This weekly round-up analytically summarises the key stories of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) reported at taxscan. in, from January 15 to January 21, 2023.
The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), has ruled that the earlier payments made through Cenvat Account are to be re-credited on payment of duty in cash.
The appellant having discharged the duty burden from their PLA Account and as such, there being no dispute about the same, the Tribunal consisting of P. K. Choudhary, the Member (Judicial) observed “It is my considered view that once the duty has been paid in cash, earlier payments made through Cenvat Account are liable to be re-credited in the said Account and no objection that such recredit was not on the basis of any eligible document can be adopted by the Revenue. Admittedly, it is not a case of availment of credit in the ordinary course, but such re-credit was to neutralize the subsequent payment of duty in cash.”
“My view gets fortified by the judgement of the High Court of Madras in the case of ICMC Corporation Limited v. CESTAT, Chennai reported, whereby it was held that the suo motu credit of Cenvat reversed earlier involved only an account entry reversal and in the process, no outflow of funds from the assessee, and accordingly, filing of refund claim under Section 11B of the Central Excise Act, 1944, is not required” the Tribunal noted.
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT ), has recently in an appeal filed before it, ruled that the buying and selling of SIM cards and recharge coupons does not amount to providing business auxiliary service. The aforesaid observation was made by the Tribunal when the appellant, M/s J.K. Enterprises, engaged in the buying and selling of SIM cards, recharge coupons etc. for mobile phones, under a super distributor agreement with M/s Vodafone Essar Digilink Ltd. approached the Tribunal with regard the demand of service tax and penalty imposed on it, via a show cause notice issued , covering the period April 2008 to March 2012 , with the allegation that it was providing business auxiliary service to M/s Vodaphone Essar Digilink Ltd. as their franchisee for sale/distribution and marketing of the SIM cards and recharge coupons.
“We find that this Tribunal has consistently held that buying and selling of SIM cards and recharge coupons does not amount to providing business auxiliary service to the principal in several cases as in the case of M/s Devangi Communications & Others”, pronouncing its ruling the Bench comprising of Justice Dilip Gupta, the President and P.V. Subba Rao, the Member (Technical) observed.
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata Bench, has set aside the denial of credit of input services used for the removal and disposal of Fly Ash and recognized that Fly Ash is necessary for running of a captive power plant. Pronouncing its ruling, the Tribunal comprising of PK Choudhary, the Judicial Member observed “I am of the view that removal of coal Fly Ash is one of the necessities for running of the captive power plant. Without such removal of the coal fly ash from the captive power plant, the same cannot operate and run, in which case, the power won’t be generated and the appellant would not be in a position to manufacture their final product.” “The denial of benefit of credit of input services used for removal and disposal of Fly Ash is not sustainable” the Tribunal further noted.
With M/s. ARS Steels & Alloy International Pvt Ltd, filing an appeal against the order passed by the Commissioner of Customs, whereby the First Appellate Authority had confirmed the findings of the Adjudicating Authority, the Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), has set aside the demand of redemption fine as the Pre-Shipment Inspection (PSI) Certificate furnished as per Appendix 28 of Foreign Trade Policy (FTP).
The Adjudicating Authority having inter alia held that the appellant had violated the provisions of the Import Policy since the PSI Certificate furnished by it was not as per Appendix-28 of the Foreign Trade Policy; that the redemption of the goods in lieu of confiscation was allowed on payment of redemption fine and further that a penalty was also imposed under Section 112(a) of the Customs Act, 1962, the Tribunal of P Dinesha, the Judicial Member, while Setting aside the redemption fine, observed “To put it in simple terms, the goods have not been imported contrary to any prohibition imposed by or under the Act or contrary to any prohibition imposed by any other law for the time being in force. This is because the import is subject to fulfilment of stipulated condition, failing which the only consequence prescribed is the 100% inspection of the entire consignment.”
The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has recently quashed the confiscation and customs duty recovery order against Chimes Aviation Private Limited for use of aircrafts for purposes other than training.
Having observed that the appellant had submitted an application before the Ministry of Civil Aviation (MCA) for grant of a No Objection Certificate (NOC) to operate non-scheduled (charter) services, and that the same was granted by the MCA on 15.06.2009 and on 28.07.2009 an endorsement was also made in the permit, the Bench of Justice Dilip Gupta and Justice P V Subba Rao observed that the customs authorities could have proceeded to recover the duty on the basis of the undertaking only when the competent authority in the DGCA found as a fact that the appellant had violated the conditions of the permit.
