This yearly digest analyzes all the CESTAT stories published in the year 2023 at taxscan.in
The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), recently ruled that the payment of interest does not arise in case of revenue neutral situation and hence no duty is to be paid.
A Two-Member Bench of the Tribunal comprising Ashok Jindal, Judicial Member and K Anpazhakan, Technical Member observed that “we hold that it is the revenue neutral situation, no duty is payable by the appellant therefore whatever duty paid by the appellant Cenvat credit of the same has been availed by the sister unit, the question of payment of interest does not arise.”
Quashing the excise duty demand the Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), held that the process of re-crystallisation and distillation does not manufacture under the Central Excise Act, 1944.
A Two-Member Bench of the Tribunal comprising PK Choudhary, Judicial Member and K Anpazhakan, Technical Member observed that “we hold that the processes undertaken by the appellant would not amount to manufacture within the meaning of Section 2(f) of Central Excise Act, 1944 and hence the finished goods are not leviable to Central Excise duty. Accordingly, the demand made in the impugned order is liable to be set aside.”
The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that the Squid liver powder is classifiable as other preparations of animal feeding under the head Preparations of a kind used in animal feeding in the Customs Tariff Act, 1975 (CTA).
A Two-Member Bench of the Tribunal comprising CS Sulekha Beevi, Judicial Member and M Ajit Kumar, Technical Member observed that “We find that the classification of the ‘Squid Liver Powder’ has been correctly done under CTH 23099090 and hence the impugned orders are upheld.”
Quashing the service tax demand, the Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that the grant of licence to operate and run hotel business is not taxable under the category of ‘Renting of Immovable Property Service’.
A Two-Member Bench of the Tribunal comprising CS Sulekha Beevi, Judicial Member and M Ajit Kumar, Technical Member observed that “After appreciating the facts, evidence and applying the decision in the case of Grand Royale Enterprises, we are of the considered view that the demand cannot sustain both on merits as well as on limitation and requires to be set aside which we hereby do.”
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), reduced the amount of penalty imposed on the ground that the ignorance of Indian Baggage Rules was made by a non- resident Indian of the UK.
A Single Member Bench of the Tribunal comprising Mr Ramesh Nair, a Judicial Member observed that “I find from the facts that, it does not appear that the appellant has any intention to smuggle the gold. This has already been recorded by the Commissioner (Appeals) in his order while reducing the penalty and redemption fine. The appellant being a non-resident Indian of the UK having a UK passport was unaware about the Baggage Rules of Indian Customs as stated in their affidavit.” “I find that the Commissioner (Appeals) though has considered the reduction of penalty and fine but in my considered view the appellant deserves further leniency in the matter.
Accordingly, considering the overall facts and circumstances of the case, I reduce the fine from 50,000 to Rs. 20,000/- and penalty from 20,000 to Rs. 10,000” the Tribunal concluded.
Setting aside the order of confiscation, the Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), held that Low Aromatic White Spirit is not classifiable under Light Oils and Preparations under Customs Tariff Act, 1944.
A Two-Member Bench of the Tribunal comprising P. K. Choudhary, Member (Judicial) and K. Anpazhakan, Member (Technical) observed that “We find merit in the arguments of the Appellant. In the impugned order, the Commissioner (Appeals) has rejected the Classification of the goods under CTH 27101239. When the goods do not satisfy the criteria fixed under Note 4 of Chapter 27, the goods cannot be classified under CTH 27101239. The remaining option available in the Tariff is to classify the same under CTH 27101990 which is the only residuary entry available for classification.”
The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that the chick drinker, auto feeder, poultry cage classifiable under Machinery for preparing animal feeding stuffs under Customs Tariff Act, 1985 (CETA).
A Two-Member Bench of the Tribunal comprising CS Sulekha Beevi, Judicial Member and M Ajit Kumar, Technical Member observed that “We hold that the impugned goods merit classification under CETH 84361000, as adopted by the appellant. The duty demand, interest and penalty therefore cannot sustain and requires to be set aside, which we hereby do.”
