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, from February 6^th t0 12^th, 2023.

CHA cannot be Expected to Examine and Ensure Nature of Goods in Consignment: CESTAT Deletes Penalty u/s 114 Customs Act  (M/s. Chakiat Agencies vs Commissioner of Customs (Exports), 2023 TAXSCAN (CESTAT) 175)

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), has deleted penalty under Section 114 of the Customs Act and observed that Customs House Agent (CHA) cannot be expected to examine and ensure nature of goods in consignment.

The Counsel for the Department having argued that the CHA ought to have taken note of the fact mentioned in test report that the samples were naturally occurring Potassium Chloride and that by incorrect classification, the appellants have abetted in the attempt to export the restricted goods, the Coram of Sulekha Beevi C.S,  the Judicial Member and Vasa Seshagiri Rao, the Technical Member observed, “Be that as it may, the appellant as a CHA cannot be expected to examine and ensure the nature of the goods in the consignment. There is no allegation or evidence to establish that the appellant had indulged in any overt act or played any role in any manner so to assist the exporter in his attempt to export the goods.”

 “After appreciating the evidence and following the decision of the Tribunal in the above case, we are of the view that the penalty imposed on the appellants under Section 114 of the Customs Act is not warranted” the Tribunal noted.

Relief to Aircel: CESTAT deletes Demand of Short Paid Service Tax with Interest (M/s. Aircel Limited vs The Commissioner of Central Excise and Service Tax, 2023 TAXSCAN (CESTAT) 176

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), has, while granting relief to M/s. Aircel Limited, the appellant, deleted the demand of short paid service tax with interest.

With the Counsel for the appellant drawing support from the decision of the Apex Court in the case of M/s. Birla Corporation Ltd. v. Commissioner of Central Excise to and arguing that the Department cannot pick and choose to pursue demands against assessees ,when the issue involved has attained finality, deleting the service tax demand, the Bench comprising Sulekha Beevi CS,  the Judicial Member and Vasa Seshagiri Rao, the Technical Member observed: “The Authorized Representative for the Department has not been able to counter the submission made by the Learned Counsel for the appellant that the Department has not appealed against the Order passed in the case of the associate- company viz. M/s. ACL.”

SCN being vague and no relevance for denial of NOC: CESTAT sets aside revocation of Customs Broker License (Sai Chhaya Impex Pvt. Ltd. vs Commissioner of Customs, 2023 TAXSCAN (CESTAT) 174

The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT ), has recently , set aside revocation of Customs Broker License, on the ground of show cause notice ( SCN ) being vague and there being no relevance for denial of Non Objection Certificate ( NOC ).

Setting aside the revocation, the Bench observed that the evidence available on record in the form of verification reports relied upon in the SCN were vague and that ,in some cases, even the name of the exporter ,who they were enquiring about was not indicated in them.

“The reports state either NOC denied which is not required by any Customs Broker or exporter or that the exporters did not exist at the time of verification which does not prove that they did not exist at the time of verification or that IGST refund may be denied which is irrelevant to the present proceedings. None of the reports establish that the appellant had violated Regulation 10(n)” the Tribunal noted.

Demand of Tax on extended period not valid when entire Service Tax  paid even period before its levy (Chiron Behring Veccines Private Limited vs C.C.E. & S.T.-Surat-ii, 2023 TAXSCAN (CESTAT) 170)

In a significant case, the Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the demand for tax on an extended period, is not valid when the entire service tax is paid even period before its levy.

With the appellant having paid the entire service tax, even for the period before its levy and also having filed ST-3 returns wherein details of payments have been declared, a Coram comprising of Mr Ramesh Nair, the Member (Judicial) and Mr Raju, the Member (Technical) observed that the appellant has made a submission about limitation and sought the benefit of section 73 (3) and Section 80 of the Finance Act, 1994.

Subsequently, the Tribunal set aside the demand of service tax for an extended period along with the penalties, thereby allowing the appeal of the assessee. 

New Jetty Construction which was for Expansion of existing Jetty includes in Input Service, can avail Service Tax Credit (Gujarat Chemical Port Limited vs Commissioner of Central Excise & ST, V, 2023 TAXSCAN (CESTAT) 169)

The Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has recently, while allowing an appeal filed before it, held that the Construction new jetty for expansion of the existing Jetty includes an Input service, and service tax credit can be availed.

Allowing the appeal while setting aside the impugned order, a Coram comprising of Mr Ramesh Nair, the Member (Judicial) observed: “even though setting up of a new factory, construction of the building of service provider is not excluded from the definition of Input service.  In this case, the construction of the Jetty is clearly like the expansion of the existing Jetty therefore, credit is admissible.”

Lack of Exercise of Jurisdiction: CESTAT remands abeyance order of Excise Commissioner (Rudraksh Detergent And Chemicals Pvt Ltd. vs C.C.E.-Kutch (Gandhidham , 2023 TAXSCAN (CESTAT) 173

In a recent judgement, the Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has the remanded issue, arising out of limitation, to the Commissioner (Appeals).

