CESTAT Annual Case Digest [Part – 29]

Annual Digest 2023 - CESTAT Annual Digest 2023 - cestat - part 29 - TAXSCAN

This yearly digest analyzes all the CESTAT stories published in the year 2023 at taxscan.in

Service Tax Leviable on Legal and Professional Charges under BAS: CESTAT M/s Infinity Credit Consultants vs Commissioner of Service Tax 2023 TAXSCAN (CESTAT) 708

The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that service tax is leviable on Legal and Professional Charges under Business Auxiliary Services (BAS).

A Two-Member Bench of the Tribunal comprising Dr Rachna Gupta, Judicial Member and Hemambika R Priya, Technical Member observed that “ We observe that though appellants were drafting and preparing legal reports but only for banks/financial institutions that too for ensuring the viability of loan and for verifying the property title documents for which such verification was sought by such banks. We opine that such activity is nothing beyond a due diligence of financial records of the customers of these banks/ financial institutions. Thus, it cannot a service provided as assistance in any branch of law.” “It actually becomes the service provided to a business entity/a financial institute/bank, to support the business or commerce of the said bank. These observations are sufficient for us to hold that the services, in question, have rightly been held to be the Business Support Service which is a taxable service” the Bench noted

LDT not Relevant Factor to Determine Assessable Value of Goods: CESTAT Quashes Differential Duty Demand Hussain Sheth Ispat vs Commissioner of Customs, Jamnagar 2023 TAXSCAN (CESTAT) 710

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed differential duty demand and observed that the Light Displacement Tonnage (LDT) not relevant factor to determine assessable value of goods.

A Two-Member Bench of the Tribunal comprising observed that “It is observed that parties have agreed upon a lump sum price of USD 5,815,747 for the ship as a whole and absent any allegation or evidence of extra consideration having been made by the importer over and above the said price, transaction value as declared by the importer has to be accepted. Lower authorities clearly erred in loading the assessable value entirely based on the LDT when the LDT is irrelevant for assessment of duty.”

Transaction Value declared by Importer deemed as Assessable Value unless rejected for Specific Reasons under Customs Valuation Rules: CESTAT Kunj Bihari Textiles vs C.C.-MUNDRA 2023 TAXSCAN (CESTAT) 705

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad bench has held that the Transaction Value declared by the Importer shall be deemed to be the Assessable Value unless the same is being rejected for Specific Reasons under the Customs Valuation Rules, thus invalidated the enhancement of value solely based on National Import Database (NIDB Data).

The two-member bench consisting of Shri Raju (Technical Member) and Shri Somesh Arora (Judicial Member) held that the declared transaction value should be accepted unless there are valid reasons for rejection based on the Customs Valuation Rules. The bench further ruled that the enhancement of value solely on the basis of NIDB data was not valid. The bench also clarified that the assessee is also found eligible for exemption from CVD under Notification No. 30/2004-CE.

Application for Refund of Customs Duty on Import Invalid without Modification of Self-assessment & Duty Re-determination: CESTAT The Commissioner of Customs vs M/s. Tamil Nadu Generation & Distribution Corporation Limited 2023 TAXSCAN (CESTAT) 706

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chennai bench has held that the application for refund of Customs Duty paid on import shall be invalid without modification of self-assessment and duty re- determination.

The two-member bench consisting of Mr. P. Dinesha (Judicial Member) and Mr. Vasa Seshagiri Rao (Technical Member)found that the first appellate authority erred in holding that the assessee was eligible for the refund. In conclusion, the order of the first appellate authority was set aside and the rejection of the refund claims by the adjudicating authority was upheld.

Capital Goods for import Registered with Project Report Irreversible, Concurrent Exemptions Unavailable as Valuation tied to Project Rate: CESTAT Graphite India Limited vs Commissioner of Customs 2023 TAXSCAN (CESTAT) 707

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chennai has held that the capital goods for import once registered with the Project Report is irreversible and Concurrent Exemptions are not available as the valuation is tied to Project Rate.

