This weekly round-up analytically summarizes the key stories of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) reported at taxscan.in, from November 24, 2024 to November 30, 2024.
The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) remanded the rejection of a Cost Accounting Standards ( CAS-4 ) certificate in a Special Economic Zone ( SEZ ) valuation matter for reconsideration due to the adjudicating authority’s improper verification of the certificate’s details before rejection.
The two-member bench comprising Ramesh Nair (Judicial Member) and Raju (Technical Member) observed the adjudicating authority rejected the CAS-4 certificate due to missing cost components but the appellant was not given a chance to explain. The tribunal also observed that the adjudicating authority failed to verify details of differences in scale, turnover, and product quality between the appellant and Purple Medical Solutions Pvt. Ltd. before applying the comparable price. So, the tribunal set aside the impugned order and remanded the matter for fresh adjudication.
The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) rejected the appellant’s refund claim on storage services stating that refunds for service tax paid on input services are allowed only when the services are used directly for export purposes and beyond the place of removal.
The two-member bench comprising S.K. Mohanty (Judicial Member) And M.M. Parthiban (Technical Member) observed that notification no. 52/2011-S.T. dated 30.12.2011 which mentioned a scheme for the refund of service tax paid on services used exclusively for the export of goods. The tribunal observed that storage and warehousing services were used for raw materials and semi-finished goods and not directly for exported products. The tribunal observed that these services were not utilized beyond the “place of removal” or directly for export purposes as required under the notifications. So, the tribunal found no infirmity in the Commissioner (Appeals)’s order and upheld the Commissioner (Appeals)’s order. The appeal of the appellant was dismissed.
The Bangalore Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) granted the benefit of re-importation under Notification No. 52/2003-Cus. for 6000 kg of “Coarse Ground Chilli” that had been rejected by the foreign buyer. It ruled that the goods could be reprocessed and re-exported under the notification’s provisions.
The two member bench comprising D.M.Misra (Judicial Member) and R.Bhagya Devi(Technical Member)examined the appeal and the records. The main issue was whether the assessee was eligible for the benefit of Notification No. 52/2003-Cus. for the re-imported 6000 kg of “Coarse Ground Chilli.” The assessee had exported 25,000 kg, of which 6000 kg were rejected by the foreign buyer. The goods were re-imported for repair and re-export, with the assessee claiming the benefit under Sr. No. 14 of the notification. The appellate tribunal observed that Sr. No. 14 allowed re-importation for repair or reconditioning within three years, while Sr. No. 15 applied to goods rejected by the buyer within one year. The bench determined that the assessee’s case fell under Sr. No. 14, making the benefit of the notification applicable. The impugned order was set aside, and the appeal was allowed with consequential relief.
In a significant ruling, the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ), Ahmedabad Bench held that the value of land is not includible in the gross amount charged for works contract services, while determining the service tax liability.
The Tribunal, relying on Section 73(i) of the Finance Act, 1994, and the judgment of S.R. Gupta & Sons Vs. CCE [2012], observed that the show cause notice was issued beyond the period of 18 months from the relevant date, rendering the demand time-barred. While dismissing the Revenue’s appeal, as well as allowing the cross-objection filed by Shree Siddhi Infrabuild Pvt Ltd the Bench further elucidated that the value of land is not includible in the taxable value of works contract services, as per Rule 2A(i) of the Service Tax (Determination of Value) Rules, 2006.
The Bangalore Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) upheld the use of the Ujagar Prints method for valuing job-worked goods, rejecting Rule 8 of the Central Excise Valuation Rules, 2000, as inapplicable since the assessee supplied the goods to the principal manufacturer for further production rather than captively consuming them.
The two member bench comprising D.M.Misra(Judicial Member) and R Bhagya Devi(Technical Member) also clarified that the introduction of Rule 10A in 2007 did not change the position where the conditions of Rule 8 or specific sub-rules of Rule 10A were not satisfied. Following these precedents, the tribunal set aside the impugned orders and allowed the appeals, granting consequential relief to the assessee as per law.
The Bangalore Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) allowed Cenvat credit on materials like MS angles and rods used in machinery fabrication before 07.07.2009, but denied credit for the period after the amendment (07.07.2009 to April 2011), as materials for factory structures were excluded from the “input” definition under Rule 2(k) of the Cenvat Credit Rules, 2004.
The two member bench comprising D.M.Misra (Judicial Member) and R Bhagya Devi (Technical Member) concluded that the appellants were entitled to cenvat credit for the period prior to 07.07.2009, and the demand confirmed for that period was incorrect. For the period after 07.07.2009, the credit was not admissible. The matter was remanded to the original authority for recalculation of the demand after 07.07.2009, with no penalty imposed, due to the confusion over credit eligibility. The appeal was accordingly disposed of.
