This weekly round-up analytically summarises the key stories of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) reported at taxscan.in, from May 13th to May 19th 2023.
The Chhattisgarh High Court has granted a three-month extension to Nava Raipur Atal Nangar Vikas Pradhikaran, a special development authority, for depositing the mandatory pre-deposit before the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT).
The Single Bench of Justice Parth Prateem Sahu accepted the alternative prayer for an extension of the deadline for the required deposit but rejected the argument for the waiver of the pre-deposit. The petitioner was given an additional three months starting on the date the order was passed to pre-deposit the money before the Tribunal. Other taxpayers who are experiencing financial difficulties as a result of the COVID-19 outbreak may now request similar extensions to complete their statutory pre-deposit requirements prior to the CESTAT, which might have a substantial impact on their situation.
The New Delhi bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that adjudication against the co-noticee even after the settlement of the dispute by the settlement commission is not valid.
The Settlement Commission was said to have determined that the importer had provided true and complete disclosure of all information pertaining to imported items. The Commission also took into account the importer’s additional payment of customs tax and interest. The importer was consequently awarded immunity from prosecution, fines, and penalties. It was noted that continuing the procedures against the CHA over the exact same transaction would be discriminatory and unfair if the proceedings against the importer had already ended.
A single-member bench comprising Mr Anil Choudhary, (Judicial) held that the appellant is also entitled to immunity granted by the Settlement Commission, to the main noticee. While allowing the appeal, the CESTAT set aside the impugned order.
The New Delhi bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the value of service tax cannot be anything more or less than the consideration paid for rendering service and set aside the Interest and penalty.
It was thought that the Apex Court had ruled in the case of the Union of India and Anr. v. M/s. Intercontinental Consultants and Technocrats Pvt. Ltd. that “under Section 67 (un-amended before 1st May 2006) or after its amendment with effect from 1st May 2006, the only possible interpretation of the said Section 67 is that for the valuation of taxable services for charging service tax, the only amount that has to be taken into account is the Any additional sum that is not used to provide such a taxable service cannot be included in the aforementioned value.
A two-member bench comprising Dr Rachna Gupta, (Judicial) and Ms Hemambika R Priya, (Technical) observed that the value of service tax cannot be anything more or less than the consideration paid as quid pro quo for rendering such services. Further held that Section 67 of the Finance Act, 1994 does not allow the inclusion of reimbursable expenses in the valuation of service rules.
In a significant case, the Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that bagasse is an agricultural waste not a manufactured product and set aside the demand of Excise duty.
A two-member bench comprising Mr Ajay Sharma, Member (Judicial) and Mr Anil G. Shakkarwar, (Technical) observed that Bagasse is only an agricultural waste and residue, which itself is not the result of any process. Therefore, it cannot be treated as falling within the definition of Section 2(f) of the Act and in the absence of manufacture, there cannot be any excise duty.
The statement continued, “Based on the adjustment to Section 2(d), the Department has issued one circular No. 904/24/2009-CX, dated October 28, 2009 in accordance with the amendment in Section 2(d) ibid, which was also relied upon by the Authorities Below in confirming the Demand. However, following the Supreme Court’s decision in the case of DSCL Sugar Ltd. (supra), the department issued another circular with the number 1027/15/2016-CX on April 25, 2016, which stated that because the decision covered the time period before and after the insertion of an explanation in section 2(d) of the aforementioned document, the circular with the date of October 28, 2009 is no longer valid and is rescinded.
In a recent case, the Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) disallowed thecum-tax benefit claim under section 67 (2) of the Finance Act, 1994 on non-payment of service tax to clients.
The single-member bench consisting of Mr. R. Muralidhar (Judicial) referred the matter to the Adjudicating Authority since all of this work to determine the amount of service tax cannot be taken up by the Tribunal at this time. The Adjudicating Authority will adhere to the principle of natural justice and issue a thoughtful decision within four months, as per the CESTAT’s directive to the appellant.
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that self-assessment orders are appealable.
The challenged order was cited by the Authorised Representative. In the matter of ITC LTD vs. CCE, Kolkata-IV, the Apex Court clearly declared that self-assessment orders are likewise assessments orders and are subject to appeal in the same way as other orders, such as reassessment orders. The Commissioner (Appeals) has rejected the appeal only on the grounds that no appeal can be brought against the self-assessment order, according to a two-member bench made up of Raju, Technical Member, and Somesh Arora. We determine that the Commissioner’s orders did not benefit from the Apex Court’s ruling in the ITC LTD case.
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed service tax demand and noted that the extended time proviso not invokable on sales commission to overseas commission agent under Reverse Charge Mechanism (RCM).
In their final statement, a Single Bench of CL Mahar, Technical Member stated, “I follow the decision of this Tribunal in the case of M/s. Marck Bioscience Ltd whereunder it has been held that in case of sales commission to overseas commission agent under reverse charge mechanism, the extended time proviso is not invokable.”
In a significant case, the Chandigarh bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) upheld the revocation of the Customs Broker License since the violation of the regulation of Customs Broker Licensing Regulation, 2018 (CBLR) was proven.
