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 June 24 to June 30, 2023.

Cenvat Credit of Input Sponge Iron, Utilized in Manufacturing of Finished Goods of Pig Iron: CESTAT quashes Penalty on Director Anjaney Ispat Limited vs Commissioner of Central Excise 2023 TAXSCAN (CESTAT) 700

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed penalty on Director as the Cenvat credit of input Sponge Iron was utilized in the manufacturing of the finished goods of Pig Iron.

A Two-Member Bench of the Tribunal comprising P.K Choudhary, Technical Member and K Anpazhakan, Judicial Member observed that “The duty paid nature of the Sponge Iron was also not in dispute. Since receipt, utilization and duty paid nature of the input Sponge Iron was not in dispute, we hold that the Appellant are eligible for the Cenvat credit of the input Sponge Iron, as the same has been utilized in the manufacturing of finished goods Pig Iron. We observe that there was no violation committed by the Director Uday Singh. Thus, we hold that no penalty is imposable on the Director under Rule 15(1) of Cenvat Credit Rules, 2004.”

Larger Period of Limitation u/s 11A(1) of Central Excise Act Could Not  be Proceed Unless Holder for valuable consideration Shown to be Party to Fraud: CESTAT Jai Balaji Industries Limited vs Commissioner of Central Excise 2023 TAXSCAN (CESTAT) 699

The Kolkata bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that a larger period of limitation under section 11A(1) of the Central Excise Act could not proceed unless the holder for valuable consideration shown to be a party to fraud.

“Since there was no evidence that even if the goods were not manufactured by M/s.Saha Industries the fact remained that the same was duly received by the Appellant and M/s.Saha Industries have duly discharged the central excise duty on the same,” the two-member bench comprising of Shri P.K Choudhary, Member(Judicial) and Shri K Anpazhakan, Member(Technical).

RFG formed by conversion of Energy in form of Electricity on partially processed input, Rule 4(5)(a) of Cenvat Credit Rules not applicable: CESTAT Haldia Petrochemicals Limited vs Commissioner of Central Excise 2023 TAXSCAN (CESTAT) 698

The Kolkata bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that Rule 4(5)(a) of Cenvat Credit Rules, 2004 is not applicable as the Residual Fuel Gas (‘RFG’) formed by conversion of Energy in the form of Electricity on partially processed input.

In light of Maharashtra Aldehydes & Chemicalscase wherein the duty demand on the intermediate product cleared under Rule 4(5)(a) of the CCR was dropped. The two-member comprised of Shri P.K Choudhary, Member (Judicial) and Shri K Anpazhakan, member(technical) allowed the appeal.

Adjudication Order Passed without Allowing Cross-Examination is Gross Violation of Natural Justice: CESTAT quashes Customs Duty Demand Indu Overseas Pvt. Limited vs Commissioner of Central Excise & ST 2023 TAXSCAN (CESTAT) 697

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed customs duty demand and observed that the adjudication order passed without allowing cross-examination is gross violation of natural justice.

Quashing the customs duty demand, a Two-Member Bench of the Tribunal comprising Mr. Ramesh Nair, Member (Judicial) and C L Mahar, Member (Technical) observed that “We are of the view that it is necessary on the part of the Adjudicating Authority to accord opportunity of cross-examination of witnesses whose statements have been used as evidence in the matter. It is mandatory for Adjudicating Authority to follow the principles of natural justice.”

Provision as per GAAP towards Sharing Expenditure on Receipt of Sponsorship Services, not Subject to Tax: CESTAT rules in Favour of Vodafone idea M/s. Vodafone Idea Limited vs The Commissioner of Central Excise 2023 TAXSCAN (CESTAT) 692

In a significant ruling in favour of Vodafone idea ltd, the Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that provision as per the Generally Accepted Accounting Principles (GAAP) towards sharing expenditure on receipt of sponsorship services is not subject to tax.

In many decisions of the Tribunal, it has been held that no Service Tax is payable on sponsorship of IPL and ICC cricket tournaments during the impugned period. In light of judgements, the two-member panel comprising of Mr P Dinesha, Member (Judicial) and Mr Vasa Seshagiri Rao, Member (Technical) held that “the provisions made in the books of account by the appellant as per the GAAP towards sharing the expenditure on account of receipt of sponsorship services cannot be subjected to tax as the ingredients for levy of tax are not fulfilled in the absence of any provision of service and when payments were made only about sponsorship of the IPL Cricket tournament.”

