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 May 20th to May 26th 2023.

CESTAT allows Cenvat Credit on Invoices issued by Unregistered Dealer, when Actual Receipt of Goods not Disputed M/s. Marco Blowers (India) Pvt. Ltd. vs Assistant Commissioner CITATION: 2023 TAXSCAN (CESTAT) 548

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed the cenvat credit on invoices issued by unregistered dealer, when actual receipt of goods not disputed.

The Apollo MetalexPVT. Ltd. v. CCE & ST Noida decision was cited by Rajeev Tandon, Technical Member, in support of his argument that it was improper to deny credit based solely on invoices from an unregistered dealer (intermediary supplier) when actual receipt of the goods was uncontested. The Bench noted in its conclusion that nothing prevents a person from utilising a Cenvat Credit when such a facility is expressly provided for by law, the government has stated its intention to do so in a circular to encourage/facilitate ease of doing business, and there is extensive circumstantial evidence demonstrating the receipt of the goods.

CHA is Processing Agent on Documents of Clearance of Goods through Customs House: CESTAT quashes Penalty on Absence of Prior Knowledge on Mis declared Goods Shri Satyender Singh vs Commissioner of CustomsCITATION: 2023 TAXSCAN (CESTAT) 552

The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed the penalty on absence of prior knowledge on mis declared goods and observed that a Customs House Agent (CHA) is a processing agent on documents of clearance of goods through customs house.

The Tribunal of Dr. Rachna Gupta, Judicial Member, noted that, aside from the statements—which were also contradictory—and the fact that none of the deponents were being cross-examined by the appellant in this case, it was determined that there was insufficient evidence to link the appellants to the exporter's gross misrepresentation of the consignment's description and value. "It is obvious that there is no evidence in the file to suggest that the appellants were aware of the purported misstatement. In light of these facts, the tribunal stated that the ruling penalising the appellants is now upholdable.

CESTAT allows Interest on Auction Sale Proceeds from Date of receipt of Amount by Customs Department till Date of Disbursal M/s.Oriental Trimex Limited vs Commissioner of Customs (Import) CITATION:   2023 TAXSCAN (CESTAT) 550

The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), allowed interest on auction sale proceeds from the date on which amount was received by the Customs Department till the date of disbursal.

"Revenue shall disburse the amount of sale proceeds pursuant to auction sales by only adjusting the amount of penalty," the Tribunal of Anil Choudhary, Member (Judicial), stated. No redemption penalty may be changed. Additionally, from the day the money was received by the Customs Department to the date of disbursal, the appellant shall be entitled to interest on the proceeds of the auction sale; the rate of interest shall be in accordance with the Rules.

No Service Tax on Value of Sale of Books Separately Identifiable from Audited Financial Statement and sold to Third Parties: CESTAT Kanhaiya Singh Vision Classes Private Limited vs Commissioner of CGST & CX CITATION: 2023 TAXSCAN (CESTAT) 551

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that no service tax can be levied on value of sale of books separately identifiable from audited financial statement and sold to third parties.

"We find that since the value of sale of books is separately identifiable from the audited financial statements of the Appellant and there are documents to show that such sale was also made not to the students but to third parties as well, the question of levying service tax on such value from sale of books/publication cannot be sustained," the two-member bench made up of PK Choudhary, a judicial member, and K Anpazhakan, a technical member, stated.

CESTAT Grants Service Tax Refund on Renting of Immovable Property Services Amneal Life Sciences Pvt Ltd vs C.S.T.-Service Tax CITATION: 2023 TAXSCAN (CESTAT) 549

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), granted service tax refund on renting of immovable property services.

The Bench further noted that the declaration in Form A-1 regarding the service provider and the refusal of refund on this ground appeared to be totally thin, which was the second reason for rejecting the refund claim. The fact that the appellant got the service and the service tax was abated on these services has not changed, and neither has anyone objected to it.

No Document to Prove Discharge of Customs Duty Liability for Foreign Currency: CESTAT decides Foreign Currency as Smuggled even though not Recovered from Customs Area Janki Dass Madan vs Commissioner of Customs CITATION: 2023 TAXSCAN (CESTAT) 553 

The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), that the seized gold is of smuggled nature even though they were not recovered from the customs area as no document was produced to prove discharge of customs duty liability for gold.

"The appellants could not produce any document about discharging their customs duty liability," the tribunal chaired by Dr. Rachna Gupta, said. As a result, the evidence sufficiently established that the appellants were buying gold in clear violation of the Customs Act and that the gold they bought passed through the customs area covertly without being charged customs duty, establishing that the appellants were engaged in the smuggling of gold.Three of the appellants claimed to have given him the aforementioned cash, and this is supported by the paperwork that was found on their property.

Resultantly, irrespective, the currency/gold were not recovered from the customs area, the trading thereof is definitely in violation of the Customs Act and the goods are definitely the smuggled goods” the Bench concluded.

Appeal not barred by Limitation in absence of Material Evidence to prove the Order Passed Date and Served Date as same: CESTAT M/s Johnsons Controls-Hitachi Air Conditioning India Ltd vs Commissioner of CGST & Central Excise Jammu & KashmirCITATION: 2023 TAXSCAN (CESTAT) 556

The Chandigarh bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that appeal is not barred by limitation in the absence of material evidence to prove the order passed date and served date as same.

