CESTAT Weekly Round-Up

This weekly round-up analytically summarises the key stories of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) reported at taxscan.in during 08 January to 14 January, 2023.

No Service Tax on Notice Pay Recovery: CESTAT Quashes Demand based on CBIC Circular Exempting GST [Krishak Bharti Co Operative Ltd vs C.C.E. & S.T - 2023 TAXSCAN (CESTAT) 109]

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad has held that service tax cannot be levied on the notice pay recovery as the Central Board of Indirect Taxes and Customs (CBIC) has clarified its view on the same.

A bench of Member (Judicial), Mr. Ramesh Nair, and Member (Technical), Mr. Raju observed that the CBIC has issued a circular No.178/10/2022-GST dated 3rd August 2022 in which it has stated its stand on the issue of taxability of various transactions claimed to be “liquidated damages”.

Relief to Dabur India: Disallowance of Cenvat Credit on Advertisement and Sales Promotion Services deleted - [Dabur India Limited Vs C.C.E & S.T.-Silvasa - 2023 TAXSCAN (CESTAT) 110]

As a relief to Dabur India, the Ahmedabad bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) deletes the disallowance of Cenvat Credit on Advertisement and sales promotion service.

It was observed that “once the availment and distribution of credit by the ISD is held to be proper, there is no question of denying the same credit at the hands of the recipient units on the same grounds and for the same period.”

No alleged Violation of provisions of CBLR: CESTAT quashes Suspension of Revocation of Customs Broker Licence of CHA [ICS Cargo vs Commissioner of Customs - 2023 TAXSCAN (CESTAT) 111]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi Bench quashed suspension of revocation of Customs Broker Licence of Customs House Agent (CHA) as there was no alleged violation of provisions of Customs Broker Licensing Regulations, (CBLR) 2018.

“We hold that the appellant has not committed any alleged violation of Regulation 10(a), 10(d) and 10(n) of CBLR, 2018”, the Bench further declared.

Demand based on Audit without further Investigation is invalid: CESTAT quashes Service Tax demand [M/s. Innovative and Technological Learning Services Pvt. Ltd. vs Commissioner of CGST - 2023 TAXSCAN (CESTAT) 112]

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed service tax demand on the ground that demand based on audit without further investigation is invalid.

The Bench comprising Sanjiv Srivastava, Technical Member and Dr Suvendu Kumar Pati, Judicial Member observed that the demand based on audit without any further investigation it liable to be set aside on this count alone.

Wrongly claimed benefit under MEIS without aware of Foreign Origin of Goods: CESTAT reduces Redemption Fine [M/s Cipra Enterprises vs Commissioner of Customs - 2023 TAXSCAN (CESTAT) 113]

The Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) reduces redemption fines when an assessee wrongly claimed benefit under MEIS without being aware of the foreign origin of goods.

A Coram of Anil Choudhary, Member (Judicial) observed that it was the responsibility of the appellant to understand the eligibility and the conditions before claiming the export benefits.

Benefit of S.73(3) can't be denied When Assessee discharged the entire Service Tax along with Interest [Sumeru Builders vs C.C.E. & S.T - 2023 TAXSCAN (CESTAT) 114]

The Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that benefit of Section 73(3) of the Finance Act, 1994 can’t be denied when the assessee discharged the entire service tax along with interest.

It was held that the appellant discharged the entire service tax along with interest soon after the same was pointed out and in this circumstance, the benefit of Section 73(3) should not have been denied.

No Format Prescribed in Statute: CA Certificate cannot be Brushed Aside Because Authorities did not “Like” Format [Sun Metallics & Alloys Pvt. Ltd vs Commissioner of CGST & Central Excise - 2023 TAXSCAN (CESTAT) 115]

The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Mumbai bench has held that the CA certificate cannot be brushed aside by the excise authorities as there is no format prescribed under the Statute.

Ajay Sharma, Member (Judicial) observed that there is certificate of the Chartered Accountant as well as the affidavit of the appellant specifically mentioning therein that the burden towards Cenvat credit, interest and penalty was never passed on to the consumers.

