. Pant Hospital, a government entity of N.C.T., New Delhi. The agreement was made by the service recipient on behalf of the President of India, indicating that the hospital in question is a Government Hospital.
The bench observed that “In respect of claiming exemption for payment of service tax on the services provided to SEZ Unit/Developer, the Notification No. 09/2009-S.T. dated 03.03.2009 as amended, in explicit terms provides that the services provided to the SEZ should be considered to grant of the benefit of exemption. In the case in hand, since the appellant had in fact provided the services to an unit of SEZ unit, in our considered view the benefit of the exemption provided under the Notification dated 03.03.2009 should also be available.”
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that the subsidy received from sale of mobile handsets purchased from independent vendors is business auxiliary services (BAS), chargeable to service tax. The two-Member Bench comprised of Justice Dilip Gupta, President and PV Subba Rao, Technical Member.
The bench based its decision based on Balaji Enterprises versus Commissioner of Central Excise and Service Tax, Jaipur where the tribunal observed that “subsidy received by the appellant from Tata Tele Services on the sale of mobile handsets purchased by the appellant from independent vendors can be said to be an amount received for providing “business auxiliary services” to Tata Tele Services and, therefore, chargeable to service tax.”
The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), imposed penalty of Rupees 10,000 on the Customs Broker (CB) and observed that the responsibility of CB is to play crucial role in protecting interest of the revenue.
The court observed “In view of the failure of the appellants to have acted in a proactive manner in fulfilment of the obligation under sub-regulation 10(a) ibid, particularly when they have received the documents from importer through intermediary logistics operator, we find that it is justifiable to impose a penalty of Rs.10,000/- against the appellants…”
A Two Member Bench of the Tribunal comprising S.K. Mohanty, Member (Judicial) and M.M. Parthiban, Member (Technical) observed that “we are of the considered view that the responsibility of a Customs Broker is to play a crucial role in protecting the interest of Revenue and at the same time he is expected to facilitate expeditious clearance of import/export cargo by complying with all legal requirements.”
The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the availment of the CENVAT credit of excise duty without proper receipt of goods. The two-member bench comprised of Ashok Jindal (Judicial) and Anpazhakan (Technical).
The Bench observed that the assessee was involved only in paper transactions by taking invoices without any receipt of the goods in their premises and thereafter, enabling the recipient of the assessee to take credit without proper receipt of the goods.
The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the revocation of customs broker (CB) Licence and observed that livelihood of Customs broker and employees is dependent upon functioning of Customs brokers business. The two-Member Bench of the Tribunal comprised S.K. Mohanty, Member (Judicial) and M.M. Parthiban, Member.
The bench observed that the timelines indicate that the suspension was continued during the inquiry proceedings for about 22 months. Normally, immediate suspension action prior to conduct of regular inquiry is taken considering the serious violations of CBLR, 2018 by the action of the Customs broker. Otherwise, the regulations provide for conducting regular inquiry, while license of Customs broker is in operation, for taking a decision on the suspension or revocation of the license. If the entire process of suspension proceedings is unduly delayed, then the very purpose of prescribing specific time limits in relation to conduct of inquiry proceedings is nullified and to such extent the actions of the authorities is not really sanctioned by law.
The Bangalore Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld the excise duty demand as there was splitting value of modem artificially as value of Hardware and value of the software so as to evade payment of duty.
The bench, comprising DM Misra (Judicial Member) and R Bhagya Devi (Technical Member), noted that the appellant, despite customers’ purchase orders covering the total modem value with embedded software, knowingly separated the value into hardware and software components to avoid duty payment. The bench rejected the appellant’s argument that they believed in good faith in declaring the software value separately. Consequently, the Tribunal found no merit in the appeal and saw no reason to interfere with the Commissioner’s order.
The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed excise duty demand, thereby granting relief to M./s, Honda Cars.