It was noted that the respondent had not been able to present any proof that the order dated 25.03.2019 was indeed served on that day, 25.03.2019, as claimed by the respondent. There is no evidence in the file demonstrating that the appellant was actually served with a copy of the order on March 25, 2019, as indicated by the dispatch register provided by the respondent. 

The challenged order was set aside by a single member, Mr. S. S. Garg (Judicial), who further directed the Commissioner (Appeal) to decide the appeal on the merits after finding that the dismissal of the appeal based on limitation was not supported by the law.

Adjudication Authority failed to give the opportunity to submit Documents: CESTAT directs Re-adjudication M/s. Lexmark International (India) Pvt. Ltd. vs Commissioner of CGST & CX CITATION: 2023 TAXSCAN (CESTAT) 557

The Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) directed the re-adjudication since the adjudication authority failed to allow submitting Documents.

In all of the appeals, Mr. R. Muralidhar, (Judicial) was the lone member who sent the case back to the adjudicating authority. It was decided that the adjudicating authority would uphold the principles of natural justice and permit the appellant to submit all documentary evidence in support of their claim. The adjudicating authority is required to wrap up the proceedings within 4 months of receiving this order because the matter relates to the year 2018.

Independent Manufacturer liable to pay Excise Duty on the Marble Slabs Manufactured on Job Work Basis: CESTAT directs Re-adjudication M/s Commissioner of Central Goods And Service Tax vs Sonex Marmo Grani Pvt Ltd CITATION: 2023 TAXSCAN (CESTAT) 554

The New Delhi bench of the Custom, Excise & Service Tax Appellate Tribunal (CESTAT) held that the independent manufacturer is liable to pay Central Excise Duty on the marble slabs manufactured on a job work basis. The CESTAT directs the original adjudicating authority for Re-adjudication.

It was held that Job workers are liable to pay duty as they are carrying out manufacturing activity independently, even if raw materials and designs were given by the appellant. While allowing the appeal and cross-objections the court directed the matter to the original Adjudicating Authority for re-adjudication of appeals and cross objections, recalculation of SSI exemption, reduced penalty amount, and opportunity of hearing within 45 days.

Value of Sale of Book Separately Identifiable from Audited Financials Statements, No Service Tax leviable on Consideration received on Publication Section L: CESTAT M/s. Kanhaiya Singh Vision Classes Private Limited vs Commissioner of CGST & CX CITATION: 2023 TAXSCAN (CESTAT) 555

The Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT)has held that service tax is not leviable on consideration received on Publication of Section L, as the value of the sale of the book separately identifiable from audited financials statements.

A two-person panel made up of Shri P K Choudhary (Judicial) and Shri K Anpazhakan (Technical) determined that the question of whether to levy service tax on the value from the sale of books or publications cannot be sustained because the value of the sale of books is separately identifiable from the appellant's audited financial statements, and there are documents to support the fact that the sale was made to third parties rather than students. 

The CESTAT dismissed the contested order while allowing the appeal.

Service Tax Refund cannot be denied to any Person who has Borne the Incidence of Tax: CESTAT M/s Quality Builders & Contractor vs Commissioner of Central Excise CITATION:   2023 TAXSCAN (CESTAT) 558

The Delhi bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that a service tax refund cannot be denied to any person who has borne the incidence of tax.

A two-person panel made up of Justice Dilip Gupta, President, and Ms. Hemambika R Priya, (Technical), noted that Rajasthan Housing Board has also subtracted the service tax due from the bills presented by the appellant utilising the reverse charge process. Furthermore, it was decided that the appellant, who had to pay the tax, could not have their refund withheld from them.  The CESTAT revoked the contested order and permitted reimbursement.

Failure by Dept to Submit Date of Communication of Order to Calculate Limitation Period: CESTAT upholds the Order in Favour of Usha Internationals Commissioner of Customs (Exports) vs M/s. Usah International Ltd CITATION: 2023 TAXSCAN (CESTAT) 559

The Chandigarh bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) upheld the Order in favour of Usha Internationals as the department had failed to submit the date of communication of the order to calculate the limitation period.

The refund sum had previously been settled, according to a two-member bench made up of Ms. Sulekha Beevi C. S. (Judicial Member) and Mr. Vasa Seshagiri Rao (Technical Member), who also paid interest.  As a result, the appeal was rejected by the bench.

Cenvat Credit on Service Tax cannot be denied due to Procedural Irregularities: CESTAT allows Cenvat Credit to Reliance HR Services Ltd Reliance HR Services Private Limited vs Assistant Commissioner of Service Tax CITATION: 2023 TAXSCAN (CESTAT) 560

In the case of Reliance HR Services Ltd, the Customs, Excise &Service Tax Appellate Tribunal (CESTAT) allowed the Cenvat Credit and held that the Cenvat Credit on Service Tax cannot be denied due to Procedural Irregularities.

According to a two-member bench made up of Mr. P Anjani Kumar, Member (Technical) and Justice Dilip Gupta, President, "the acknowledgement of due discharge of tax liability on 'output service' for which the impugned services were procured and, in the absence of evidence to the contrary, deployed suffices to entitle the appellant under the scheme of Cenvat credit." The court upheld the appeal while reversing the challenged order.

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