The bench held that by virtue of the doctrine of merger, the orders of the lower authorities had merged with the previous order of this Bench and it is only consequent to the directions of this Bench that the de novo Order-in- Original was passed and therefore, the de novo Order-in-Original is valid. Furthermore, it was also found that the assessee had not made a convincing case on merits for an intervention by the bench. The discrepancy in the import of capital goods was seen acknowledged by the assessee, and the denial of concurrent benefit of exemption resulting in the demand for differential duty is deemed lawful. Consequently, the bench dismissed the appeal upholding the earlier decision and confirming the demand for differential duty.

No Evidence of Inclusion of Excise Duty in Price Charged from Buyer: CESTAT Grants Benefit of Cum-Duty Price Messrs Rohan Automotive Equipment Pvt Ltd vs C.C.E 2023 TAXSCAN (CESTAT) 704

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), granted benefit of cum-duty price on absence of evidence of inclusion of excise duty in the price charged from buyer.

A Two-Member Bench of the Tribunal comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member observed that “We further observed that in the present matter appellant also claimed the benefit of cum-duty price which was denied by the learned Commissioner on the ground that no evidence of inclusion of excise duty in the price charged from the buyer has been produced by the Appellant before him. However, we find that the benefit of the same is liable to be extended to the appellant.

Intermediate Goods can be cleared without duty payment only on directs to Pay Interest In Delayed Payment M/s. Caterpillar India Pvt vs Commissioner of GST & Central Excise 2023 TAXSCAN (CESTAT) 703

The Chennai bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that intermediate goods can be cleared without duty payment only on condition of clearing them as the final product within six months.

The two-member bench comprising Ms Sulekha Beevi C.S, Member (Judicial) and Shri M. Ajit Kumar, Member (Technical) observed that “The duty liability for the manufacture and clearance of engines is on the Hosur unit and not on the appellant. Only because appellant opted for the facility of Rule 12BB, the duty burden is shifted to the appellant unit. In such circumstances, when the duty liability is paid with interest, the penalty levied under Sec. 11AC is unwarranted. In the peculiar facts of this case, we are of the considered opinion that the penalty imposed requires to be set aside which we hereby do.”

Denial of Credit of Service Tax Merely on Ground that Coal and Iron ore Mines Situated Away from Factory being Separate Entities is Invalid: CESTAT M/s. Usha Martin Limited vs Commissioner of Central Excise & Service Tax 2023 TAXSCAN (CESTAT) 702

The Kolkata Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that denial of credit of service tax merely on the ground that coal and iron ore mines situated away from the factory are separate entities is invalid.

A two-member bench comprising Shri P K Choudhary, Member (Judicial) and Shri K Anpazhakan, Member (Technical) held that “the denial of credit of service tax by the Commissioner in the instant case is unsustainable. We also find that the statutory ER-I returns were being filed along with a statement containing invoice-wise details of the credit taken and the ISD registration was obtained after disclosing all the relevant facts vide letter dated 25 April 2008 addressed to the Superintendent, Jharkhand Commissionerate.” The CESTAT set aside the impugned order and penalty.

Duty  Exemption on Gasket cannot be Denied Merely Because of Mismatch Occurred Initially which in later Rectified: CESTAT  M/s. IGP Engineers Pvt. Ltd vs Commissioner of GST & Central Excise 2023 TAXSCAN (CESTAT) 701

The Chennai bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) have held that duty exemption on gasket cannot be denied merely because of a mismatch that occurred initially which in later rectified.

The two-member bench comprising Ms Sulekha Beevi C.S., Member (Judicial) and Shri M. Ajit Kumar, Member (Technical) held that “the appellant is eligible for availing exemption from duty under Notification No. 6/2006 CE dated 1.3.2006 for the impugned goods. This being so demand for interest and penalty do not survive.” The bench set aside the impugned order and allowed the appeal.

Cenvat Credit of Input Sponge Iron, Utilized in Manufacturing of Finished Goods of Pig Iron: CESTAT quashes Penalty on Director Anjaney Ispat Limited vs Commissioner of Central Excise 2023 TAXSCAN (CESTAT) 700

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed penalty on Director as the Cenvat credit of input Sponge Iron was utilized in the manufacturing of the finished goods of Pig Iron.