The two-member bench, made up of Mr. S. S. Garg (Judicial) and Mr. P. Anjani Kumar (Technical), came to the conclusion that the appellant had violated regulations 10(b), 10(d), and 10(n) of the 2018 CBLR. The CESTAT rejected the appeal but confirmed the contested decision made by Commissioner Ludhiana.
In a recent judgement,the Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) allowed the adjustment of excise duty to Steel Authority of India Ltd (SAIL), Alloy Steel Plant as they paid the Higher Duty than demanded.
The Appellant has paid the right duty determined in accordance with Rule 4 of the Valuation Rules throughout the relevant time, according to a two-member bench made up of Shri P K Choudhary (Judicial) and Shri K Anpazhakan (Technical). Additionally, the Appellant has already paid a substantially higher amount of duty than what is required by the contested decision; under these factual circumstances, an adjustment of excise duty should have been permitted rather than a new demand being made.
The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) quashed the order by the Commissioner since the interest and penalty against Cipla Ltd for incorrectly availed CENVAT credit on input services dropped without a speaking order.
It was found that the impugned order has been passed most unusually and there was no reasoning given in the conclusion. There was neither any reasoning nor any finding that too while setting aside the reasoned order passed by the adjudicating authority. It was evident that the assessee’s appeal was allowed by way of non-speaking order and the entire adjudication order was set aside.
A two-member panel made up of Mr. Ajay Sharma, Member (Judicial), and Mr. Anil G. Shakkarwar, Member (Technical), overturned the challenged order and remanded the case to the Commissioner (Appeals) for new consideration on the merits of the case, after affording each party a reasonable opportunity to be heard and by providing reasoning and findings when reaching any conclusions in the assessee’s appeal.
The Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that service tax demand and penalty under section 78 of the Finance Act is not valid in the absence of corroborative evidence.
A two-person panel made up of Shri P K Choudhary (Judicial) and Shri K Anpazhakan (Technical) noted that the appellant had reported the taxable amount in the ST-3 returns they had submitted and had not withheld any information from the department. Show Cause Notice issued on October 9, 2009 was deemed to be unsupportable due to the use of an extended period of limitation. Additionally, it was said that “the demand of service tax and interest confirmed and the penalty imposed under section 78 of the Finance Act 1994, in the impugned order, is not sustainable on the premise of limitation.
The Chandigarh bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the 100% penalty is not imposable as duty along with interest and 25% penalty paid when the order was received.
A two-person panel made up of Mr. S. S. Garg, a judge, and Mr. P. Anjani Kumar, a technical expert, came to the conclusion that the appellant, a small business owner, lacked the resources to stay up to date on the law. There are grounds to assume that the appellant had good reason to withhold the applicable service tax because the primary cable operator, M/s SIFY, had discharged service tax on the entire amount it had received from customers. While granting the appeal, the Tribunal determined that the appellants are eligible for Section 80’s benefits and overturned the penalties imposed.
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that there can be no invocation of the extended time period for issuance of second show cause notice demanding service tax.
The second show cause notice should have been for the normal period of demand, and the department should not have invoked the extended time period for demanding service tax, according to a single-member bench made up of CL Mahar, a technical member, who observed that the first show cause notice had already been issued on 17.03.2008 invoking a period of five years.
The matter is remanded back to the original adjudicating authority to re-judge the matter in light of the above observation and confirm the service tax for the normal period of demand as provided by Section 73 (1) of the Finance Act, 1994. The Bench further noted that the second show cause notice dated 20.03.2009 is beyond the normal period of limitation.
In a major relief to M/s Fresenius Kabi Oncology Limited, the appellant, the Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that the deduction on account of octroi and additional sales tax are permissible.
According to the two-member bench made up of P Anjani Kumar, a technical member, and SS Garg, a judge, “In the instant case, we find that there was no whisper of seeking denial of deduction on secondary goods and to that extent, there is no ambiguity in the SCN and it is not open for the Department to claim confirmation of duty on account of secondary goods at this juncture.” “We discover that it has been ruled in numerous occasions that the SCN is not a pointless formality and that it must be precise and unambiguous. The Department is not permitted to merely request a demand based on statistics that were accidentally provided by the appellant, the Tribunal said.
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that the penal provision of the Central Excise Rules, 1944 are not to be invoked against the company accountant.
A Single Bench of CL Mahar, Technical Member observed that “, I find that the appellant was only an accountant who was doing normal accountancy work. The issue of valuation of captively consumed yarn is a matter of the interpretation and therefore the penal provision of Rule 209 A of Central Excise Rules, 1944 cannot be invoked against the person who is only involved in maintaining the accounts of the company.”
The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), relied on the Supreme Court order wherein it was held that cenvat credit cannot be availed on input services utilized for exempted services or trading goods.
The Lally Automobiles case, which was upheld by the Supreme Court, has now become the rule of the land and must be adhered to, according to the two-member bench composed of SS Garg, a judge, and P Anjani Kumar, a technical member. As a result, we do not see any flaws in the adjudicating authority’s conclusions on the denial of the CENVAT credit on input services utilised in trading.
