CESTAT Weekly Round Up

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This weekly round-up analytically summarizes the key stories of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) reported at taxscan.in, from May 11, 2024  to May 17, 2024

CESTAT Calls for Re-determination as Micro-Cellular Goods Assessment Falters, Questions Reliance on Unofficial Test Report Sewa Elastomers vs Commissioner of CGST & Central Excise palghar CITATION: 2024 TAXSCAN (CESTAT) 450

The Mumbai bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) calls for re-determination as the assessment of micro-cellular goods falters, questioning the reliance on an unofficial test report.

The two member bench of the tribunal comprising Ajay Sharma (Judicial member ) and C.J Mathew (Technical member) concluded that the impugned order was set aside and notice restored to the original authority for fresh decision on claim of appellant-assessee after test, CESTAT, are inclined to remand the matter insofar as appellant-assessee was concerned, the appropriate disposal of this appeal of revenue too was re-determination of the dispute by the original authority. Accordingly, set aside the impugned order and allow the appeals by way of remand.

Manufactured Product in Syringes without Needle cannot be classified as Parts and Accessories of Goods of heading 9018: CESTAT Sanofi India Limited vs Commissioner of Central Excise & ST CITATION: 2024 TAXSCAN (CESTAT) 451

The Ahmedabad bench of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) ruled that a manufactured product contained in syringes without needles cannot be categorized as parts and accessories of goods falling under heading 9018.

The bench found that only question whether the product “All Star” Reusable Insulin Delivery Device cleared by the appellant as “Syringes without needles” were  exempted from excise duty under serial No. 309 of Notification No. 12/2012-CE dated 17.03.2012 or it is liable to pay concessional rate of duty at the rate of 6% under serial No. 310 of Notification No. 12/2012-CE dated 17.03.2012 and whether the demand of Cenvat credit availed on input and input services can be sustained on the ground that finished goods are eligible for complete exemption and appellants have wrongly paid Central Excise duty at the rate of 6% on their final product.

CESTAT directs Commissioner to Return Gold Seized as Not Smuggled u/s 123 of Customs Acts Commissioner of Customs vs M/s Sai Max Jewelers CITATION: 2024 TAXSCAN (CESTAT) 452

The Allahabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has directed the Commissioner to return the seized gold, ruling that it was not smuggled under Section 123 of the Customs Act, 1962.

The two member bench of the tribunal comprising P.K.Choudhary ( Judicial member) and Sanjiv Srivastava (Technical member)  does not find any reasons to interfere with the impugned Order-in-Appeal passed by the learned Commissioner (Appeals) and accordingly, the same is sustained. The appeals filed by the Department are thus dismissed.

Residential Units are not Liable to Service Tax: CESTAT sets aside Service Tax Demand with Interest and Penalties SAUMYA DEVELOPERS vs C.C.E. & S.T.-CGST & CENTRAL EXCISE CITATION: 2024 TAXSCAN (CESTAT) 453

The Ahmedabad bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) has set aside the service tax demand, along with interest and penalties, stating that residential units are not liable to service tax.

The two member bench of the tribunal comprising Ramesh Nair (Judicial member) and C.L Mahar (Technical member) concluded that the service tax demand confirmed with interest and penalties is not sustainable in this case. The demand of Service Tax upheld by O-I-A with interest and penalties deserves to be set aside. Accordingly, the appeal filed by the appellant was allowed.

Issuing Second SCN for Excise Demand without Adjudicating First Deems Jurisdictionally Void: CESTAT M/s. Saf Yesat Company Pvt. Ltd. vs Commissioner of Central Excise CITATION: 2024 TAXSCAN (CESTAT) 454

The Mumbai bench of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) ruled that issuing a second Show Cause Notice (SCN ) for excise demand without adjudicating the first was deemed jurisdictionally void.

The two-member tribunal, consisting of Dr. Suvendu Kumar Pati (Judicial member) and Anil G. Shkkarwar (Technical member), concluded that the appeal was granted. They deemed the order issued by the Commissioner of Central Tax (Appeals-I), Pune, under Order-in-Appeal No. PUN-EXCUS-001-APP-013 to 14/2020-21 dated 29.07.2020, based on a subsequent show-cause notice following the dismissal of the first notice by CESTAT, to be lacking jurisdiction. Consequently, they set aside the order, granting consequential relief.

No CENVAT taken on Inputs/ Capital Goods or Input Services used in Rendering Service Goods: CESTAT Remands for Reconsideration Smp Construction Pvt Ltd vs Commissioner of C.E-Bharuch CITATION: 2024 TAXSCAN (CESTAT) 455

The Ahmedabad bench of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) has remanded the case for reconsideration, stating that no Central Value Added Tax (CENVAT) credit was taken on inputs, capital goods, or input services used in rendering the service goods.

The two member bench of the tribunal comprising Ramesh Nair (Judicial member) and Raju Technical member) concluded that adjudicating authority can reconsider the issue afresh based out of the factual matrix of the present case taking into account the submissions made by the Appellant as regards the effect of availment of Cenvat credit and abatement where credit was not availed at all. Therefore, CESTAT found that the issue needs to be remanded back to the adjudicating authority for reconsideration.