A Two-Member Bench of the Tribunal comprising P.K Choudhary, Technical Member and K Anpazhakan, Judicial Member observed that “The duty paid nature of the Sponge Iron was also not in dispute. Since receipt, utilization and duty paid nature of the input Sponge Iron was not in dispute, we hold that the Appellant are eligible for the Cenvat credit of the input Sponge Iron, as the same has been utilized in the manufacturing of finished goods Pig Iron. We observe that there was no violation committed by the Director Uday Singh. Thus, we hold that no penalty is imposable on the Director under Rule 15(1) of Cenvat Credit Rules, 2004.”

Larger Period of Limitation u/s 11A(1) of Central Excise Act Could Not be Proceed Unless Holder for valuable consideration Shown to be Party to Fraud: CESTAT Jai Balaji Industries Limited vs Commissioner of Central Excise 2023 TAXSCAN (CESTAT) 699

The Kolkata bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that a larger period of limitation under section 11A(1) of the Central Excise Act could not proceed unless the holder for valuable consideration shown to be a party to fraud.

“Since there was no evidence that even if the goods were not manufactured by M/s.Saha Industries the fact remained that the same was duly received by the Appellant and M/s.Saha Industries have duly discharged the central excise duty on the same,” the two-member bench comprising of Shri P.K Choudhary, Member(Judicial) and Shri K Anpazhakan, Member(Technical).

RFG formed by conversion of Energy in form of Electricity on partially processed input, Rule 4(5)(a) of Cenvat Credit Rules not applicable: CESTAT Haldia Petrochemicals Limited vs Commissioner of Central Excise 2023 TAXSCAN (CESTAT) 698

The Kolkata bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that Rule 4(5)(a) of Cenvat Credit Rules, 2004 is not applicable as the Residual Fuel Gas (‘RFG’) formed by conversion of Energy in the form of Electricity on partially processed input.

In light of Maharashtra Aldehydes & Chemicalscase wherein the duty demand on the intermediate product cleared under Rule 4(5)(a) of the CCR was dropped. The two-member comprised of Shri P.K Choudhary, Member (Judicial) and Shri K Anpazhakan, member(technical) allowed the appeal.

Adjudication Order Passed without Allowing Cross-Examination is Gross Violation of Natural Justice: CESTAT quashes Customs Duty Demand Indu Overseas Pvt. Limited vs Commissioner of Central Excise & ST 2023 TAXSCAN (CESTAT) 697

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed customs duty demand and observed that the adjudication order passed without allowing cross-examination is gross violation of natural justice.

Quashing the customs duty demand, a Two-Member Bench of the Tribunal comprising Mr. Ramesh Nair, Member (Judicial) and C L Mahar, Member (Technical) observed that “We are of the view that it is necessary on the part of the Adjudicating Authority to accord opportunity of cross-examination of witnesses whose statements have been used as evidence in the matter. It is mandatory for Adjudicating Authority to follow the principles of natural justice.

Provision as per GAAP towards Sharing Expenditure on Receipt of Sponsorship Services, not Subject to Tax: CESTAT rules in Favour of Vodafone idea M/s. Vodafone Idea Limited vs The Commissioner of Central Excise 2023 TAXSCAN (CESTAT) 692

In a significant ruling in favour of Vodafone idea ltd, the Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that provision as per the Generally Accepted Accounting Principles (GAAP) towards sharing expenditure on receipt of sponsorship services is not subject to tax.

In many decisions of the Tribunal, it has been held that no Service Tax is payable on sponsorship of IPL and ICC cricket tournaments during the impugned period. In light of judgements, the two-member panel comprising of Mr P Dinesha, Member (Judicial) and Mr Vasa Seshagiri Rao, Member (Technical) held that “the provisions made in the books of account by the appellant as per the GAAP towards sharing the expenditure on account of receipt of sponsorship services cannot be subjected to tax as the ingredients for levy of tax are not fulfilled in the absence of any provision of service and when payments were made only about sponsorship of the IPL Cricket tournament.”

Composite Contract cannot be Artificially Bifurcated to Levy Service Value: CESTAT quashes Service Tax Demand Walchandnagar Industries Limited vs Commissioner of Central Excise & Service Tax 2023 TAXSCAN (CESTAT) 693

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed service tax demand and noted that the composite contract cannot be artificially bifurcated to levy service.