The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), allowed re-export of rough diamonds and commented that State must restrict their statutory intervention only within the intent of the statute and any excess of that will not only imperil their action but also have consequences in law.
A Two-Member Bench of the Tribunal comprising CJ Mathew, Technical Member and Ajay Sharma, Judicial Member observed that “Hence, the discarding of the proposals for confiscation under section 111(d) of Customs Act, 1962 and for denial of the option of redemption are, after the refusal of the first appellate authority to admit the appeal of Commissioner of Customs, no longer available for agitating before the Tribunal.”
Allowing the re-export of rough diamonds, the Bench further noted that “The valuation is purely academic and we, thus, reiterate our earlier observation that agencies of the State must restrict their statutory intervention only within the intent of the statute. Any excess of that will not only imperil their action but also have consequences in law.”
The Ahmedabad Bench of the Customs Excise and Service Tax Appellate Tribunal (CESTAT), quashed the service tax demand thereby noting that packed goods before sterilization are semi-finished goods.
Quashing the service tax demand, a Two-Member Bench of the Tribunal comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member observed that “In the present case, the packed goods were supplied to the appellant for carrying out process of sterilization therefore the packed goods before sterilization are semi-finished goods. Therefore, the contention of the Revenue that only raw material should be processed to be eligible for the exemption is incorrect as semi-finished goods are also allowed to be processed for making eligible for the above notification.”
The Ahmedabad bench Customs, Excise and Service Tax Appellate Tribunal (CESTAT) have held that demand of amount on exempted service in terms of rule 6 of Cenvat Credit is not allowable when the assessee paid back the entire Cenvat credit along with interest.
“The demand of 8%/6%/5% cannot be made in the facts of the present case when the respondent has admittedly paid back the entire Cenvat credit along with interest which was partly attributed to exempted service. Therefore, the demand is not sustainable.”, the two-member bench comprising Mr Ramesh Nair, Judicial Member and Mr C L Mahar, Technical Member held. The CESTAT dismissed the appeal and upheld the impugned order.
The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed service tax demand and held that Fixed Facility Charges (FFC) are not consideration received for providing the supply of tangible goods. A Two-Member Bench of the Tribunal comprising Sulekha Beevi CS, Judicial Member and M Ajit Kumar, Technical Member held that “Since it is clarified by the Board in the appellant’s own case that the said charges have to be included in the transaction value for payment of excise duty, we find no reason to hold that FFC charges are in the nature of consideration received by the appellant for providing supply of tangible goods. Relevant Board circular is binding on the department.”
The Ahmedabad bench Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that Cenvat Credit was allowable for Products used for providing Output Services as Cement and Steel are directly used in Commercial and Industrial Construction Services.
It was evident that cement and steel were directly used in Commercial and Industrial Construction Services. The CESTAT bench held that the appellant is legally entitled to Cenvat credit on Cement and Steel used for providing output service and set aside the impugned order.
The Ahmedabad bench Customs, Excise and Service Tax Appellate Tribunal (CESTAT) have held that service tax exemption is allowable on the commission received about general insurance under the government’s various schemes.
The CESTAT held that “the appellant is entitled to the exemption notification 3/2000-ST and not liable to pay any service tax on the commission received about general insurance under government’s various schemes.Accordingly, the impugned order is set aside and the appeal is allowed.”
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), West Zonal Bench, Ahmedabad, has held that the demand of Service Tax for an extended period of limitation is unsustainable without the evidence of Fraud, Collusion, Wilful Misstatement, Suppression of facts and Intention to evade payment of tax.
The two-member bench comprising of Mr. Ramesh Nair (Judicial Member) and Mr. C.L. Mahar (Technical Member) held that the demand for service tax, although meritorious, was barred by the limitation period and therefore not sustainable since the larger period of limitation cannot apply. The bench thus set aside the order and allowed the appeal in favour of the assessee thus establishing the importance of the limitation period.