Consignment Note Absence Invalidates Service Tax Claim for GTA: CESTAT Mr. Sitaram Jaggnath Prasad Sihotia vs Commissioner CITATION: 2024 TAXSCAN (CESTAT) 456

The Delhi bench of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that the absence of a consignment note invalidates the service tax claim for the Goods Transport Agency (GTA).

A single member bench of the tribunal comprising  Binu Tamta ( Judicial member)  found that it was an undisputed position that the appellant had not issued any consignment notes by whatever name and hence in view of the law laid down by the series of decisions, no service tax liability can be imposed. Therefore, it was held that the demand proposed in the show cause notice for recovery of service tax of Rs. 1,69,003/- along with interest and penalty was dropped and the impugned order was set aside. The appeal was accordingly allowed.

Service Tax is not Leviable on Service Received in SEZ u/s 26 of Customs Act: CESTAT Roop Telesonic Ultrasonix Limited vs Roop Telesonic Ultrasonix Limited CITATION: 2024 TAXSCAN (CESTAT) 457

The Ahmedabad bench of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) Service tax was not leviable on service received in Special Economic Zone (SEZ) under Section 26 of Customs Act.

The single member bench of the tribunal comprising Ramesh Nair (Judicial member) concluded that the Section 26 of SEZ Act provides that no tax/ duties are leviable on the input or input service received and used in the SEZ. As per this statutory provision which overrides any other Act, the service tax is not leviable on the service received in SEZ. Accordingly, the tax paid on the service needs to be refunded. Therefore, in my considered view the appellant is legally entitled for the refund.

Freight and/or Insurance Charges shown separately in invoice is not includable in  assessable value of Excisable Goods: CESTAT Sayaji Senthness Ltd vs Principal Commissioner CITATION: 2024 TAXSCAN (CESTAT) 458

The Ahmedabad Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) held that  freight and /or insurance charges shown separately in the invoice is not includable in assessable value of the excisable goods.

After analyzing the arguments and submission of both parties, the two member bench of Ramesh Nair (Judicial) and Raju (Technical)  observed that  freight and /or insurance charges shown separately in the invoice s not includable in assessable value of the excisable goods.

Service Tax Demand under Work Contract Service is not Valid as assessee was not Registered for the same: CESTAT Commissioner of Central Excise vs M/s Tiranga Construction Co CITATION: 2024 TAXSCAN (CESTAT) 459

The Allahabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT ) has held that service tax demand under work contract service is not valid as the assessee was not registered. It was found that the party was registered with the department only for providing “Commercial and Industrial Construction” services till 05.122010 and was availing the benefit of notification 1/2006 dated 05. 10.2010.

A two-member bench of Mr P K Choudhary, Member (Judicial) and Mr Sanjiv Srivastava, Member (Technical) held that the services provided by the respondent were correctly classifiable under the category of “Work Contract Services” the entire argument advanced by the revenue to the effect that the activities undertaken by the respondent in respect of Lucknow Development Authority would not survive.

Agreement for Supply of Water Not a Right to Use Natural Resources: CESTAT Quashes Service Tax Demand Sasan Power Limited vs Commissioner, Central Excise CITATION: 2024 TAXSCAN (CESTAT) 460

In a significant case, the Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT ) has held that the agreement for supply of water not a right to use natural resources and quashed the service tax demand.

The two member bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) has observed that the agreement was for the supply of water by the government to the appellant and is not for the assignment of any right to the appellant to use the natural resources of the government.

While allowing the appeal, it was held that the agreement is for the supply of water and not mere access to a water source. The CESTAT held that no service was provided by the government to the appellant.

No Service Tax for Selling Coal to End Consumers: CESTAT rules in Favour of NCCF NATIONAL CO-OPERATIVE CONSUMERS vs COMMISSIONER OF CENTRAL EXCISE CITATION: 2024 TAXSCAN (CESTAT) 461

The Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) has ruled that service tax is not payable by the National Co-Operative Consumers’ Federation of India,(NCCF) since they are adding 5% margin money, collecting the sale price from the consumers, and paying the sales tax on the entire amount received from the end consumers.

The CESTAT observed that, as per the coal policy, the appellant is selling coal at a price whereby he is getting a profit margin of 5% on the base price. The resale price has been fixed by an agreement between the parties. The two member bench of Binu Tamta (Judicial Member) and Hemambika R. Priya (Technical Member) held that the transaction is one of sale or purchase on a principal-to-principal basis, and the coal companies as well as the appellant are discharging the liability of sales tax or VAT. There is no element of service involved, and the appellant cannot be saddled with the liability of service tax.

Relief to Reliance Brands, Advertising and Marketing Expenses for Sale of Post Import Goods not Includable in Value of Goods: CESTAT Reliance Brands Luxury Fashion Private Ltd vs The Principal Commissioner of Customs CITATION: 2024 TAXSCAN (CESTAT) 462

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that expenses related to advertising and marketing are expenses are not includable in value of imported goods since the activities were carried out in India for the sale of the goods in India which amounts to post-import.

The two-member bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) has observed that the reasoning of the Principal Commissioner in the order that since the appellant was required and obliged to undertake marketing and advertising in terms of the agreements with the foreign suppliers, the price of the imported goods cannot be said to be the sole consideration within the meaning of Section 14 of the Customs Act.

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