A Two-Member Bench of the Tribunal comprising PK Choudhary, Judicial Member and K Anpazhakan, Technical Member observed that “There is no value assigned for any service in the contract. In addition to supply of goods, the Appellant rendered the service of supervising the erection, installation and commissioning of the plant, which is liable to service tax. Even though there was no separate value assigned for this service in the contract, the Appellant worked out the cost of these services based on the man hours used for these services and paid service tax of Rs.8,76,154/-.”

Value of PPF Funds Management Services Received Prior to 10.9.2004, in respect of “Operation of Bank Accounts” not Subject to Service Tax: CESTAT M/s State Bank of India vs Commissioner of Service Tax-II 2023 TAXSCAN (CESTAT) 696

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that the value of Public Provident Fund (PPF) funds management services received by the service provider prior to 10.9.2004, in respect of “operation of bank accounts” is not subject to service tax.

The Bench also noted that “We find that the appellant is eligible to claim refund of service tax paid under protest in terms of the proviso to Section 11B, subject to the condition that such a refund claims are required to be filed in terms of section 11B of Central Excise Act, 1944, which have been made applicable to service tax as per Section 83 of the Finance Act, 1994.”

Refund Claim of Sugar Cess Rejected based on Pending Order of Higher Authority: CESTAT sets aside Rejection Order in Absence of Evidence M/s. Diamond Beverages Private Limited vs Commissioner of CGST & CX 2023 TAXSCAN (CESTAT) 694

The Kolkata bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has set aside the rejection order of the refund claim of sugar cess in the absence of evidence showing the pending order of the Higher Authority.

The CESTAT held that “the appellate order to that extent goes beyond the allegations raised in the SCN and cannot be sustained.”

Claim for Refund, even where Tax has been Paid under Mistake of Service Tax Law to be Decided upon u/s 11B of Central Excise Act: CESTAT GAIL India Ltd. vs Commissioner of GST & Central Excise 2023 TAXSCAN (CESTAT) 691

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that the Claim for refund, even where tax has been paid under mistake of service tax law to be decided upon under Section 11B of Central Excise Act, 1944.

A Two-Member Bench of the Tribunal comprising Sulekha Beevi C.S., Member (Judicial) and M. Ajit Kumar, Member (Technical) observed that “While this is a fresh legal issue which has not been examined by the Original Authority, it is no longer in dispute that claims for refund, even where tax has been paid under a mistake of service tax law are to be filed and decided upon under Section 11B of the Central Excise Act, 1944, subject to the claimant establishing that burden of duty has not been passed on to third parties.”

No Duty Demandable on Semi-Finished and Finished Goods when it was Exported after Payment of Duty u/s 3(1) of Central Excise Act: CESTAT M/s. Annur Cotton Mills vs Commissioner of Central Excise 2023 TAXSCAN (CESTAT) 695

In a significant case, the Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that no duty demandable on semi-finished and finished goods when it was exported after payment of duty under section 3(1) of Central Excise Act, 1944.

A Two member bench comprising Ms Sulekha Beevi C S, Member (Judicial) and Mr M Ajit Kumar, Member (Technical) concluded that the duty demand raised on the semi-finished goods and finished goods cannot be sustained for the reason that the goods have already been exported and that too on payment of duty under Section 3(1) of Central Excise Act, 1944. While allowing the appeal, the CESTAT held that the “appellant is eligible to avail credit of duty paid on finished goods and semi-finished goods.”

Salary not Covered by Provisions of Service Tax: CESTAT quashes Service Tax Demand M/s. Kellogg India Pvt. Ltd. vs Commissioner of CGST & CE, Belapur 2023 TAXSCAN (CESTAT) 690

Quashing the service tax demand, the Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that Salary is not covered by provisions of service tax.

