CESTAT Weekly Round Up

This weekly round-up analytically summarizes the key stories of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) reported at taxscan.in, from July 20, 2024 to August 2, 2024

Not Enough Evidence to Prove Illegal Procurement of Plastic Scrap from Nepal: CESTAT quashes Confiscation Order, Redemption Fine and reduces Penalty Shri Bindeshwari Poddar vs Commissioner of Customs (Preventive) CITATION:   2024 TAXSCAN (CESTAT) 643

In a recent ruling, the Kolkata bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) quashed the confiscation order and redemption fine, while reducing the penalty, stating that there was not enough evidence to prove the illegal procurement of plastic scrap from Nepal

Further the bench held that “I find that in respect of plastic scrap, there is no case made out against the assessee. However, in case of plastic granules, the assessee though initially has not claimed the ownership, but has come forward to redeem the same on payment of redemption fine and the relevant payment of the relevant Customs duty. Based on these facts, the penalty of Rs.14, 854/- is reduced to Rs.5, 000/- (Rupees Five Thousand only)”.  The Assessee has made a Security Deposit of Rs.64, 854/-. This amount should be utilized to appropriate the redemption fine of Rs.20,000/- in respect of granules and the penalty imposed on  Bindeshwari Poddar and against the balance Customs duty and interest to be paid by the assessee. Accordingly, The appeal was disposed of.

CESTAT allows Cenvat Credit to Cement Manufacturers on Welding Electrodes Work Nuvoco Vistas Corporation Limited vs Commissioner of Central Excise and CGST CITATION:   2024 TAXSCAN (CESTAT) 644

While hearing a recent appeal, the Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) allowed the cenvat credit to cement manufacturers on welding electrodes as inputs used in manufacturing final products, namely cement and clinker.

The single bench of Binu Tamta (Judicial Member) has observed that as per sub-rule 4 of Rule 57-A of the Central Excise Rules, 1944, the credit of specified duty is allowed in respect of two categories of inputs, namely (i) inputs used in the manufacture of final products and (ii) inputs used in or in relation to the manufacture of final products, whether directly or indirectly, and whether contained in the final product or not. While allowing the appeal, the Tribunal held that the appellant is entitled to cenvat credit on welding electrodes as inputs used in the manufacture of final products – cement and clinker. Further set aside the order. Saurabh Suman Sinha appeared for the appellant and Rohit Issar appeared for the respondent.

CESTAT Allows Customs Duty Exemption on Samsung India on Imported IC-Codecs M/s. Samsung India Electronics Pvt. Ltd vs Commissioner of Customs CITATION:   2024 TAXSCAN (CESTAT) 645

In a ruling on the case of Samsung India Ltd, the Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) allowed customs duty exemption on imported IC-Codecs.

The two-member bench of Justice Dilip Gupta (President) and P. V. Subba Rao (Technical Member) has observed that HSN Explanatory Notes to CTH 8542 provide that monolithic ICs may be in the form of un-diced wafers. The IC-Codecs, as imported by the appellant, are in the form of rolls, i.e., un-diced wafers. It, therefore, clearly follows that the goods imported by the appellant are IC-Codecs and are classifiable under Customs Heading 8542 and more specifically under CTI 8542 39 90. While allowing the appeal, the CESTAT held that the department has not provided any technical literature or material in the impugned order to show that the imported ICs, at the time of import, have any capability of transmission or reception of digital information.

CESTAT sets aside Service Tax Demand against CIPLA on Manufacturing & Exporting of Pharmaceutical Products COMMISSIONER, CENTRAL EXCISE AND SERVICE TAX vs M/S CIPLA LIMITED CITATION:   2024 TAXSCAN (CESTAT) 646

The Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) sets aside service tax demand against CIPLA on manufacturing & exporting of pharmaceutical products. It was found that the respondent-assessee is a holder of a letter of approval issued by the Development Commissioner for the manufacture of pharmaceutical products within the Special Economic Zone, Pithampur, Indore.