“In the present case, such a finding has not been recorded and on the other hand, the permits have been renewed from time to time”, the tribunal bench set aside the impugned order of detention and demand, ruling in favour of the assessee, Chimes Aviation Private Limited.”, the Tribunal further added.
The Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has, while allowing an appeal filed before it, held that the Import of Urea on high Seas Sale from State Trading Enterprises (STE) is not violative of ITC policy and quashed the penalty under section 112(a)(i) of the Income Tax Act,1961.
It was observed by the coram comprising of Mr Ramesh Nair, Member (Judicial) and Mr Raju, Member (Technical) that “when the import is allowed “through” STC, MMTC and Indian Potash, it means that so long as the purchase of the Urea from the foreign supplier is effected by STC, MMTC or Indian Potash ,and the payment to the foreign supplier is made by STC, MMTC or Indian Potash, who in turn sell the same to a party in India whether on High Seas or otherwise, the import is clearly through STC, MMTC or Indian Potash.”
Deciding the appeal of N R Agarwal Industries Ltd, the Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that Cenvat credit is not allowable in respect of Vehicles taken on rent.
It was observed that for service providers falling under the category of renting of a motor vehicle, the motor vehicle would always be capital goods. As such the expression – “which is not a capital good appearing in the said exclusion clause would require examination vis-à-vis the service provider and not vis-à-vis the recipient of the service.”
Ongoing through the said exclusion Clause, a Coram comprising of Mr Ramesh Nair, Member (Judicial),while allowing the appeal observed that since the Motor Vehicle was held to be a capital good, the eligibility of Cenvat credit on Rent-a-Cab service shall not be hit by the exclusion clause provided under Rules 2(l) of Cenvat Credit Rules, 2004.
The Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has recently, in an appeal filed before it, held that the installation of thermal insulation is a “works contract service” and service tax is not demandable.
The aforesaid observation was made by the Tribunal when an appeal was preferred before it on the basis of the intelligence received that Rudra Engineering, the Appellant, was wrongly availing abatement of 67% for calculating the taxable value for payment of service tax ,as per the provisions of Notification No. 1/2006-ST dated 01.03.2006, as amended.
With the Tribunal observing that though the sale price of the material was not being separately shown in the invoice, however, substantial VAT/Sales Tax under the appropriate scheme and at appropriate rates were paid, and further that the approx.. involvement of the material in the work undertaken is about 70% of the total cost, a Coram comprising of Mr Ramesh Nair, Member (Judicial) and Mr Raju, Member (Technical) further added that in clause (a) thermal insulation is also mentioned and that the appellant had also paid VAT/ sales tax on goods which is used in the installation of thermal insulation.
“The impugned activity of the assessee was nothing but “works contract service””, the Tribunal thus held.
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ordered release of Chinese mobiles on the ground that there was no evidence on allegation of smuggling.
The aforesaid observation was made by the Tribunal when the appellant, Dharmesh B. Bhavsar, a trader engaged in trading of electronic goods filed an appeal before it.
The Tribunal further observed “I find from the record that no evidence has been brought on record in support of its allegation. Further, sale-purchase of goods in India is supported by the levy of Sales Tax by the Sales Tax Department of Rajasthan.”
The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Ahmedabad Bench , has confirmed the denial of Cenvat Credit on Secondary and Higher Education Cess under invoice issued by EOU, in an appeal filed before it by the appellant Huber Group India Pvt Ltd.
The Bench comprising Ramesh Nair, Judicial Member observed that “In the show cause notice, it can be seen that the demand of Cenvat Credit is not only in respect of basic Excise duty but also of Education Cess and Secondary & Higher Education Cess. Therefore, in this fact it cannot be said that the order denying the Cenvat credit on Education Cess and Secondary & Higher Education Cess is travelling beyond the scope of show cause notice. Hence, the demand was rightly made by the adjudicating authority.”
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), has currently, in an appeal filed before it by M/s AFT Tobacco Pvt Ltd, ruled that no interest demand can be made in absence of condition precedent under Section 11AA of Central Excise Act, 1944.
The Tribunal of Anil Choudhary, Member (Judicial) observed that “Here both the conditions are not available to Revenue as admittedly neither there is any determination of duty liability of NCCD under Section 11A, nor there is voluntary default in deposit of the amount of NCCD.”
“In absence of condition precedent in Section 11AA of the Central Excise Act, I hold that no interest can be demanded from the appellant –assessee.”, the Bench ruled.