The Bangalore Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that exporters can claim benefits under a suitable notification such as duty exemptions even at a later stage if not initially availed.
The tribunal explained that no DEPB benefits were claimed during the initial export, as evidenced by the shipping bill, and the appellant was eligible for this exemption. The tribunal referenced the Supreme Court’s ruling in Share Medical Care vs. Union of India (2007) which established that an appellant can claim benefits under a notification even at a later stage. The tribunal relied on IE Impex Pvt. Ltd. vs. CC (Port), Kolkata which allowed exemption under Notification No. 94/96 when conditions under Notification No. 158/95 were not strictly met. Considering the facts, the tribunal held that the demand for duties and interest was unjustified. The appellant’s appeal was allowed.
The Ahmedabad bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) held that the excise duty demand of Rs. 59 lakhs was unsustainable due to the limitation bar and proper Cenvat Credit reversal by the appellant, GHCL.
The bench observed that Section 11A(4) of the Central Excise Act and Rule 14 of the Cenvat Credit Rules were not applicable in this case as there was no fraud, suppression, or intent to evade duty. The bench noticed that the department had knowledge about the reversal of Cenvat Credit by the appellant as it was informed on 8.04.2008, but the show cause notice was issued on 29.03.2013, far beyond the limitation period, due to which the notice and order are time-barred. The CESTAT, comprising of Ramesh Nair ( Judicial Member ) and C.L. Mahar ( Technical Member ) set aside the impugned order and allowed the appeal filed by the appellant.
The Bangalore Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) remanded the matter concerning the classification of services related to the supply and installation of computers and peripherals at customer premises back to the Commissioner (Appeals) due to the lack of a reasoned order.
The tribunal observed that the Commissioner (Appeals) did not adequately analyze whether the appellant’s services truly fell under the disputed categories, namely “Manpower Recruitment and Supply Agency Services” and “Business Auxiliary Services” as defined under the Finance Act, 1994. There was no discussion on how the definitions applied to the services rendered. So, the tribunal remanded the matter back to the Commissioner (Appeals) for fresh adjudication and directed him to do a detailed and well-reasoned order. The appellant’s appeal was allowed by way of remand.
In a recent ruling, the Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal held that the excess duty payment could not be treated as a deposit and upheld the decision of the Commissioner ( Appeals ) in rejecting the time-barred refund claim.
The bench was of the view that the excess payment was in the nature of duty and would be required to be dealt with in accordance with the provisions under Section 27 of the Customs Act. The CESTAT comprising A K Jyotishi ( Technical Member ) upheld the order of commissioner appeals and dismissed the appeal filed by the assessee. Thus, the CESTAT upheld the rejection of the time-barred refund claim for double customs duty payment.
The Ahmedabad bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT ) held that fuel oil stored in the engine room bunker of ships imported for ship breaking was eligible for CENVAT credit.
The CESTAT bench, by relying on the above-mentioned judgement of the Gujarat High Court, noted that the fuel oil lying in the engine room is part and parcel of the ship which is imported for breaking, and the fuel oil cannot be given different treatment than the entire ship. The bench further noted that for the purpose of CENVAT, discrimination cannot be made between the entire ship and the bunker lying in the engine room. The CESTAT, comprising Ramesh Nair (Judicial Member) and C.L. Mahar ( Technical Member ) upheld the impugned order and dismissed the appeal filed by the Revenue.
The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that penalties and confiscation become unwarranted once an importer voluntarily accepted the enhancement of goods’ value to comply with the Minimum Import Price (MIP) stipulated by the Directorate General of Foreign Trade ( DGFT ).
The tribunal explained that once the importer voluntarily accepted the enhanced valuation to align with the MIP, the goods were no longer in violation of the import policy. The tribunal observed that treating the goods as restricted and imposing penalties was inconsistent after compliance with the MIP requirement. So, the tribunal set aside the confiscation & penalties and upheld the duty demand on the enhanced value based on the Minimum Import Price fixed. The appellant’s appeal was partly allowed with consequential relief.
The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that the Coating Machine “Innopet Plasmax System 20Q” should be classified under the specific tariff heading for Aerating Beverages rather than under the general residual heading as mandated by GIR 3
The tribunal dismissed the department’s claim that the machine should fall under the residuary category of CTI 8479 8999 as such classifications are not warranted when a more specific heading applies. The tribunal pointed out that the application of GIR 1 and GIR 3 explained that classification should prioritize specific tariff headings over general or residuary categories. So the tribunal ruled that “Innopet Plasmax System 20Q” was classifiable under CTI 8422 3000. The tribunal quashed the penalties, differential duty demand, and confiscation ordered by the Commissioner of Customs.