A Two-Member Bench of the Tribunal comprising Anil G. Shakkarwar, Member (Technical) and Dr. Suvendu Kumar Pati, Member (Judicial) observed that “The basic fundamental of charging service tax at ad valorem is that the service provider has to receive consideration from the service recipient. Here as per the show cause notice, the appellant has not received any consideration and, therefore, the question of payment of service tax does not arise. The amount which is stated by Revenue in the show cause notice is the amount not paid as salary and retained by the appellant. Salary is out of the purview of service tax.”

CESTAT Allows Appeal of Arcelor Mittal Projects India Limited as Limitation Period for Refund to be Calculated u/s 9 & 10 of General Clauses Act Arcelormittal Projects India Limited vs C.C. 2023 TAXSCAN (CESTAT) 689

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad bench has allowed the appeal filed by ArcelorMittal Projects India Limited, a leading steel manufacturer stating that the limitation period for the refund claims of the assessee shall be calculated in accordance with Sections 9 and 10 of the General Clauses Act, 1897.

The two-member bench consisting of Ramesh Nair (Judicial Member) and C. L. Mahar (Technical Member) focused on the issue of whether the refund claims were within the one year limitation period from the date of payment. The bench analyzed the relevant provisions regarding the commencement, termination, and computation of time contemplated under Sections 9 and 10 of the General Clauses Act, 1897. The bench held that the refund claims filed by the assessee were indeed within the stipulated one year period. The bench observed that according to Section 9 of the General Clauses Act, 1897 the date of deposit of duty on August 26, 2011, and August 25, 2011, meant that the one-year period commenced on August 27, 2011, and August 26, 2011, respectively. Consequently, the first refund claim filed on August 27, 2012, fell well within the one year limit. The bench also clarified that even though the one year period for the second refund claim technically ended on August 26, 2012, as it was a sunday, the filing of the claim on monday, August 27, 2012, was deemed to be within the prescribed time limit as per Section 10 of the General Clauses Act, 1897. In result, the bench set aside the order and allowed the appeal.

Compensation Received for Cancellation of Sale Agreement not Declared Service under Section 66E(e) of Finance Act: CESTAT M/s. M.N.Dastur & Company Private Limited vs Commissioner of Service Tax 2023 TAXSCAN (CESTAT) 686

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that the compensation received for the cancellation of sale agreement not “Declared Service’ under Section 66E(e) of the Finance Act, 1994.

A Two-Member Bench of the Tribunal comprising PK Choudhary, Judicial Member and K Anpazhakan, Technical Member observed that “We are of the considered view that the receipt of compensation cannot, by any stretch of imagination, fall under the provisions of Declared Service under Section 66E(e) of the Finance Act.”

No requirement to follow Procedure under Rule 4A of Service Tax Rules in Absence of Head Office-Branch Office Basis: CESTAT IVAX Paper Chemicals Ltd. vs Commissioner of Central Tax 2023 TAXSCAN (CESTAT) 688

The Hyderabad bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that there is no requirement to follow the procedure under Rule 4A of the Service Tax Rules, 1994, since, there was no head office branch office basis relation between the appellant company and its other units.

The appeal was partly allowed by way of remand for redetermination of the amount of eligible credit out of total demand and for recovery of the remaining amount, levy of interest applicable, and imposition of a penalty with reference to such ineligible credit, so determined.

CESTAT Quashes Order as SCN Deemed Time-Barred, Issued Beyond Period of Limitation KANDLA PORT TRUST vs C.C.E. & KUTCH 2023 TAXSCAN (CESTAT) 687

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad bench has quashed an order related to a service tax appeal on the grounds that the Show Cause Notice (SCN) was deemed time-barred and issued beyond the period of limitation.

The bench kept the issue of taxability open, considering that the SCN did not raise a demand for service tax despite the appellant having paid it. In result, the bench quashed the order and allowed the appeal.

Error in Recorded Statement not Relevant when Gold Biscuits are of Foreign Origin: CESTAT upholds Confiscation Shri Jochan Michael vs Commissioner of Customs 2023 TAXSCAN (CESTAT) 683

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), upheld the confiscation of the gold biscuits and noted that the error in recorded statement is not relevant when the gold biscuits are of the foreign origin.