The two-member bench of Binu Tamta (Judicial Member) and Hemambika R. Priya (Technical Member) has observed the amount claimed by way of refund claims has been paid under the reverse charge mechanism, for which they have furnished the certificate from the Chartered Accountant, bank statement, party-wise statements, and details of payment made to the service, provided that the service tax has been paid by them. The CESTAT held that services rendered by the appellant are fully exempted from service tax in terms of the provisions of the SEZ Act and the provisions thereof cannot be imposed on the respondent to deny the refund.

Relief to Oriental Insurance: CESTAT Quashes Service Tax Demand on Auxiliary Service & Short Account of Insurance Premium Income M/s Oriental Insurance Company Limited VS Principal Commissioner of Central Excise,Service Tax & CGST CITATION:   2024 TAXSCAN (CESTAT) 647

In a ruling related to Oriental Insurance Company, the Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) has quashed the service tax demand on insurance auxiliary services and short accounts of insurance premium income. It was observed that the CENVAT credit of the group health insurance policy for the employees cannot be denied to the assessee.

The two member bench of Justice Dilip Gupta (President) and Hemambika R. Priya (Technical Member) has held that the appellant had correctly discharged service tax on “business support services” and, therefore, once the service tax stands paid on the transaction, it is not open to the department to seek its recovery again. The appellant states that they discharge service tax under “business support services” as the bank had provided space to the appellant along with ancillary facilities such as chairs and desks, and these infrastructural support services provided by the bank are covered under “business support services.” The service is not liable to tax under the reverse charge mechanism.

CESTAT Upholds Penalty For Attempt To Export SCOMET Item Without Authorization Flyover Cargo Pvt. Ltd vs COMMISSIONER, CUSTOMS-NEW DELHI (AIRPORT AND GENERAL) CITATION:   2024 TAXSCAN (CESTAT) 648

In the recent case, the Delhi bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ), upheld a penalty of Rs. 50,000 imposed on the appellant for attempting to export Triethanolamine without proper authorization and set aside the revocation of the appellant’s license and the forfeiture of the security deposit.

A coram of Justice Dilip Gupta ( President ) and P. V. Subba Roa ( Technical Member ) on considering the facts and circumstances of the case contended that the penalty for violation be upheld and to overturn the license revocation and security deposit forfeiture.

Vague Allegations against manufacturing unit without disputing Credit availed by ISD: CESTAT quashes Denial of Central VAT Credit Bharat Heavy Electricals Ltd vs The Commissioner of CGST & Central Excise CITATION:   2024 TAXSCAN (CESTAT) 649

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has quashed the denial of Central VAT Credit, alleging ineligibility at the manufacturer’s end without disputing credit availed by the Input Service Distributor ( ISD ) duly registered with the Central Excise Department.

It was observed that, “On perusal of the impugned order, other than alleging that these services are not used directly or indirectly or in relation to manufacture of final products, there is no specific finding to deny the credit. As correctly argued by the Ld. Counsel for appellant, the Cost Centres which are registered as input service distributors have to file periodical returns declaring the credit availed by them. These ISDs are subject to verification and audit by the jurisdictional authorities. There has been no dispute raised against these Cost Centres ( ISDs ) alleging that they have availed ineligible credit.” The tribunal bench of Vasa Seshagiri Rao, Member ( Technical ) and Sulekha Beevi C S, Member ( Judicial ) thus set aside the impugned order of denial of Cenvat Credit availed using invoices raised by the ISD –  Cost Centres.

SBI Cards & Payment Service Ltd not entitled to Refund of Krishi Kalyan Cess: CESTAT SBI Cards And Payment Service Ltd vs Commissioner of CGST & CE CITATION:   2024 TAXSCAN (CESTAT) 650

The Chandigarh Bench of Customs, Excise, and Service Appellate Tribunal ( CESTAT ) has observed that SBI Cards And Payment Service Ltd  is not entitled to refund of Krishi Kalyan Cess ( KKC ).