Composite Contract cannot be Artificially Bifurcated to Levy Service Value: CESTAT quashes Service Tax Demand Walchandnagar Industries Limited vs Commissioner of Central Excise & Service Tax 2023 TAXSCAN (CESTAT) 693

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed service tax demand and noted that the composite contract cannot be artificially bifurcated to levy service.

A Two-Member Bench of the Tribunal comprising PK Choudhary, Judicial Member and K Anpazhakan, Technical Member observed that “There is no value assigned for any service in the contract. In addition to supply of goods, the Appellant rendered the service of supervising the erection, installation and commissioning of the plant, which is liable to service tax. Even though there was no separate value assigned for this service in the contract, the Appellant worked out the cost of these services based on the man hours used for these services and paid service tax of Rs.8,76,154/-.”

Value of PPF Funds Management Services Received Prior to 10.9.2004, in respect of “Operation of Bank Accounts” not Subject to Service Tax: CESTAT M/s State Bank of India vs Commissioner of Service Tax-II 2023 TAXSCAN (CESTAT) 696

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that the value of Public Provident Fund (PPF) funds management services received by the service provider prior to 10.9.2004, in respect of “operation of bank accounts” is not subject to service tax.

The Bench also noted that “We find that the appellant is eligible to claim refund of service tax paid under protest in terms of the proviso to Section 11B, subject to the condition that such a refund claims are required to be filed in terms of section 11B of Central Excise Act, 1944, which have been made applicable to service tax as per Section 83 of the Finance Act, 1994.”

Refund Claim of Sugar Cess Rejected based on Pending Order of Higher Authority: CESTAT sets aside Rejection Order in Absence of Evidence M/s. Diamond Beverages Private Limited vs Commissioner of CGST & CX 2023 TAXSCAN (CESTAT) 694

The Kolkata bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has set aside the rejection order of the refund claim of sugar cess in the absence of evidence showing the pending order of the Higher Authority.

The CESTAT held that “the appellate order to that extent goes beyond the allegations raised in the SCN and cannot be sustained.”

Claim for Refund, even where Tax has been Paid under Mistake of Service Tax Law to be Decided upon u/s 11B of Central Excise Act: CESTAT GAIL India Ltd. vs Commissioner of GST & Central Excise 2023 TAXSCAN (CESTAT) 691

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that the Claim for refund, even where tax has been paid under mistake of service tax law to be decided upon under Section 11B of Central Excise Act, 1944.

A Two-Member Bench of the Tribunal comprising Sulekha Beevi C.S., Member (Judicial) and M. Ajit Kumar, Member (Technical) observed that “While this is a fresh legal issue which has not been examined by the Original Authority, it is no longer in dispute that claims for refund, even where tax has been paid under a mistake of service tax law are to be filed and decided upon under Section 11B of the Central Excise Act, 1944, subject to the claimant establishing that burden of duty has not been passed on to third parties.”

No Duty Demandable on Semi-Finished and Finished Goods when it was Exported after Payment of Duty u/s 3(1) of Central Excise Act: CESTAT M/s. Annur Cotton Mills vs Commissioner of Central Excise 2023 TAXSCAN (CESTAT) 695

In a significant case, the Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that no duty demandable on semi-finished and finished goods when it was exported after payment of duty under section 3(1) of Central Excise Act, 1944.

A Two member bench comprising Ms Sulekha Beevi C S, Member (Judicial) and Mr M Ajit Kumar, Member (Technical) concluded that the duty demand raised on the semi-finished goods and finished goods cannot be sustained for the reason that the goods have already been exported and that too on payment of duty under Section 3(1) of Central Excise Act, 1944. While allowing the appeal, the CESTAT held that the “appellant is eligible to avail credit of duty paid on finished goods and semi-finished goods.”

Salary not Covered by Provisions of Service Tax: CESTAT quashes Service Tax Demand M/s. Kellogg India Pvt. Ltd. vs Commissioner of CGST & CE, Belapur 2023 TAXSCAN (CESTAT) 690

Quashing the service tax demand, the Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that Salary is not covered by provisions of service tax.

A Two-Member Bench of the Tribunal comprising Anil G. Shakkarwar, Member (Technical) and Dr. Suvendu Kumar Pati, Member (Judicial) observed that “The basic fundamental of charging service tax at ad valorem is that the service provider has to receive consideration from the service recipient. Here as per the show cause notice, the appellant has not received any consideration and, therefore, the question of payment of service tax does not arise. The amount which is stated by Revenue in the show cause notice is the amount not paid as salary and retained by the appellant. Salary is out of the purview of service tax.”