The Tribunal, comprising Ajay Sharma (Judicial Member) and CJ Mathew (Technical Member), observed that the appellant’s imported goods, upon being repacked after customs clearance, undergo a manufacturing process subject to excise duties under section 4A of the Central Excise Act, 1944. The affixing of the ‘retail selling price (RSP)’ becomes the final declaration for assessment. The Tribunal held that there is no application of Explanation 2(a) under section 4A, as there are no two prices. In favor of the appellant, the Tribunal set aside the demand, including interest and penalties, based on a prior Tribunal decision in their favor for the earlier period.
The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld the demand of cenvat credit of service tax paid on outdoor catering service for normal period. M.M. Parthiban, Member (Technical) was the sole member on the bench
The issue in dispute is in respect of Cenvat Credit taken by the appellants in respect of canteen facilities provided to their employees and staff, during shifts and office timings, and availing of service tax paid thereon in respect of services provided by an ‘outdoor caterer’ as eligible ‘input service’.
The tribunal deemed the demand for interest for the extended period to be unsustainable, citing the Department’s awareness of the issue, as evidenced by a previous Tribunal order and various appellate authorities’ actions. The Tribunal set aside the interest and penalty imposed in the impugned order, confirming the Order-in-Original dated 27.06.2019. The matter is remanded back to the original authority to re-quantify the demand for the normal period related to the contested outdoor catering service on which Cenvat Credit was claimed by the appellants.
The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) granted Cenvat Credit on the supply of inputs by manufacturers of copper.The two-Member Bench comprise of CJ Mathew, Technical Member and Ajay Sharma, Judicial Member.
M/s KSH International Pvt Ltd, a manufacturer of insulated conductors containing essential copper, was engaged in supplying its final product both domestically and for exports, fulfilling obligations under the ‘advance licence/authorization scheme’ of the Foreign Trade Policy (FTP). To acquire the primary ingredient, copper, duty-free, the respondent sourced it from M/s Hindalco Industries Ltd and M/s Sterlite Industries Ltd between October 2004 and March 2009. This was done by paying a duty of ₹5,26,47,414/- upon the invalidation of the ‘advance authorization’ to that extent.
The bench observed that the manufacturers of copper had discharged the duty on the supplied inputs to the respondent. As a consequence there is no basis for denying eligibility for CENVAT credit. Tribunal granted
The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), granted Cenvat Credit on discharge of tax liability, thereby granting relief to JSW Steel Ltd, the appellant. The Two-Member Bench of the Tribunal comprised of CJ Mathew, Technical Member and Ajay Sharma, Judicial Member.
The issue revolves around the disallowance of Cenvat credit amounting to ₹1,11,92,198/- for the period between August 2005 and April 2006. The recovery of this amount was ordered under Rule 14 of Cenvat Credit Rules, 2004, accompanied by applicable interest under Section 11AB of the Central Excise Act, 1944, and a penalty of a similar amount under Section 11AC of the Central Excise Act, 1944.
The bench observed that upon discharge of tax/duties on procurement of inputs/service and the said ‘service’ conforming to rule 2(l) of Finance Act, 1994, the recipient of service is entitled to avail credit of such tax. There is nothing on record to evidence that ‘service’ or ‘production’ for which the impugned goods had been deployed were not taxable/dutiable. The bench further noted that the tax liability had been discharged by the appellant on the procurement of such services from abroad.
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that the service tax is not leviable on ground that the show cause notice (SCN) alleges rendering of commercial or industrial construction service. The Two-Member Bench of the Tribunal comprised of Justice Dilip Gupta, President and PV Subba Rao, Technical Member.
The bench held that “No service tax could have been demanded from the appellant prior to 01.06.2007 and for the period post 01.06.2007 the demand of service tax cannot be sustained for the simple reason that the show cause notice alleged that the appellant had rendered commercial or industrial construction service and the Adjudicating Authority has also confirmed the demand under this head.”
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that the wrong claim of excise exemption notification not ground for invoking the extended period of limitation. The two member bench comprised of Dr Rachna Gupta, Judicial Member and Mr. P.V. Subba Rao, Member (Technical)
The bench observed thus, “The appellant had claimed the benefit of an exemption notification in its self- assessment which it was not entitled to. It has been the assertion of the appellant from the time of self- assessment up to and including in this appeal before us that it was entitled to the benefit this exemption notification. Wrong claim of an exemption notification is not a ground provided under section 11A for invoking extended period of limitation.”