The Ahmedabad Bench of the Customs Excise and Service Tax Appellate Tribunal (CESTAT), ruled that the Physician sample not for retail sale, value governed by Section 4 of the Central Excise Act, 1944 and excise duty to be paid on the transaction value.
“The physician sample are not for retail sale and the same is distributed free of cost to the doctors and no MRP is printed on the pack of the physician sample. In such case, the value is governed by Section 4 of the Central Excise Act, 1944 and duty is liable to be paid on transaction value and not an MRP based value under Section 4A of the Central Excise Act, 1944. This issue is no more res-integra and stand settled which is maintained upto the Supreme Court in the aforesaid judgment in the appellant’s own case. Therefore, the impugned order is not sustainable and the same is set aside” the Bench concluded.
In a significant case, the Ahmedabad bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the demand for Excise duty is valid as the assessee was aware that the transaction was done without payment of duty and reduced the penalty under Rule 26.
The two-member bench comprising Mr Ramesh Nair, Judicial Member and Mr C L Mahar, Technical Member observed that the major work related to the removal of goods is looked after by one Shri S.G. Pathak and the appellant’s statement was not recorded. The statements which he has given to the investigating officer is on behalf of the Director accordingly, such statement can be used against the Director only and not anyone else. However, the appellant worked at DGM Finance ultimately all the transactions are finally booked in the books of accounts and for which the appellant is responsible as he was aware of the transaction made without payment of duty. The CESTAT held that “the appellant deserves leniency therefore; I reduce the penalty from Rs. 10 lacs to Rs. 1 lac. Therefore, the impugned order in respect of the present appellant is modified to the above extent.”
In a significant case, the Ahmedabad bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that service tax demand on manpower recruitment and supply agency service is not valid in the absence of evidence of supply of manpower and its details.
“In the absence of such evidence, the job work charges cannot be taxed under “Manpower Recruitment and Supply Agency Service”. Hence, we are of the considered view that the adjudged demand confirmed on the appellant cannot be sustained.”, the two-member bench comprising Mr Ramesh Nair, Judicial Member and Mr C L Mahar, Technical Member. While allowing the appeal, the CESTAT set aside the impugned order.
As a relief to Sun Pharmaceuticals, the Ahmedabad bench Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed application of remission of duty as the Cenvat Credit involved in destroyed goods was reversed.
“It was also to be considered that the appellant as against the duty involvement of Rs. 1,38,233/- has reversed the Cenvat credit involved in the destroyed goods amounting to Rs. 92061/- therefore, we found that the appellant has made out a fit case for the remission of duty which could not have been rejected by the lower authorities accordingly, we set aside the impugned order and allow the appeal No. E/11131/2014. “, the two- member bench comprising Mr Ramesh Nair, Judicial Member and Mr C L Mahar, Technical Member.
The Ahmedabad bench Customs, Excise and Service Tax Appellate Tribunal (CESTAT) have held re-adjudication since the admissibility of Cenvat Credit was determined without verifying its Use.
A two-member bench comprising Mr Ramesh Nair, Judicial Member and Mr C L Mahar, Technical Member set aside the impugned order and allowed the appeal by way of remand to the Adjudicating Authority.
The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that a cash refund is allowable when an assessee working under central excise exemption notification.
A single member bench of Mr Ajay Sharma, Member (Judicial) held that the appellant is entitled to a cash refund since the appellant has requested a cash refund on the ground that they are working under exemption notification 30/2004-CE, dt. 9.7.2004 and hence not able to utilize the Cenvat Credit. The CESTAT set aside the impugned order and allowed the appeal.
The Chennai Bench of the Customs Excise and Service Tax Appellate Tribunal (CESTAT), held that the reimbursable expenses are not subject to the levy of service tax.
A Two-Member Bench of the Tribunal comprising CS Sulekha Beevi, Judicial Member and M Ajit Kumar, Technical Member observed that “It is settled position that the reimbursable expense is not subject to levy of service tax as per the decision of the Apex Court in the case of Union of India vs Intercontinental Consultants and Technocrats Ltd.”