The department contended that the refund has to be processed as per the existing law, and the existing law in this case was Chapter V of the Finance Act. As per the Larger Bench, refund of only that element of Cenvat is admissible to be refunded in cash as per the provisions of Section 142 of the CGST Act, 2017 and which was permissible to be refunded under the existing law. There is no provision in the existing law to refund the Krishi Kalyan Cess in cash. The two member bench of S. S. Garg (Judicial Member) held that the assessee is eligible for a cash refund of cesses lying as Cenvat credit balance as of 30.06.2017 in their accounts. While dismissing the appeals of the assessee, the Tribunal held that the appellants are not entitled to the refund of the KKC.

CESTAT declares Cross-Model Discount Utilisation Inadmissible, Rules in Favour of Toyota Ltd due to Time-Barred Excise Demand M/s. Toyota Kirloskar Motor Private Limited vs The Commissioner of Central Tax CITATION:   2024 TAXSCAN (CESTAT) 651

The CESTAT ( Customs Excise and Service Tax Appellate Tribunal ) decided that using discounts across different car models is not allowed, based on Tata Motors Ltd ruling. They sided with the revenue on this issue but granted the appeal because the excise demand from the department was time barred.

The two member bench of D M Mishra and R. Bhagya Devi noted that the key issue was whether discounts for small/mid-segment cars could be applied to luxury models with higher duty rates or whether cross model utilisation of incentives/discounts are admissible

Activity of “Take Away” or “Home Delivery” is Sale of Food, No Service Tax: CESTAT grants Relief to Bikanervala Foods Bikanervala Foods Pvt. Ltd. vs Commissioner of CGST CITATION:   2024 TAXSCAN (CESTAT) 652

The Delhi Bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has ruled in favor of Bikanervala Foods Pvt. Ltd., freeing the company from service tax on sales via “Take-Away” and “Home Delivery.”

The CESTAT bench of Binu Tamta, Member (Judicial) and Hemambika R.Priya, Member (Technical) thus held that, “Since the facts of the present case are absolutely identical and give rise to the issue of taxability of sale of food items through “Take Away” or “Home Delivery”, the activity is clearly of sale of food and does not involve any service element and, therefore, following the ratio of the judgements referred above, the activity of sale of food items by “Take Away” or “Home Delivery” by the appellant is not liable to service tax.” Accordingly, the impugned order was set aside and the appeal was allowed.

Relief to Make My Trip: CESTAT quashes Service Tax Demand, says MMT not a Short Term Accommodation Provider but a Tour Operator Make My Trip (India) Private Limited vs Additional Director General Directorate General of GST Intelligence CITATION:   2024 TAXSCAN (CESTAT) 653

The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) in New Delhi has ruled in favour of Make My Trip (India) Private Limited, quashing substantial service tax demands and penalties imposed on the company.

Justice Dilip Gupta, President and Hemambika R Priya, Member (Technical) held that Make My Trip qualified as a tour operator and, therefore, on the service of booking of accommodation of service, Make My Trip was entitled for the benefit of abatement, citing the earlier decision.

Race Track is “Road” but without Access to Public: CESTAT denies Service Tax Exemption on Construction of Race Track M/s. Paramount Infraventures Pvt. Ltd. vs Commissioner of Service Tax – Delhi II CITATION:   2024 TAXSCAN (CESTAT) 654

The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has ruled that the construction of a Formula 1 race track does not qualify for service tax exemption under the category of public roads. The decision upholds the service tax liability of Rs. 2.24 crore for Paramount Infraventures Pvt. Ltd.

The two-member bench comprising Dr. Rachna Gupta ( Judicial Member ) and Mrs. Hemambika R. Priya ( Technical Member ) noted that the race track, while technically a road, does not grant the public a right of access, which is a critical element for qualifying as a public road under the exemption notification.

No Service Tax on Construction for Educational Institutions: CESTAT quashes Demand Order Sri Mookambigai Constructions India Pvt. Ltd. vs Commissioner of GST & C. Ex, Coimbatore CITATION:   2024 TAXSCAN (CESTAT) 655

The Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has quashed a demand order issued by the revenue department for service tax on construction services provided to educational institutions.