The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the goods supplied to mega power projects based on International competitive bidding are eligible for excise duty exemption. The two-member bench comprised of Ashok Jindal (Judicial) and Rajeev Tandon (Technical).
The Bench observed that the responsibility regarding proper classification/ valuation of goods is on the importer and the customs officials and not on the Customs Broker Further, it is submitted that the role of a Customs Broker is limited to filing of bill of entry based on description of goods and documents in support of the same furnished by the importer
The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the goods supplied to mega power projects based on International competitive bidding are eligible for excise duty exemption. The two-member bench comprised of Muralidhar (Judicial) and Anpazhakan (Technical).
The Bench noted that, according to Entry 91 along with condition no.19 of Notification 06/2006 -CE dated 01.03.2006 and Entry No. 400 along with condition no. 86 of Notification 21/2002-Cus dated 01.02.2002, goods supplied through international competitive bidding under any Chapter of the First Schedule to the Central Excise Tariff are classified as ‘Nil’ rated. The bench pointed out that this exemption is contingent upon the goods being exempted from the customs duties applicable when imported into India.
The Punjab and Haryana High Court has reprimanded the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) for virtually allowing a decade-long stay on the pre-deposit to Pelican Tobacco Co. Ltd.,
The bench, consisting of Justice G S Sandhawalia and Justice Lapita Banerji, emphasized that the director, who had filed writ petitions and SLPs, was well aware that both the company and himself were denied the benefit of exemption from pre-deposit waiver, and their appeals had been dismissed.
The Bench further held thus, “The Tribunal in such circumstances has over-stepped its jurisdiction by allowing the application for condonation of delay and restoration of the appeals and thereafter proceeded ahead with the matter for the reasons best known to it….”
The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the procedural lapse cannot impede the grant of substantive benefit of Customs Duty. The two-member bench comprised Ashok Jindal (Judicial) and Rajeev Tandon (Technical).
In this case Sofitel Overseas Private Limited, the appellant, filed five Bills of Entry seeking the benefit of Notification No.12/2012-Customs, as amended by Notification No.25/2013-Customs, and paid duty at the rate of 7.5% during the clearance of the goods. The appeal was lodged against the adjudicating authority’s decision to reject the claimed benefit.
The Bench pointed out that in the case of India Photographic Co. Ltd. vs. Collector of Customs, Bombay, the court held that procedural formality, if any cannot impede the grant of a substantive benefit. And these findings were found to be pertinent with regards to the case.
The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the suspension of the Customs Broker license on misdeclaration of balloons on the grounds of absence of involvement. The two member bench comprised of Ashok Jindal (Judicial) and Rajeev Tandon (Technical).
SP Agency, the appellant assessee imported one consignment of decorative items. The decorative items were misdeclared by the appellant.
The assessee had appealed against the order passed by the Principal Commissioner of Customs (Airport & Administration), Kolkata for suspension of the license of the Customs Broker.
The Bench held that the order given by commissioner to immediately cancel the custom broker’s license was not valid. The bench also cited the absence of involvement by the custom’s broker in the movement of decorative items for quashing the suspension of custom broker’s license.
The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the denial of Customs duty exemption on the grounds of procedural lapse 2023 TAXSCAN (CESTAT) 1569
The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the denial of Customs duty exemption on the grounds of procedural lapse. The two-member bench comprised of Ashok Jindal (Judicial) and Rajeev Tandon (Technical).
The Bench observed that omission as pointed out does not violate any of the provisions of the Rules referred to above which could entail denial of the exemption. It was also settled law that where a more beneficial exemption is available to the assessee, it cannot be precluded from seeking duty relief thereto.
Also observed that procedural lapses, if any, cannot come in the way of disallowing a substantive benefit to the party, as long as there was no prejudice caused to the contents and the intentions of the documents.
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