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed service tax demand for extended period of limitation on architect services and management or business consultant services.
Judge Dilip Gupta, the president of the two-member bench, and Hemambika R. Priya, the technical member, stated that “the order passed by the Commissioner confirming the demand of service tax for the extended period of limitation in so far as the architect services and management or business consultant services are concerned is set aside.”
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that service tax is not leviable on hostel services and education services by way of pre-school education and education up to higher secondary school.
The education service is what provides the package of hostel and educational services its basic character, according to a two-member bench made up of Justice Dilip Gupta, President, and Hemambika R. Priya, Technical Member. The negative list of services included in section 66D of the Finance Act includes education services through pre-school education and education up to higher secondary school or equivalent. It cannot therefore be subject to the imposition of a service tax.
The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed service tax demand and observed that the work contracts are chargeable only from 01.06.2007.
The Two-Member Bench, composed of SS Garg, a Judicial Member, and P Anjani Kumar, a Technical Member, dismissed the service tax demand, noting that “in light of the Apex Court judgements, works contract are chargeable only from 01.06.2007.” The appellant shaving made themselves eligible for the composition plan under works contract service by choosing to pay duty under the new scheme in their letter dated 04.06.2007.
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh Bench quashed the excise duty demand and ruled that the use of inputs supplied by principal manufacturer is essential to qualify as job worker.
The usage of inputs provided by the primary manufacturer is at the core of the definition of a job worker, according to the two-member bench made up of SS Garg, a judge, and P Anjani Kumar, a technical member. Despite the fact that all of the manufactured goods were supplied to M/s Nilkamal Limited, we find that nothing in the contract demonstrates that the appellants produced the goods “on behalf” of that company. Additionally, the primary manufacturer, M/s Nilkamal Limited, did not supply any materials or products for the production of the goods.
The Chandigarh bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that courier agency, exhibition, insurance and internet service fall under ‘input service’ under rule 2(l) of Cenvat credit rules, 2004.
A single-member bench comprising Mr S S Garg, (Judicial) observed that all the impugned services fall under the definition of input services and set aside the impugned order.
The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that appeal before CESTAT is not valid when National Company Law Tribunal (NCLT) approved a resolution plan on insolvency proceedings and dismissed the Jet Airways (India) Limited.
The appeals before CESTAT have been dropped, according to the bench of S.K. Mohanty (Judicial Member) and M.M. Parthiban (Technical Member), after the NCLT approved the resolution plan in the bankruptcy proceedings involving the corporate debtor of the appellant-assessee firm.
The Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) set aside the demand of Cenvat Credit on invoices issued beyond 14 days from the date of completion of service/receipt of payment.
It was determined that even if the service provider issues the invoice more than the required 14 days after the date of completion of the service or receipt of payment, the cenvat credit cannot be denied in the hands of the service recipient by using Rule 4A (1) of the ST Rules. The service supplier, not the service recipient, is now responsible for issuing the invoice on time. The contested order as well as the claim for the return of CENVAT Credit, interest, and penalty were dismissed by the CESTAT. Appeals were granted.
The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that there is no service tax liability in absence of service receiver and service provider relationship.
“No show cause notice therefore merits issuance to the appellant herein as they are not recipient of service directly from M/s Dipak Paul,” the Bench found. For the contested works order, there is no relationship between TSCBL and M/s Dipak Paul as a service receiver and a service provider.
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that the classification as Heavy Melting Scrap (HMS), is improper when the assessee admitted misdeclaration of imported cut rails as heavy melting scrap and requested for condonation of misdeclaration.
“There is a lot of factual similarity in this case with the matter of Indo Deutsche Trade Links and is inclined to follow the order of the Supreme Court, in the matter, and accordingly since the letter was not taken into consideration by the Commissioner (Appeals), we are inclined to allow the departmental appeal with consequential relief, on description as well as value accept,” the two-member bench made up of Raju, Technical Member, and Somesh Arora, Judicial Member, concluded.
The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed the central excise duty demand, thereby granting relief to M/s Hindalco Industries Limited, the appellant.
The P.K. Choudhary, Judicial Member, and K. Anpazhakan, Technical Member, two-member bench of the Tribunal noted that “When excess paid duty is reconciled against the short payment that net consequence is that there is no short payment by the Appellant. This change was not made by the adjudicating authority. It is against the law to demand duty only on underpayments while ignoring overpayments. As a result, we maintain that the requirement confirmed in the challenged order cannot be met.
The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed penalty under Sections 112(a) and (b) and 114 AA of the Customs Act, 1962 as the seized gold bars was established to be domestically purchased.
The Two-Member Bench of the Tribunal comprising PK Choudhary, Judicial Member and K Anpazhakan, Technical Member observed that the in the argument of the appellants that penalty is not imposable on them under section 112(a)and(b) of Customs Act, 1962. The investigation has not brought in any evidence to establish that Manoj Kumar Seth has intentionally made false statement or declaration warranting penalty under section 114AA of Customs Act, 1962. Hence, we hold that penalties under sections 112(a) and (b) and 114 AA of the Customs Act, 1962 are not imposable in this case.” the Bench concluded.
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