CESTAT Allows Appeal of Arcelor Mittal Projects India Limited as Limitation Period for Refund to be Calculated u/s 9 & 10 of General Clauses Act Arcelormittal Projects India Limited vs C.C. 2023 TAXSCAN (CESTAT) 689

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad bench has allowed the appeal filed by ArcelorMittal Projects India Limited, a leading steel manufacturer stating that the limitation period for the refund claims of the assessee shall be calculated in accordance with Sections 9 and 10 of the General Clauses Act, 1897.

The two-member bench consisting of Ramesh Nair (Judicial Member) and C. L. Mahar (Technical Member) focused on the issue of whether the refund claims were within the one year limitation period from the date of payment. The bench analyzed the relevant provisions regarding the commencement, termination, and computation of time contemplated under Sections 9 and 10 of the General Clauses Act, 1897. The bench held that the refund claims filed by the assessee were indeed within the stipulated one year period. The bench observed that according to Section 9 of the General Clauses Act, 1897 the date of deposit of duty on August 26, 2011, and August 25, 2011, meant that the one-year period commenced on August 27, 2011, and August 26, 2011, respectively. Consequently, the first refund claim filed on August 27, 2012, fell well within the one year limit. The bench also clarified that even though the one year period for the second refund claim technically ended on August 26, 2012, as it was a sunday, the filing of the claim on monday, August 27, 2012, was deemed to be within the prescribed time limit as per Section 10 of the General Clauses Act, 1897. In result, the bench set aside the order and allowed the appeal.

Compensation Received for Cancellation of Sale Agreement not Declared Service under Section 66E(e) of Finance Act: CESTAT M/s. M.N.Dastur & Company Private Limited vs Commissioner of Service Tax 2023 TAXSCAN (CESTAT) 686

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that the compensation received for the cancellation of sale agreement not “Declared Service’ under Section 66E(e) of the Finance Act, 1994.

A Two-Member Bench of the Tribunal comprising PK Choudhary, Judicial Member and K Anpazhakan, Technical Member observed that “We are of the considered view that the receipt of compensation cannot, by any stretch of imagination, fall under the provisions of Declared Service under Section 66E(e) of the Finance Act.”

No requirement to follow Procedure under Rule 4A of Service Tax Rules in Absence of Head Office-Branch Office Basis: CESTAT IVAX Paper Chemicals Ltd. vs Commissioner of Central Tax 2023 TAXSCAN (CESTAT) 688

The Hyderabad bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that there is no requirement to follow the procedure under Rule 4A of the Service Tax Rules, 1994, since, there was no head office branch office basis relation between the appellant company and its other units.

The appeal was partly allowed by way of remand for redetermination of the amount of eligible credit out of total demand and for recovery of the remaining amount, levy of interest applicable, and imposition of a penalty with reference to such ineligible credit, so determined.

CESTAT Quashes Order as SCN Deemed Time-Barred, Issued Beyond Period of Limitation KANDLA PORT TRUST vs C.C.E. & KUTCH 2023 TAXSCAN (CESTAT) 687

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad bench has quashed an order related to a service tax appeal on the grounds that the Show Cause Notice (SCN) was deemed time-barred and issued beyond the period of limitation.

The bench kept the issue of taxability open, considering that the SCN did not raise a demand for service tax despite the appellant having paid it. In result, the bench quashed the order and allowed the appeal.

Error in Recorded Statement not Relevant when Gold Biscuits are of Foreign Origin: CESTAT upholds Confiscation Shri Jochan Michael vs Commissioner of Customs 2023 TAXSCAN (CESTAT) 683

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), upheld the confiscation of the gold biscuits and noted that the error in recorded statement is not relevant when the gold biscuits are of the foreign origin.

Upholding the confiscation of the gold biscuits, a Single Member Bench of the Tribunal of R. Muralidhar, Member (Judicial) observed that “the Recorded statements did not specify that the same were being recorded in terms of Section 108 of Customs Act, 1962. However, the appellants are required to support their claim by way of proper Invoices in the first place. They were not in a position to prove the same. Therefore, even the error pointed out about the Recorded Statement cannot come to the rescue of the appellants.”

CESTAT Upholds Utilisation of Cenvat Credit of Basic Excise Duty for Payment of Education Cess & Secondary Higher Education Cess Welspun Corp Limited vs C.C.E. & S.T.-Rajkot 2023 TAXSCAN (CESTAT) 685

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad has held that Cenvat Credit of Basic Excise Duty can be utilised for payment of Education Cess and Secondary Higher Education Cess.