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), has ruled that there is no excise duty on outward freight from Leamak Healthcare P Ltd to ITC Ltd when included in assessable value.
The Bench comprising Ramesh Nair, Judicial Member and Raju, Technical Member observed that “No excise duty needs to be paid on the outward freight from Leamak to ITC, Marketing spends by ITC and fixed costs of ITC relating to activities of ITC other than provision of moulds at concessional cost”, thus setting aside the impugned order in so far as it seeks to include outward freight from Leamak to ITC godown and marketing spends for charging excise duty.
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has, in an appeal filed before it by the Appellant, Shri Balaji Ceramic Products allowed free import under Foreign Trade Policy (FTP) on establishment of identity and genuine export of Calcined Petroleum Coke (CPC).
Listening to the contentions of the appellant the Bench comprising of Anil Choudhary, the Judicial Member observed “ I find that both the identity of the goods is also established and also that the appellant had genuinely exported the goods to the user buyer in Saudi Arabia. Further, on rejection by the buyer, the appellant was obligated to re-import the goods to mitigate his loss.”
“Admittedly, the export in this case was made through shipping bill which is before the date of restriction imposed vide Notifications. Thus, I hold that CPC was free for export-import on the day of export, the re-import by the appellant of the rejected goods, has to be treated as freely importable under the Foreign Trade Policy” the Tribunal noted.
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), invalidated the order as vague and non -speaking on the ground that there was non-examination of whether service fall under exclusion clause of input service. The Bench comprising Ramesh Nair, Judicial Member and Rju, Technical Member observed that “The impugned order does not examine the admissibility of Cenvat Credit of these services in the main part of the definition, but relies solely on the changes made in the inclusive part of definition. It is seen that the impugned order does not examine which service would fall under which exclusion clause. The order in this regard is vague and not a speaking order.”
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT), ruled that goods held liable for confiscation, may be released on payment of redemption fine after adjudication. The Bench comprising Justice Dilip Gupta, President and PV Subba Rao, Technical Member observed that “After adjudication, if the goods are held liable for confiscation, they may be released on payment of redemption fine. The present case of provisional release of goods needs to be seen in this context.”
In a significant move, the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has got 12 new Technical Members as the Government made the postings amidst a huge number of litigations pending with the Tribunal. “The aforesaid officers are required to take charge of the post of Member (Technical) in the bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) mentioned against their respective names within 30 days from the date of issue of this order. They are also requested to submit their medical fitness from an authority specified by the Central Government before assuming charge of the post as Member (Judicial) in the Tribunal,” the office order said.
The Delhi bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that Service tax under the head “business support services” is not allowable on health care services by the clinical establishment.
A Coram comprising of Justice Dilip Gupta, President and Mr P V Subba Rao, Member (Technical) set aside the impugned order and held that “the Commissioner was not justified in confirming the demand of service tax under the head “business support services”.
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) of Anil Choudhary set aside demand of duty for period prior to starting of commercial production.The bench observed that “Thus, more or less – the appellant has done only test production prior to 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. Further, I find that Revenue has taken contrary stand wherein in the first show cause notice it is admitted that assessee has started commercial production from November, 2010 wherein in the second show cause notice, duty has been demanded from July, 2010.”
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT),of Raju, (Technical Member)confirmed composite penalty when charges pertained to period prior to and after introduction of Section 11 AC of the Central Excise Act, 1944. The Bench determined that “In view of this I do not find any error in imposition of composite penalty under Rule 173 Q read with Section 11 AC as in the instant case all the charges have been confirmed and the charges pertains to both the period prior to introduction of Section 11 AC and thereafter.”
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), granted relief to M/s. Punjab National Bank (PNB) and allowed cenvat credit on input services. The Tribunal of Ajay Sharma, Judicial Member observed that “The appellant is justified in availing Cenvat Credit in respect of input services availed by its Zonal Training Centre, Zonal Office and Zonal Audit Office (ZAO) in terms of Rule 2(l) of Cenvat Credit Rules, 2004 and the services received by these zonal offices fall under the definition of ‘input service’ as provided by Rule 2(l) of CCR.”
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. A Coram comprising Mr 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. The Tribunal allowed the appeal by modifying the impugned order wherein it was stated that the quantum of finished goods liable to duty for the period 01.07.2010 to 31.10.2010 shall be NIL. Further, the penalty under Section 11AC read with Rule 25 was set aside.
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