Upholding the confiscation of the gold biscuits, a Single Member Bench of the Tribunal of R. Muralidhar, Member (Judicial) observed that “the Recorded statements did not specify that the same were being recorded in terms of Section 108 of Customs Act, 1962. However, the appellants are required to support their claim by way of proper Invoices in the first place. They were not in a position to prove the same. Therefore, even the error pointed out about the Recorded Statement cannot come to the rescue of the appellants.”

 CESTAT Upholds Utilisation of Cenvat Credit of Basic Excise Duty for Payment of Education Cess & Secondary Higher Education Cess Welspun Corp Limited vs C.C.E. & S.T.-Rajkot 2023 TAXSCAN (CESTAT) 685

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad has held that Cenvat Credit of Basic Excise Duty can be utilised for payment of Education Cess and Secondary Higher Education Cess.

The bench emphasized that the issue is no longer res integra, as settled by the earlier decisions. As a result, the order was set aside, and the appeal filed by Welspun Corp Limited was allowed thus reaffirming the right of businesses to utilise available credits for payment of education cess and higher education cess.

Suppression cannot be Alleged by Department for Income Reconciliation of Books and ST 3 Returns: CESTAT quashes Service Tax Demand M/s. Bimal Auto Agency vs Commissioner of CGST & CX 2023 TAXSCAN (CESTAT) 684

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed the service tax demand and observed that the suppression cannot be alleged by the department for income reconciliation of books and ST 3 returns.

A Two-Member Bench of the Tribunal comprising P.K Choudhary, Judicial Member and K Anpazhakan, Technical Member observed that “Since there had been service tax audit conducted prior to the DGGI investigation covering the period under dispute, we are of the considered view that suppression cannot be alleged by the department for income reconciliation of books and ST 3 returns as no such allegation was raised during department audit. we are of the view that the entire demand of service tax has to go.”

Customs Duty, Redemption Fine and Penal Action can be Confirmed on Establishment that Customs Duty Paid on Raw Material Sent to Job Workers not Received by 100% EOU of Appellant: CESTAT Sun Pharmaceuticals Industries Ltd vs C.C.E. & S.T.-Surat-ii 2023 TAXSCAN (CESTAT) 683

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that the customs duty, redemption fine and penal action can be confirmed on the establishment that customs duty paid on raw material sent to job workers not received by 100% Export Oriented Units (EOU) of the appellant.

A Two-Member Bench of the Tribunal comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member observed that “In this case, we find that the appellant has violated the faith imposed in them in as much as they did not even bother to check whether the job worker declared by them for the manufacture of an intermediate product exists at the time declared manufacturing unit or not. It also shows the carelessness on the part of the manufacturer in failing to ensure that the duty-free import or acquired are being sent to the right place which has been declared by them for the manufacture of the intermediate products.” “We are of the view that duty, redemption fine and penal action can be confirmed only if it is established that duty paid on raw material which was sent to the job workers have not been received by the 100% EOU of the appellant” the Bench concluded.

Parts of Tricycle Imported Separately cannot be Clubbed for Classification Purpose: CESTAT Quashes Appeal Filed for Value Enhancement M/s. Baba Baidyanath Trading Company vs Commissioner of Customs 2023 TAXSCAN (CESTAT) 682

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Big Bull Traders Pvt Ltd (Appellant 1) is a manufacturer of Tricycle and holds ICAT certificate issued by the designated agency. They are authorized to manufacture Tricycles operated by battery under Motor Vehicle Rules. Baba Baidyanath (Appellant 2) is a Trading Company dealing in parts of Tricycle.

A Two-Member Bench of the Tribunal comprising PK Choudhary, Judicial Member and K Anpazhakan, Technical Member concluded that “We observe that the Notice proposes to adopt the value of Rs 33,000 per Tricycle as per the assessable value available for fully finished tricycle in the National Import Database (NIDB) data. There is no evidence available to establish that the goods for which value is available in NIDB and the impugned goods imported by the Appellants together are similar goods. Hence, we hold that the adjudicating authority has rightly rejected the value of 33,000 proposed in the Notice. Accordingly, we hold that the department’s appeal for value enhancement is liable for rejection.” “The goods imported by both the Appellants cannot be clubbed for classification purpose. The goods imported by the appellants were not in CKD condition and therefore goods cannot be classified under Customs Tariff Heading (CTH) 87038040. The goods are rightly classifiable under CTH 87089900” the Bench noted.

