CESTAT Weekly Round-Up

This weekly round-up analytically summarizes the key stories related to the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) reported at Taxscan.in during the previous week 20th October 2024 to 27th October 2024.

CHA Not Obliged to Verify Genuineness Of IE Code For Each Import/Export Transaction: CESTAT M/s. Akansha Logistics vs Commissioner of Customs Airport & General CITATION: 2024 TAXSCAN (CESTAT) 874

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that CHA is not obliged to verify genuineness of Import Export ( IE ) Code for each import/export transaction. The bench held that there was no need for any proceedings under CBLR to have been initiated against the appellant and set aside the order confirming violation.

The tribunal noted that there is nothing or record to show that the appellant/CHA had prior knowledge about the exporters mentioned in the IE code to be non-existing persons.The two member bench of Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member) has observed that irrespective the exporters are found non-existent but since the IE code is issued after the background check of the importer/exporter had been undertaken by the customs authorities there can be no reason to doubt the identity of the importer or exporter. While allowing the appeal, the CESTAT held that there was no need for any proceedings under CBLR to have been initiated against the appellant and set aside the order confirming violation. It was found that the department could not produce any evidence proving violation of 11(d) and 11(n) of CBLR, 2013.

LCD Panels Imported as Liquid Crystal Device Panels, Attracts Nil Customs Duty: CESTAT Rules in Favour of Micromax Informatics M/s Micromax Informatics Limited VS Commissioner of Customs CITATION: 2024 TAXSCAN (CESTAT) 875

In the case of Micromax Informatics, the Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that liquid crystal display ( LCD ) Panels Imported as Liquid Crystal Device Panels and attracts nill Customs Duty. Further, allowed the appeal to raise alternative classification of LED/LCD TV Panels and Accessories.

The two member bench of Justice Dilip Gupta ( President ) and C.J. Mathew ( Technical Member ) observed that the appellant had self-assessed the Bills of Entry under CTI 8529 90 90, but at the appellate stage they are seeking classification under CTI 9013 80 00, which would amount to re-assessment of the self-assessment done. This has been done without getting the original assessment order modified or getting the Bills of Entry amended under section 149 of the Customs Act or modified under section 154 of the Customs Act. While allowing the appeal, the Tribunal held that the appellant is permitted to raise the alternative classification of the goods under CTI 9013 80 10 by adding a ground.

No Provision under Central Excise Act, 1944 & Rules to enable Assessee to Pay Central Excise Duty under protest: CESTAT rejects Refund Claim M/s Yadu Sugar Ltd vs Commissioner of Central Goods & Service Tax CITATION: 2024 TAXSCAN (CESTAT) 876

The Allahabad Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that there is no provision under the Central Excise Act, 1944 & Rules made thereunder for the relevant period to enable them to pay Central Excise duty under protest. It had rejected the refund claims barred by limitation under the Cenvat Credit Scheme.

The single bench of Sanjiv Srivastava (Technical Member) has observed that the amounts were paid by the appellant/assessee, they deposited these amounts for the closure of the proceedings that would have been initiated against them for recovery of these amounts in response to the audit objection raised. Taking note of such deposits these proceedings were initiated against the appellants.The claim that the amounts were paid in protest also do not have any merits and needs to be rejected.The tribunal has held that the petitioner not only paid the duty unquestioningly and without any protest, he did not even challenge it by way of an appeal or otherwise, and has preferred this claim more than four years after the payment of duty. The tribunal dismissed the appeal. Aalok Arora appeared for the Appellant and Santosh Kumar appeared for the respondent

Relief to Coca Cola India, Service Tax Not Applicable On Reimbursable Expenses Towards Advisory Services to Group Companies: CESTAT Coca Cola India Inc vs Commissioner of Service Tax CITATION: 2024 TAXSCAN (CESTAT) 877

In a ruling in favor of Coca Cola India, the Chandigarh Bench of Customs, Excise, Service Tax Appellate Tribunal ( CESTAT ) has held that no service tax on reimbursable expenses towards advisory services to group companies is applicable.

The tribunal  held that as long as the expenses reimbursed are not shown to be a consideration towards the provisions of service, the same cannot be included for the purposes of arriving at the taxable value.  It was noted that the department has not brought out anything on record to show that the said expenses are indeed a consideration but were shown artificially as expenses.

No Evidence of TV Assembly at Warehouse in alleged Clandestine Manufacture and Duty Evasion: CESTAT nullifies Excise Duty Demand SUNDER INTERNATIONAL vs COMMISSIONER OF CGST & CENTRAL EXCISE CITATION: 2024 TAXSCAN (CESTAT) 878

The Mumbai Bench Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) nullified an excise duty demand citing a lack of concrete evidence for the alleged assembly of television sets at their Bhiwandi warehouse and duty evasion.

The two-member bench comprising C J Mathew (Technical Member) and Ajay Sharma ( Judicial Member) perused all the records and highlighted that in cases of clandestine manufacture, the department must present solid evidence such as raw material acquisition, sales, transportation, or other corroborative proof. The tribunal found that the statements of employees were questioned due to the language barrier and the lack of voluntary nature. Cross-examination showed inconsistencies, casting doubt on their credibility.Therefore, the tribunal concluded that the department failed to establish clandestine manufacture or removal beyond a reasonable doubt. Thus, the show cause notice was not sustainable. The appellant’s appeal was allowed with consequential relief

CESTAT Reduces Redemption Fine and Penalty 10% & 5% on Unlicensed Import of Used Clothing Citing Sufficiency in Meeting Justice Commissioner of Customs (Port) vs M/s Ess Ess Overseas CITATION: 2024 TAXSCAN (CESTAT) 879

The Kolkata Bench Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) reduced the redemption fine and penalty to 10% and 5%, respectively, for the unlicensed import of used clothing. The Tribunal deemed these reduced penalties sufficient to uphold justice.