With Rudraksh Detergent and Chemicals Pvt ltd, the assessee, having challenged the order of the Commissioner (Appeals), whereby he had remanded the matter to the Adjudicating Authority to keep the matter in abeyance till recredit orders were issued by the Jurisdictional Assistant Commissioner and then to adjudicate the show cause notice,  a Coram comprising of Mr Ramesh Nair, the Member (Judicial) and Mr Raju, the Member (Technical) observed that the Commissioner (Appeals), instead of remanding the matter to the Jurisdictional Assistant Commissioner could have decided the matter finally at his end.

The Tribunal further held: “The Commissioner (Appeals) ought not to have remanded the matter to the Adjudicating Authority, particularly when the appellant has raised the ground on limitation and the matter should go back to the Commissioner (Appeals) for deciding the appeal before him finally without remanding the matter to the Adjudicating Authority.”

Manufacture of Excisable Goods are excluded from definition of Business Auxiliary  Services, No Service Tax (Gujarat Insecticides Ltd vs C.C.E. & S.T, 2023 TAXSCAN (CESTAT) 171)

The Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), has held that the manufacture of excisable goods is excluded from the definition of business auxiliary Services and that Service Taxi s not demandable.

With the appellant submitting before it,  that the said activity was undertaken under the provision of Rule 4 (5) (a) of Cenvat Credit Rules, 2004 and hence that the activity , being clearly of manufacture, cannot be construed as service for charging service tax, a Bench comprising of Mr Ramesh Nair, the Member (Judicial) and Mr Raju, the Member (Technical), while setting aside the impugned order and allowing the appelant’s appeal , thus held : “the activity per se, cannot be treated as service itself for the reason that the activities carried out by the appellant is pure of manufacture of excisable goods with the inputs and packaging material supplied by the GCL and the said manufacturing was done on job work basis on behalf of M/s GCL.”

Refund allowable on Pre-GST unutilized Credit of Education Cess, SHEC (USV Private Limited vs Commissioner of Central Excise & ST, 2023 TAXSCAN (CESTAT) 172)

The Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has recently, in an appeal filed before it by USV Private Limited
,held that refund is allowable on Pre-GST unutilized Credit of Education Cess, Secondary and Higher Education Cess (SHEC).

Referring to Rule 3. CENVAT credit, a Coram comprising of Mr Ramesh Nair, Member (Judicial) observed:

“From the above Rule, under clause (vi) and (via), the credit of Education Cess and Secondary and Higher Education Cess is allowed. Therefore, the appellant is legally entitled to Cenvat of Education Cess and Secondary and Higher Education Cess. The refund cannot thus be denied.”

CESTAT upholds Penalty of 50 lakhs u/s 112(b)(i) on Import of Gold Bar (Sunny Kakkar vs Principal Commissioner of Customs, 2023 TAXSCAN (CESTAT) 168)

The Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) , has recently in an appeal filed before it, upheld the penalty of 50 lakhs u/s 112(b)(i) on the import of gold bars.

With the Tribunal observing that undisputedly the gold was of a foreign origin, that the same was reasonably believed to be smuggled by the officers and was seized and that the appellant had not discharged his burden to show that it was not smuggled gold, it upheld the absolute confiscation of the disputed gold and the penalty imposed of Rs. 50 lakhs.

CESTAT upholds Confiscation of Mercedes Car which used for Smuggling of Gold Bar (Sunny Kakkar vs Principal Commissioner of Customs, 2023 TAXSCAN (CESTAT) 168)

The Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) , has recently in a case, upheld the Confiscation of a Mercedes Car which was used for smuggling of Gold bar.

A Coram comprising Justice Dilip Gupta, the President , along with P V Subba Rao, the Member (Technical),while upholding the penalty and codification observed: “As per Section 112(b), any person who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner, dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111, is liable to a penalty.”

Exemption Notification Only Effective After Official Gazette Publication and Digital Signature: CESTAT directs to refund differential BCD deposited by Adani Wilmar (Adani Wilmar Ltd. vs Commissioner of Customs, 2023 TAXSCAN (CESTAT) 167)

The Customs Excise and Service Appellate Tribunal ( CESTAT ) chaired by Justice Dilip Gupta (President) and Justice C J Mathew (Technical Member), has recently in a case before it,  directed to refund the differential Basic Customs Duty (BCD) deposited by the Adani Wilmar.

With the appellant asserting that notwithstanding the fact that the duty rate applicable under Notification No. on 05.03.2018 should have been applied to the imported goods, the Bills of Entry were incorrectly reassessed at a higher rate of duty @ 54%, under Notification dated 01.03.2018, the Tribunal observed that the Government of India, Ministry of Law and Justice in its press release, had clarified that the Gazette Notification of Government of India, will henceforth be only e-published as they are uploaded.

“The Commissioner (Appeals), was not justified in holding that the duty would be payable on the imported goods at the rates specified in that notification. The exemption notification was digitally signed for e-publication, and it only became effective on the date it was published in the Official Gazette. Additionally, the appellant will receive a refund of the difference duty amount she deposited along with the applicable interest rate.”, the Bench noted

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