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chennai has held that Export Oriented Units (EOUs) should be treated on par with Importers and shall be eligible to claim Duty Exemptions under Section 5A of the Central Excise Act.
The two-member bench consisting of Ms. Sulekha Beevi C.S (Judicial Member) and Shri M. Ajit Kumar (Technical Member) concluded that EOUs should be treated on par with importers, paying duty equal to customs duties under the Customs Act, while also allowing them to benefit from applicable duty exemptions.
The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that adopting values fixed by the Valuation Committee without revealing the methodology and the basis adopted is not correct.
A Two-Member Bench of the Tribunal comprising P Dinesha, Judicial Member and Vasa Seshagiri Rao, Technical Member observed that “As such adopting the values as fixed by the Valuation Committee without revealing the methodology and basis adopted for such values is not correct and is not in accordance with the Valuation Rules.”
The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), dismissed an appeal on acceptance of Central Excise finalized ad valorem value of copper anode.
A Two-Member Bench of the Tribunal comprising Sulekha Beevi C.S, Member (Judicial) and M. Ajit Kumar, Member (Technical) observed that “Now the appellant’s counsel has orally accepted the value as determined in the impugned order and only requests for netting the excess payment against the amounts short-paid before the department raises a demand, if any. They have not given any written application amending their plea and making a fresh prayer, perhaps knowing that it is not maintainable.”
“By their acceptance of the impugned order the earlier dispute does not survive. We find that the issue now submitted by the appellant is what may arise post the finalization of the demand, if any, by the department, based on the impugned order and is currently not the subject matter before us” the Bench concluded.
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that a refund is hit by unjust enrichment when the incidence of duty has been passed on to the buyers.
A Two-Member Bench of the Tribunal comprising Ramesh Nair, Member (Judicial) and C L Mahar, Member (Technical) observed that “In view of the above discussion and considering the overall facts and circumstances of this matter, the principles of unjust enrichment in this case is applicable and the appellant has failed to discharge its burden of proving that burden of duty has not been passed on to the customer. We hold that since the incidence of the duty has been passed on to the buyers, therefore, the refund is hit by the principles of unjust enrichment.”
The Chennai Bench of Customs and Excise and Service Tax Tribunal (CESTAT) has allowed the credit holding that the meal passes and group insurance were admissible input services.
The Two-member Bench of Sulekha Beevi, (Member Judicial) M. Ajit Kumar, (Member Technical), referring to the decision of in the case of Ford, the appellant was eligible for the credit and set aside the impugned order.
The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that no penalty can be imposed under the category of ‘renting of immovable property services’ if any reasonable cause on the part of the assessee for failure in discharging the service tax liability.
The two-member bench comprising Sulekha Beevi C.S.(Judicial) and M. Ajit Kumar (Technical) held that nothing brought out by evidence that the assessee had not paid the service tax with the deliberate intention to evade tax and no penalty can be imposed when any reasonable cause on the part of the assessed on the failure of discharging the service tax liability while dismissing the appeal filed by the department.
The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that Cenvat utilization by any unit of the same entity would not make any loss to the exchequer.
A single member bench of Mr Ajay Sharma, Member (Judicial) viewed that “the entire excise would be revenue neutral as the utilization by any unit of the same entity would not make any loss to the exchequer as the credit disallowed from one unit in proportion to the second unit will be eligible as a credit to such other unit and the net credit availment and utilization form a company’s perspective will remain unchanged and also that the appellant is not going to gain anything extra to its entitlement.” The CESTAT set aside the impugned order and allowed the appeal filed by the appellant.
The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that penalty and redemption fines cannot be imposed when the bill of entry has been finally assessed at the declared value.