The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) set aside the service tax demand ruling that the License Agreement granting exclusive rights and control to the transferee constitutes a “deemed sale” under Article 366(29A)(d) of the Constitution of India.
The tribunal confirmed that the License Agreement met the criteria for a “deemed sale” citing exclusive transfer of the right to use the brewery license and free from any encumbrances or interference (Exclusive control). The tribunal criticized the commissioner for erroneously conflating the agreements ignoring the distinct nature of the transactions. So, the tribunal set aside the impugned order citing no service tax liability on the license endorsement fees. The appeal was allowed with consequential relief to the appellant.
The Chennai Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that Use of r-DNA Technology in Manufacturing of Diabetes Insulin Amounts to A Mono Component Insulin and allowed the customs duty exemption.
The tribunal while dismissing the appeal of the department upheld the order of the authority stating that the classification of the impugned goods as ‘mono-component insulin’ is a content based classification and certainly not a source based classification, as in the case of porcine and bovine insulin and hence, insulin manufactured using r-DNA technology would qualify as a mono component insulin, and hence, was entitled to the benefit of exemption under the Notification/s in question. S. Subramanian appeared for the appellant and G. Shivadass appeared for the respondent.
The Banglore Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that service tax not applicable on rendering customer support services to parent companies as it does not qualify as ‘intermediary service’.
The bench of D.M. Misra ( Judicial Member ) and R Bhagya Devi ( Technical Member ) has observed that “The basic requirement to be an intermediary is that there should be at least three parties; an intermediary is someone who arranges or facilitates the supply of goods or services or securities between two or more persons. In other words, there is main supply and the role of the intermediary is to arrange or facilitate another supply between two or more other persons and, does not himself provide the main supply.” The CESTAT Upheld the impugned order and rejected the Revenue’s appeal being devoid of merit.
In a significant case, the Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) held that appeal under section 129A (3) of the Customs Act can be filed before CESTAT within three months of the communication of the order.
A single bench of Shri M. Ajit Kumar, Member (Technical) set aside the impugned order and remanded the matter to the file of the First Appellate Authority to be decided afresh after giving the appellant an opportunity of being heard, as per law. Further while allowing the appeal, it was directed that “The appellant should cooperate in the matter and appear for the hearing on the date fixed. He should also indicate the correct address for service of notice to the said authority, within fifteen days of receipt of this order.”
In a recent case, the New Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal, held that in the absence of recourse to section 28 of Customs Act, 1962, ingredients for invoking section 114A against the importer do not exist. It was viewed that here being no misdeclaration of value, confiscation under section 111 of Customs Act, 1962 does not survive and with it the penalties under section 112 of Customs Act, 1962 lack sustenance.
A two member bench of Justice Dilip Gupta, President and C J Mathew, Member (Technical) observed that the declared price is, by default, not only the transaction value but also, unless established to the contrary, the price for delivery at the time and place of importation. With the law thus enacted, the onus for establishing the contrary rests with the adjudicating authority. On the evidence available and reliably acceptable, that onus has not been discharged. The declared price remains unimpeached to negate the enhancement and recovery of differential duty. It was held that in the absence of recourse to section 28 of Customs Act, 1962, ingredients for invoking section 114A against the importer do not exist. There being no misdeclaration of value, confiscation under section 111 of Customs Act, 1962 does not survive and with it the penalties under section 112 of Customs Act, 1962 lack sustenance.The CESTAT set aside the impugned order and allowed the appeals.
The Ahmedabad Bench of the Customs, Excise, and Services Tax Appellate Tribunal ( CESTAT ) ruled that “Mandap Keeper Services” do not qualify as “support services” under Section 65B(49) of the Finance Act, 1994, and are non-taxable as they fall under the “negative list” of services post-01.07.2012.
The tribunal reviewed the definition of “support services” and concluded that “Mandap Keeper Services” do not fit the criteria outlined in Section 65B(49). The tribunal explained that the appellant’s services post 01.07.2012 were covered under the “negative list” and hence non-taxable. The tribunal ruled that the appellant as a statutory body could not be accused of intent to suppress or evade taxes making the extended limitation period inapplicable for pre 01.07.2012. The tribunal explained that revenue’s classification of the appellant’s services as “support services” was without merit. The tribunal modified the orders of the lower authorities and set aside the tax demands. The appeal of the appellant was allowed.
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