Service Tax Demand Under “Management or Business Consultant Service” For Period Before 16.05.2008 is not Valid: CESTAT Basf India Ltd vs C.C.E. & S.T.-Surat-ii 2023 TAXSCAN (CESTAT) 681

The Ahmedabad bench Customs, Excise and Service Tax Appellate Tribunal (CESTAT) have held that service tax demand under “Management or Business Consultant Service” for the period before 16.05.2008 is not valid.

The two-member bench comprising Mr Ramesh Nair, Judicial Member and Mr C L Mahar, Technical Member observed that implementation of the ERP services is specifically covered under the information technology service, which was effective only from 16-5-2008. Under these circumstances, it cannot be liable to Service Tax for a period before that. It was evident that the entire period in the present case is before 16-5-2008. The CESTAT bench held that “the appellant has made out a strong case for waiver of penalties invoking Section 80 of the Finance Act, 1994. Accordingly, we set aside the penalties imposed in the impugned order.”

Availing CENVAT Credit by Bills of Entry on basis of Forged VKGUY and DEPB License is Invalid: CESTAT Hindalco Industries Limited vs C.C.E- Bharuch 2023 TAXSCAN (CESTAT) 606

The Ahmedabad bench Customs, Excise and Service Tax Appellate Tribunal (CESTAT) availing Cenvat credit by bills of entry based on Vishesh Krishi and Gram Udyog Yojana (VKGUY) and Duty Entitlement Pass Book (DEPB)licences is invalid.

The two-member bench comprising Mr Ramesh Nair, Judicial Member and Mr C L Mahar, Technical Member observed that “the genesis of this case is the fraudulent obtainment of VKGUY & DEPB licences regarding that custom matter the appellants were issue show cause notice dated 05.11.2012 which was adjudicated vide order-

in-original passed by customs commissioner.” Since the adjudication order in the customs matter was not considered by the Adjudicating Authority, the CESTAT remitted back the matter to the adjudicating authority for reconsideration. Accordingly, the impugned order was set aside and allowed the appeal by way of remand.

Commissioner can Remand Matter to Lower Authority for Examining Documentary Evidence Regards to Unjust Enrichment: CESTAT rules in Favour of Indian Oil Corporation C.C.E vs Indian Oil Corporation Ltd 2023 TAXSCAN (CESTAT) 680

Tin the case of Indian Oil Corporation, the Ahmedabad bench Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the Commissioner can remand the matter to a lower authority for examining documentary evidence regards to unjust enrichment.

The two-member bench comprising Mr Ramesh Nair, Judicial Member and Mr C L Mahar, Technical Member observed that “it is settled that Commissioner (Appeals) has indeed the power to remand the matter to Adjudicating Authority to decide afresh. Moreover, by remanding the matter to the Adjudicating Authority there is nothing prejudicial to the Revenue.” The CESTAT upheld the impugned order and dismissed the appeal of the revenue.

Penalty not Demandable when Assessee has Not Crossed the Threshold limit on Exemption: CESTAT sets aside Demand relying on Form H M/s.Annai Chemicals and Associators vs The Commissioner of GST & Central Excise 2023 TAXSCAN (CESTAT) 677

The Chennai bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that penalty is not demandable when the assessee has not crossed the threshold limit on the exemption and set aside demand relying on Form H.

The two-member bench comprising Ms Sulekha Beevi C.S., Member (Judicial) and Shri M. Ajit Kumar, Member (Technical) held that “it is observed from the record that the merchant exporter exported the goods which were not disputed at any point of time.” While allowing the appeal, the Bench set aside the impugned order.

No Penalty under Excise Act Invokable When Duty with interest Levied u/s 12BB on Clearance of Engine to Sister Concern: CESTAT M/s. Caterpillar India Pvt. Ltd vs Commissioner of GST & Central Excise 2023 TAXSCAN (CESTAT) 679

The Chennai bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that penalty under the excise act is not invokable when duty with interest levied under section 12BB on clearance of engine to sister concern.

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