A single member bench of Mr Ajay Sharma, Member (Judicial) observed that “during the pendency of appeal herein, the Bill of Entry has been finalized as per declared value that when the Bill of Entry has been finally assessed at the declared value then the redemption fine and penalties cannot be imposed. Since this development occurred after the passing of the impugned order” The CESTAT bench remanded the matter back to the Commissioner to be decided afresh on merits after taking into consideration the development after the passing of the impugned order. While allowing the appeal, the bench set aside the impugned order.
The Chennai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that service tax is not leviable on clearing and forwarding agency services provided outside India.
In light of the case of Paramount Communications Ltd. Vs. CCE, Delhi – 2019 (29) GSTL 322 (Tri. Del.), the two- member bench of Ms Sulekha Beevi C.S., Member (Judicial) and Shri M. Ajit Kumar, Member (Technical) set aside the impugned order demanding service tax.
In a recent case, the Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) allowed the refund on Unutilised Cenvat Credit since it was Calculated as Per the Prescribed Format Under Cenvat Credit Rules, 2004.
A single member bench of Mr Ajay Sharma, Member (Judicial) observed that the first appellate authority also seems to have decided the appeal mechanically without properly looking into the issue and also the submission of the appellant that they were not heard by the lower authority. While allowing the appeal, the CESTAT set aside the impugned order.
The Chennai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that no service tax leviable under“Manpower Recruitment or Supply Agency Service” (MRSAS) service on manufacturing of valves based on fixed remuneration on a tonnage basis.
A two-member bench of Ms Sulekha Beevi C.S, Member (Judicial) and Shri M. Ajit Kumar, Member (Technical) observed that the appellant has obtained a work order to execute certain works which are part of the manufacturing activity. The appellants are thus responsible to execute the work. The payment is on a tonnage basis/unit rate. “Being a contractor for execution of work, the contractor gets to decide the number of persons that have to be engaged for completion of the work whereas, in the case of manpower recruitment services, the contract for the supply of workers and the payment is based on man hours spent by the employee, which was not covered under MRSA Service”, the bench held. As a result, the CESTAT set aside the impugned orders and allowed the appeal.
The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) allowed the customs exemption on polyethene (pet) granules as it was used as testing moulds which fall under the input category.
“Considering that ‘polyethylene (PET) granules’ are used during the manufacture of ‘moulds’ that are the acknowledged export product of the appellant and which, even if not deployed in the manufacture of mould, renders the acceptability of the goods for the customer in the absence of which export obligation would remain unfulfilled, it is nothing but ‘consumables’ which are covered by the omnibus enumeration of eligible requirements other than capital goods, the impugned order has erred in denying the benefit of exemption.”, the two-member bench comprising Mr S K Mohanty, Member (Judicial) and Mr C J Mathew, Member (Technical) held. The CESTAT allowed the appeal and set aside the impugned order.
The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the goods used as Input should be duty paid and credit of duty paid on the said goods had not been taken for availing Modified Value Added Tax (MODVAT) credit under section 57A of the Central Excise Rules,1944.
A single-member bench comprising Ajay Sharma (Judicial) held that the Denial of MODVAT credit was not as per the law and was liable to be deleted. Additionally, it was held that the goods used as inputs were duty paid and were eligible to take the MODVAT credit while allowing the appeal filed by the assessee.
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata has held that the Ultimate Selling Price from the depot is irrelevant in determining the Assessable Value whereas the Import Parity Price published by Platts shall be accepted for the valuation of Petroleum Products under the Central Excise Regime.
The two-member bench consisting of Mr. Ashok Jindal (Judicial Member) and Mr. K. Anpazhakan (Technical Member) upheld the contentions of the assessee and held that the demand based on the ultimate selling price was not sustainable. The bench also acknowledged the acceptability of import parity prices based on Platts for the valuation of petroleum products under the Central Excise Regime. The bench ruled in favour of the assessee, setting aside the demand based on the ultimate selling price holding that the duty should be assessed based on the import parity price adopted by the assessee. In result, the appeal filed by the assessee was allowed.