The bench, comprising Sulekha Beevi.C.S ( Judicial Member ) and Vasa Seshagiri Rao ( Technical Member ), held in favour of the appellant. The tribunal referred to the Board’s Circular No.80/10/2004-ST, which clarified that such constructions are not taxable. In the said circular, the board has clarified that when constructions for the use of organizations or institutions established solely for educational, religious, or charitable purposes are provided, they cannot be considered as construction services of commercial nature.

The tribunal also relied on several previous decisions of the CESTAT and High Courts, which held that the primary use of the building determines its taxability. The tribunal concluded that the demand for service tax of the department on construction services for educational institutions was unsustainable and allowed the appeal filed by the appellant.

Pre-July 2012 Works Contract Services for Non-Commercial Use Liable to Service Tax: CESTAT ETA ENGINEERING PRIVATE LIMITED vs COMMISSIONER OF CENTRAL EXCISE CITATION:   2024 TAXSCAN (CESTAT) 656

The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ), Principal Bench, New Delhi, has ruled that works contract services provided before July 1, 2012, are liable to service tax, when not used for commercial or industrial purposes. This decision was made in the service tax appeal filed by ETA Engineering Private Limited against the Commissioner of Central Excise-Delhi-I, bringing clarity to the classification and taxability of such services under the Finance Act, 1994.

The two-member bench comprising Mr. Raju (Technical Member) and Dr. Rachna Gupta (Judicial Member) confirmed that the services provided by ETA Engineering, which included designing, supplying, erection, testing, and commissioning of the entire HVAC system, fell under the definition of “works contract service” as per Section 65(105)(zzzza) of the Finance Act, 1994. This classification encompasses contracts involving the transfer of property in goods, which are subject to VAT, and services related to installation and commissioning of plant, machinery, or equipment.

Construction Activities not proven as Non-Commercial; CESTAT dismisses Service Tax Refund Appeal M/s. ASK Engineers Company vs Commissioner of Central Excise CITATION:   2024 TAXSCAN (CESTAT) 657

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has dismissed the service tax refund appeal filed by M/s. ASK Engineers Company. The decision stressed the requirements for proving non-commercial use of construction projects to qualify for service tax exemptions.

The two-member bench of the CESTAT comprising Mr. Justice Dilip Gupta (President) and Ms. Hemambika R. Priya (Technical Member) noted that the appellant could not present evidence to prove the non-commercial nature of the construction activities. The bench stated that for an exemption under the notification, the appellant must substantiate the non-commercial use of the projects. The appellant failed to provide convincing evidence to this effect. Consequently, the Tribunal found no reason to interfere with the order of the Commissioner (Appeals), thereby dismissing the appeal. This ruling highlights the importance of concrete evidence when claiming tax exemptions based on the non-commercial nature of activities. It indicated that mere assertions without substantial proof will not suffice in tax refund claims. In result, the appeal filed by M/s. ASK Engineers Company was dismissed on the finding that the construction projects were not proven to be non-commercial.

CESTAT upholds Composition Scheme Benefit for Construction Company, overturns Service Tax Demand Sri Mookambigai Constructions India Pvt. Ltd vs Commissioner of GST & C. Ex CITATION:   2024 TAXSCAN (CESTAT) 658

The Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has upheld the right of a construction company to avail the composition scheme under service tax even without filing a mandatory declaration. The tribunal quashed a demand order issued by the revenue department seeking service tax on the entire value of a Works Contract.

The tribunal, comprising Sulekha Beevi.C.S (Judicial Member) and Vasa Seshagiri Rao (Technical Member), relied on various decisions, including the jurisdictional High Court’s ruling in GE T & D India Ltd., which held that the requirement to file a declaration was only procedural in nature and the benefit of the composition scheme could not be denied on such grounds. The tribunal set aside the demand order and concluded that the demand for service tax on the entire value of the Works Contract was unsustainable.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates