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 from October 29 to November 4, 2022.

Hari Prabhu vs Commissioner of Customs -2022 TAXSCAN (CESTAT) 583

The Chennai bench of CESTAT set aside the Consification of goods and penalty imposed under Customs Act as it was solely based on a statement adduced. The Tribunal observed that there is nothing on record other than Shri Chandrasekhar informing Shri R. Suresh that the above job was given to him by the appellant and in his voluntary statement, said Chandrasekhar has denied having known this appellant. The bench held that the penalty levied on the appellant is arbitrary and set aside the impugned order.

M/s. Caravel Logistics Private Limited vs The Commissioner of Customs - 2022 TAXSCAN (CESTAT) 579

The pre-shipment inspection certificate is mandatory at the time of clearance of the goods by an importer, any other person including Steamer Agent has no locus of responsibility, the Chennai bench of CESTAT set aside the penalty under section 112(a) of the Customs Act, 1962. A Single member bench of Mr P Dinesha, member (judicial) has held that “the said Memorandum cannot be made applicable just because the Revenue woke up after more than 8 years to issue the Show Cause Notice.” The Tribunal set aside the impugned order and allowed the appeal. Shri L. Gokul Raj, Advocate appeared for the Appellant and Shri M. Ambe, Authorized Representative appeared for the Respondent.

M/s Clariant Chemicals India Ltd vs Commissioner of Central Excise & Service Tax - 2022 TAXSCAN (CESTAT) 585

The CESTAT of Mumbai, has recently, in an appeal filed before it, held that non-mentioning of CVD and SAD in ER-1 is not a ground to deny cenvat credit. allowing the assessee’s appeal and subsequently setting aside the impugned order, ruled that “Appellant is also otherwise eligible to go for availing of transitional credit through filing required forms in Tran-I as per the order passed by the Hon’ble Supreme Court on 22nd July, 2022, but in view of the observation of this Tribunal read with Section 142(6)(a) of the CGST Act that such CENVAT Credit amount shall be paid to the Appellant in cash, it can’t avail dual benefits once order of this Tribunal is duly complied by the Respondent Department by the closing date of the window”.

M/s. Nurture Marketing Pvt. Ltd. vs Commr. of CGST & CX, Kolkata North Commissionerate - 2022 TAXSCAN (CESTAT) 584

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata, has recently in an appeal filed before it, held that when service tax with interest is already paid, no further proceeding can be initiated or penalty can be imposed upon the assesse. allowing the assessee’s appeal it was concluded that “I find force in the submissions of the Ld. Advocate for the appellant and therefore hold that the proceedings should have been concluded before issuance of the show cause notice. I therefore set aside the penalties imposed and do not interfere with the Service Tax as confirmed in the Adjudication Order. Accordingly, the impugned order is set aside”.

Aurum Pharmachem Private Limited vs Commissioner of CGST & Excise - 2022 TAXSCAN (CESTAT) 576

The CESTAT of Kolkata Bench held that Disallowance of Credit cannot be Done by Invoking Rule 6(3) of the Cenvat Credit Rules, 2004 Mechanically. A Single Bench consisting of P K Choudhary, Judicial Member observed that “I find that the Calcutta High Court in the case of Commissioner of Service Tax I, Kolkata Vs. M/s Surya Vistacom Private Limited, it was held that if according to the adjudicating authority, the assessee did not abide by the provisions of Rule 6(3) of the Cenvat Credit Rules, 2004, it was open to such adjudicating authority to reject the assessee’s claim as regards the disputed Cenvat Credit and it could not mechanically invoke the 6% Rule on the assessee.”

M/s United Custom House Agency Pvt.Ltd vs Principal Commissioner of Customs - 2022 TAXSCAN (CESTAT) 415

The CESTAT of Kolkata directed suspension to be lifted without prejudice to final decision after inquiry on suspension of license on failure to follow Custom Brokers License Regulation 2018. The Bench consisting of P K Choudhary, Judicial Member and Raju, Technical Member held that” We find that significant amount of time is lapse and whatever inquiry was necessary would have been completed now. In this background and looking at the gravity of offence we do not find any justification and continuing the suspension any more. In view of above we direct that the suspension may be lifted with immediate effect. Our findings and observations are purely interim and should not affect the final decision taken after the inquiry.”

Ronix Polymer Private Limited vs Commissioner of CGST & CX - 2022 TAXSCAN (CESTAT) 587

The Kolkata Bench of CESTAT has held that demand duty is not sustainable when the reason was not mentioned in the show cause notice. A Single member bench of Shri P K Choudhary, member(judicial) observed that invocation of an extended period of limitation cannot be sustained when no such allegation was ever made in the SCN. The Tribunal set aside the duty demand and allowed the appeal with consequential relief as per law.

M/s Simbhaoli Sugars Limited vs Addl. Directorate General of GST Intelligence - 2022 TAXSCAN (CESTAT) 586

While considering a bunch of appeals, the Delhi bench of CESTAT has held that the Interpretation issue on the removal of capital goods not amounts to suppression of fact, not liable for penalty u/s 15(2) r/w S.11AC of the Central Excise Act,1944. In light of the ruling of the Madras High Court in the case of Dalmia Cement (supra), a Coram of Mr Anil Choudhary, member (judicial) and Mr Raju, member (technical)held that “there is no removal of capital assets/power plant. As There has been no removal, the provision of Rule 3(5A) of Cenvat Credit Rules is not attracted.” The impugned order was set aside by the Tribunal and allowed the appeals.

Commissioner of GST & Central Excise vs M/s. India Pistons Ltd. - 2022 TAXSCAN (CESTAT) 588

The CESTAT held that Credit is admissible even when windmill is not located inside factory premises. A Single Bench consisting of Sulekha Beevi C S, Judicial Member observed that “The issue is whether the credit availed on the service tax paid on lease rental charges paid to the Ashok Leyland Wind Energy Ltd. for the power that has been drawn by the respondent at Chennai is admissible. The High Court in the case of Ashok Leyland held that the credit is admissible and that it is not necessary that the windmill has to be located inside the factory premises. After appreciating the facts and following the decision of the High Court, I am of the view that the impugned order does not call for any interference.”

Shri Rajesh Kumar vs Commissioner of Customs - 2022 TAXSCAN (CESTAT) 589

A Single Bench of CESTAT deleted penalty of Rupees 40 lakhs as there was no violation of Section 111 of the Customs Act. The Bench consisting of Anil Choudhary, Judicial Member held that “The appellant has admitted that he had sold smuggled gold having foreign marking earlier in cash without any bill/ invoice. Further, recovery of Indian currency having face value of Rs. 6.44 crore corroborates the admission of dealing in smuggled gold. Further, observed that the appellant was aware that he was dealing in smuggled gold and accordingly upheld the order of penalty dismissing the appeal. provisions of Section 111 as alleged.”

Vishal Metallics Private Limited vs Commissioner of Central Excise & Service Tax - 2022 TAXSCAN (CESTAT) 590

The CESTAT granted credit to steel items used for setting up Sponge Iron Plant. A Single Bench consisting of P K Choudhary, Judicial Member held that “In the facts of the present case, it is not in dispute that various steel items have been used for the purpose of setting up of Sponge Iron Plant for manufacture of final products. Therefore, by applying the “user test” principle, the Appellant is entitled to avail credit on the steel items.”

M/s. S. Kumar Builders vs Commissioner of Central Goods & Service Tax & Central Excise - 2022 TAXSCAN (CESTAT) 591

The CESTAT of New Delhi Bench held that Construction of school or hospital to charitable institution or Trust is charitable purpose and is entitled to the benefit of service tax exemption as per Sl.No.13 of Notification No.25/2012-ST. A Bench consisting of Anil Choudhary, Judicial Member held that “I hold that religious use includes providing of education, and medical aid, which reduces human suffering. Accordingly, I hold that the appellant is entitled to exemption with respect to aforementioned works contract service provided to the Trusts registered under Section 12A/12AA of the Income Tax Act. Thus, the demand of Rs. 4,28,424 is set aside.

Gujarat Metal Cast Industries Ltd vs C.C.E. & S.T - 2022 TAXSCAN (CESTAT) 595

The Ahmedabad Bench of the CESTAT has held that Cenvat Credit can be granted on GTA outward when Freight Charges include in assessable value for excise duty. A Coram of Single-member Mr Ramesh Nair (Judicial) observed that the appellant have not produced the documents before the lower authority to establish the fact ,therefore the issue is remanded for verification.

Reliance Industries Ltd vs C.C.E. & S.T - 2022 TAXSCAN (CESTAT) 592

As a relief to Reliance Industries, the Ahmedabad Bench of CESTAT has held that interest on reversed Cenvat Credit is allowable as the refund not sanctioned within the stipulated time period of 3 Months from date of refund application. The Tribunal held that the appellants are entitled for the interest in the refund claim sanctioned from the date after 3 months of filing the application for refund claim till the date of sanction and the impugned orders was set aside.

INSECTICIDES INDIA LIMITED vs C.C. - 2022 TAXSCAN (CESTAT) 593

Appeal can’t file for refund of Anti-dumping duty paid merely by a letter from the department, the Ahmedabad Bench of CESTAT has held as above. The payment of anti dumping duty is not due to assessment or reassessment of Bills of entry but merely by a letter from the department, therefore there is nothing in the bills of entry to challenge. The bench held that “the impugned order upholding the rejection of the refund claim on this ground is not sustainable and is liable to be set aside.”

SATISH MEHTA vs C.C.-AHMEDABAD - 2022 TAXSCAN (CESTAT) 596

The Ahmedabad Bench of CESTAT has held that action of department on disposal of gold through SBI Bullion during the pendency of appeal violates the natural justice principle. A Coram of Mr. Ramesh Nair, member (judicial) and Mr. Raju, member (technical) observed that “the action of the department such as disposal of gold through the SBI Bullion during the pendency of the appeal is against the existing departmental instructions. Therefore, the argument of the revenue in that disposal of gold during the pendency of the appeal legally correct cannot be accepted.” It was viewed that provisions of Section 110(1A) of the Customs Act, does not permits the proper officers for dispose of the disputed goods during the pendency of appeal. The Tribunal viewedthat the department has disposed of /sold the goods on the understanding that the first order of the adjudicating authority is the final order and the department was well aware about the pendency of the appeals before this Tribunal.

Samir Transport Company vs C.C.E. & S.T.-Ahmedabad-iii - 2022 TAXSCAN (CESTAT) 594

Providing Blank LR books establishes the abatement in passing of Fraudulent Cenvat Credit ,the Ahmedabad Bench of CESTAT upheld the penalty under Rule 26 of the Central Excise Rule ,2012. A Coram of Single-member Mr Ramesh Nair(Judicial) observed that the appellant have admittedly provided the blank LRs to M/s Accord which were used for passing of fraudulent cenvat credit and the act of giving blank LR books itself clearly falls under purview of Rule 26(2) of Central Excise Rules, 2012. “Even providing blank LRs establishes the abatement in passing of fraudulent cenvat credit”, the bench held. While dismissing the appeal, the Tribunal upheld the penalty.

A Kumar Industries vs C.C.E. & S.T - 2022 TAXSCAN (CESTAT) 597

The Ahmedabad Bench of CESTAT has held that confiscation of excess stock is not permissible in the absence of physical stock-taking and non-disclosure of Stock-taking methodology. A Coram of Single-member Mr Ramesh Nair(Judicial) observed that the appellant objected to the difference in the stock merely on the ground that no physical stock-taking was conducted and the methodology of the stock-taking was not disclosed.

Murli Industries Ltd. vs Commissioner of Central Excise & Customs - 2022 TAXSCAN (CESTAT) 599

The Mumbai Bench of CESTAT held that no claim of refund can be allowed when appeal has already been abated. A Single Bench consisting of Ajay Sharma, Judicial Member held that “I am of the view that the appeal filed by the appellant herein has become infructuous and abated in terms of Rule 22 of CESTAT (Procedure) Rules, 1982. As the appeal has already been abated therefore in my considered view the appellant cannot claim any refund before this Tribunal of any pre-deposit made by them before the Commissioner (Appeals), as the power which Supreme Court/High Courts can exercise are not available with this Tribunal.”

Aurolab vs Commissioner of GST & Central Excise - 2022 TAXSCAN (CESTAT) 600

The CESTAT of Chennai Bench held that refund claim is hit by bar of unjust enrichment when no documents are produced to prove incidence of duty not passed to buyers. A Single Bench consisting of SulekhaBeevi CS, Judicial Member held that “The issue is whether the refund claim is hit by the bar of unjust enrichment. Undisputedly, the appellant has mentioned the duty element in the invoices issued to the buyers. The presumption envisaged in section 12B of Central Excise Act, 1944 then applies and the burden rests upon the appellant to rebut this presumption.”

M/s. Nai Dunia Media Pvt.Ltd vs Commissioner of Central Goods & Service Tax and Central Excise - 2022 TAXSCAN (CESTAT) 598

The CESTAT of New Delhi Bench quashed demand of Rupees one crore as no service tax can be demanded on amount received as facility charges attributable to electricity expenses. A Coram consisting of Anil Choudhary, Judicial Member observed that “Having considered the rival contentions, I hold that the appellant is not liable to service tax on the amount received as facility charges amounting to Rs.1,73,50,000 as the same is wholly attributable to electricity expenses, which has been shared proportionately by the appellant and its sister concerns.”

Larsen & Toubro Limited vs Commissioner of CGST & CX - 2022 TAXSCAN (CESTAT) 601

The Kolkata Bench of CESTAT has held that the manufacturers of excisable goods can take credit of CENVAT paid on input services and there is no bar on utilization of CENVAT credit availed. The Tribunal observed that the credit accumulated by the service provider or manufacturer on the input services availed as well as inputs is available for payment of Excise duty or Service Tax and there is no requirement of one-to-one correlation. The appeal of the assessee was allowed.

M/s Sitex International vs Commissioner of Customs - 2022 TAXSCAN (CESTAT) 604

The CESTAT of New Delhi, has recently in an appeal filed before it, held that intentional violation of regulation 12 will lead to the cancellation of license as well as the imposition of penalty. “we find that for the various contraventions of these regulations the appellant was correctly held liable to penalty under Regulation 14 and penalty of Rs. 50,000/- as was imposed by the Commissioner in the impugned order”. “In view of the above, we find that the impugned order is correct and proper and calls for no interference.”, dismissing the appellant’s appeal, the Bench ruled.

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