No Co-relation Required to Claim Refund: CESTAT allows Refund of Service Tax paid for Banking and Financial Services [Welspun Global Ltd vs C.C.E. & S.T - 2023 TAXSCAN (CESTAT) 116]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad bench, while allowing refund of service tax paid towards Banking and Financial Services, has held that the correlation is not required to claim refund of service tax.

It was observed that, “All the business of the appellant was export of goods, therefore, no co-relation was necessary as all the services were availed for export of goods.”

‘NOC’ not required to be obtained from Drug Inspector and Free to Export Drugs, Penalty under Customs Act not imposable [M/s Medista Overseas vs Commissioner, Central Excise & Central Goods and Service Tax - 2023 TAXSCAN (CESTAT) 117]

The Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that a penalty under Customs Act,1962 is not imposable when a “No Objection Certificate” (NOC)is not required to be obtained from Drug Inspector and is free to export Drugs.

A Coram of Anil Choudhary, Member (Judicial)observed that even from the test report of CDSCO, Mumbai, out of the three drugs, two drugs namely B-CO syrup and Sabtronbe of standard quality.

Possession of Ornaments, not an Offence: CESTAT allows the Release of Gold Balas from Custody [Shri Sailendra Narayan Panda vs Pr. Commissioner of CGST & CX - 2023 TAXSCAN (CESTAT) 118]

The Kolkata Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the possession of ornaments is not an offence and allowed the release of Gold Balas from custody.

The CESTAT held that “the seized gold Balas are ornaments and may be released to the Appellant.” The impugned order was set aside and the Appeal filed by the Appellant was allowed with consequential relief, as per law.

Anti Dumping Duty on Imports: CESTAT allows Modification of Product to Saturated Fatty Alcohol [M/s. Inter-Continental Oils and Fats Pte. Ltd vs Union of India - 2023 TAXSCAN (CESTAT) 119]

While considering the case of anti-dumping Duty, the Delhi bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed modification of products to saturated fatty alcohol.

A Coram comprising of Justice Dilip Gupta, President, Mr P V Subba RaoMember (Technical) and Ms Rachna Gupta, Member (Judicial) observed that there is no error in the finding recorded by the designated authority in including pure cuts C12 and C14 in the product under consideration.

Commissioner (Appeals) has No Jurisdiction to issue SCN u/s 73 of Finance Act, Order confirming demand of Interest and Penalty is not valid [M/s KEI Industries Limited vs Commissioner - 2023 TAXSCAN (CESTAT) 120]

The New Delhi Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that Commissioner (Appeals) has no Jurisdiction to issue SCN under section 73 of the Finance Act, 1994 and the order passed by the Commissioner of Appeal, which confirmed the demand of interest and Penalty is not valid.

A Coram comprising Justice Dilip Gupta, President and Mr P V Subba Rao, Member (Technical) held that the Commissioner (Appeals) did not have the power to issue the notice under section 73(1) of the Finance Act.

No Service Tax on NSDL & CDSL Charges collected by Broker and paid to Depositories [Saurin Investments Private Limited Vs C.S.T.-Service Tax – Ahmedabad - 2023 TAXSCAN (CESTAT) 121]

The Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that no service tax on NSDL & CDSL charges is collected by brokers paid to depositories under Depositories Act, 1996.

The coram of Ms Sulekha Beevi C.S, Member (Judicial) observed that the allegation of the department that the demat charges collected by the brokers are banking and financial service, hence taxable.

Demand of Duty on Test Production before starting Commercial Production is not tenable [Tribhuvan Metal Industries Vs Commissioner of Central Excise - 2023 TAXSCAN (CESTAT) 122]

The Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the demand of duty on test production before starting commercial production is not tenable.

The Coram of Anil Choudhary, Member (Judicial) observed that the appellant has done only test production before 11.11.2010 and they have been doing mainly trading of finished goods as the factory was not fully set up at the testing stage.

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