The two-member bench comprising Ashok Jindal ( Judicial Member ) and Mr.K.Anpazhakan ( Technical Member ) observed arguments from both the revenue and the importer. The Tribunal referenced a similar case in Venus Traders vs. Commissioner of Customs (Import), Mumbai, which held the confiscation of goods due to the lack of an import license but reduced the redemption fine to 10% and the penalty to 5% of the assessed value, citing procedural irregularities in the customs valuation process. Therefore, the tribunal concluded that the reduced fines were reasonable and upheld the Commissioner of Customs (Appeals)’ decision to set the redemption fine at 10% and the penalty at 5%.

Customs Dept. claimed Imported Cashews as “Raw”: CESTAT Remands Classification Dispute Citing Ambiguous Test Report Olam Agro India Pvt Ltd vs Commissioner of Customs Guntur CITATION: 2024 TAXSCAN (CESTAT) 880

The Hyderabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) remanded a classification dispute, citing ambiguities in the test report used by the Customs Department to classify imported cashew kernels as “Raw”.

The two-member bench comprising R. Muralidhar (Judicial Member) and A.K. Jyotishi (Technical Member) observed that the core issue was whether the goods should fall under Chapter 8 or Chapter 20 and the absence of clear statutory definitions distinguishing between “raw” and “roasted” cashews. The tribunal found that the CEPCI Laboratory’s test report used ambiguous language, with terms like “normally” and “may” to describe critical attributes such as moisture content and the presence of Cardanol. This lack of precision made the findings unreliable as a basis for definitive classification.

No New Evidence Justifies Invoking Extended Limitation for alleged Short Service Tax Paid: CESTAT quashes Order Skyline Web Solutions Private Limited vs Commissioner of C.G.S.T. and Central Excise CITATION: 2024 TAXSCAN (CESTAT) 881

The Kolkata Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) quashed a Service Tax demand citing that there was no new evidence justifying the use of an extended limitation period for the alleged short payment of Service Tax.

The two-member bench comprising Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) noted that the appellant had voluntarily provided all the data that the tax demands were based on, indicating no intent to evade taxes.The tribunal observed that the Show Cause Notice issued beyond the permissible period was considered time-barred. The tribunal found that the Department had not brought any evidence on record to establish the intention to evade payment of tax. The Tribunal cited a previous ruling in Maa Kalika Transport Pvt. Ltd. where a similar situation led to a decision favoring the taxpayer, stating that unclear classifications within the department do not warrant extended periods. Therefore, the tribunal quashed the Service Tax demand notice and the appeal of the appellant was allowed.

CENVAT Credit Cannot Be Denied When Duty is accepted by Department for Manufactured Product: CESTAT M/s. Mangal Singh Bros. Pvt. Ltd vs Commissioner of CGST & Central Excise CITATION: 2024 TAXSCAN (CESTAT) 882

The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that if the Department accepted duty on a manufactured product, CENVAT Credit cannot be denied.

The tribunal noted that the appellant had paid excise duties exceeding the disputed CENVAT Credit. Referencing the Bombay High Court in the case of Ajinkya Enterprise, the tribunal held that once excise duty is accepted, CENVAT Credit should not be denied. Therefore, the tribunal ordered the Department to refund the reversed credit with interest, to be paid within two months. The appellant’s appeal was allowed.

Central Sales Tax not applicable on Mere Stock Transferring of Beer from Manufacturing Units to depots situated in other State: CESTAT rules Carlsberg India Pvt. Ltd M/s Carlsberg India Pvt. Ltd. vs The State of Rajasthan CITATION: 2024 TAXSCAN (CESTAT) 883

In a ruling in favor of Carlsberg India Pvt. Ltd, the Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that Central Sales Tax is not applicable on mere stock transferring of beer from manufacturing units to depots situated in other States.

A two member bench of Justice Dilip Gupta, President and P.V. Subba Rao, Member (Technical) held that the movement of goods cannot also be considered incidental to the Master Agreement. Further held that reliance on clause 2 of the Master Agreement to justify that the movement of goods occurred incidental to the Master Agreement, is not correct. The CESTAT set aside the order and allowed all the fourteen appeals filed by Carlsberg, United Breweries and Mount Shivalik.

CESTAT Confirms ACC Limited Eligibility for 2% Concession on RMC as CENVAT Credit Linked to Cement Unit, Not RMC ACC Limited vs Principal Commissioner of Central GST & Central Excise CITATION: 2024 TAXSCAN (CESTAT) 884

The Mumbai Bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) confirmed that ACC Limited is eligible for a 2% concessional duty rate on Ready-Mix Concrete ( RMC ), citing that the CENVAT credit in question was related to the cement manufacturing unit and not the RMC division.

The two-member bench comprising Mohanty ( JudicialMember ) and M.M. Parthiban ( Technical Member ) reviewed the technical know-how agreement ACC had with Holcim Technologies. The tribunal found that the technical services were specifically related to cement production, with no clear link to RMC, as evidenced by the agreement’s wording and ACC’s separate accounting practices for Cement and RMC. The tribunal noted that the appellant had reversed any incorrect credits before the official notice, aligning with legal precedents that permit such corrective actions. Therefore, the tribunal held that the appellant complied with the conditions for the concessional duty and dismissed the Department’s demand for ₹104.01 crore in additional duty, penalties, and interest.

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