The bench emphasized that the issue is no longer res integra, as settled by the earlier decisions. As a result, the order was set aside, and the appeal filed by Welspun Corp Limited was allowed thus reaffirming the right of businesses to utilise available credits for payment of education cess and higher education cess.

Suppression cannot be Alleged by Department for Income Reconciliation of Books and ST 3 Returns: CESTAT quashes Service Tax Demand M/s. Bimal Auto Agency vs Commissioner of CGST & CX 2023 TAXSCAN (CESTAT) 684

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed the service tax demand and observed that the suppression cannot be alleged by the department for income reconciliation of books and ST 3 returns.

A Two-Member Bench of the Tribunal comprising P.K Choudhary, Judicial Member and K Anpazhakan, Technical Member observed that “Since there had been service tax audit conducted prior to the DGGI investigation covering the period under dispute, we are of the considered view that suppression cannot be alleged by the department for income reconciliation of books and ST 3 returns as no such allegation was raised during department audit. we are of the view that the entire demand of service tax has to go.”

Customs Duty, Redemption Fine and Penal Action can be Confirmed on Establishment that Customs Duty Paid on Raw Material Sent to Job Workers not Received by 100% EOU of Appellant: CESTAT Sun Pharmaceuticals Industries Ltd vs C.C.E. & S.T.-Surat-ii 2023 TAXSCAN (CESTAT) 683

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that the customs duty, redemption fine and penal action can be confirmed on the establishment that customs duty paid on raw material sent to job workers not received by 100% Export Oriented Units (EOU) of the appellant.

A Two-Member Bench of the Tribunal comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member observed that “In this case, we find that the appellant has violated the faith imposed in them in as much as they did not even bother to check whether the job worker declared by them for the manufacture of an intermediate product exists at the time declared manufacturing unit or not. It also shows the carelessness on the part of the manufacturer in failing to ensure that the duty-free import or acquired are being sent to the right place which has been declared by them for the manufacture of the intermediate products.” “We are of the view that duty, redemption fine and penal action can be confirmed only if it is established that duty paid on raw material which was sent to the job workers have not been received by the 100% EOU of the appellant” the Bench concluded.

Parts of Tricycle Imported Separately cannot be Clubbed for Classification Purpose: CESTAT Quashes Appeal Filed for Value Enhancement M/s. Baba Baidyanath Trading Company vs Commissioner of Customs 2023 TAXSCAN (CESTAT) 682

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Big Bull Traders Pvt Ltd (Appellant 1) is a manufacturer of Tricycle and holds ICAT certificate issued by the designated agency. They are authorized to manufacture Tricycles operated by battery under Motor Vehicle Rules. Baba Baidyanath (Appellant 2) is a Trading Company dealing in parts of Tricycle.

A Two-Member Bench of the Tribunal comprising PK Choudhary, Judicial Member and K Anpazhakan, Technical Member concluded that “We observe that the Notice proposes to adopt the value of Rs 33,000 per Tricycle as per the assessable value available for fully finished tricycle in the National Import Database (NIDB) data. There is no evidence available to establish that the goods for which value is available in NIDB and the impugned goods imported by the Appellants together are similar goods. Hence, we hold that the adjudicating authority has rightly rejected the value of 33,000 proposed in the Notice. Accordingly, we hold that the department’s appeal for value enhancement is liable for rejection.” “The goods imported by both the Appellants cannot be clubbed for classification purpose. The goods imported by the appellants were not in CKD condition and therefore goods cannot be classified under Customs Tariff Heading (CTH) 87038040. The goods are rightly classifiable under CTH 87089900” the Bench noted.

Service Tax Demand Under “Management or Business Consultant Service” For Period Before 16.05.2008 is not Valid: CESTAT Basf India Ltd vs C.C.E. & S.T.-Surat-ii 2023 TAXSCAN (CESTAT) 681

The Ahmedabad bench Customs, Excise and Service Tax Appellate Tribunal (CESTAT) have held that service tax demand under “Management or Business Consultant Service” for the period before 16.05.2008 is not valid.

The two-member bench comprising Mr Ramesh Nair, Judicial Member and Mr C L Mahar, Technical Member observed that implementation of the ERP services is specifically covered under the information technology service, which was effective only from 16-5-2008. Under these circumstances, it cannot be liable to Service Tax for a period before that. It was evident that the entire period in the present case is before 16-5-2008. The CESTAT bench held that “the appellant has made out a strong case for waiver of penalties invoking Section 80 of the Finance Act, 1994. Accordingly, we set aside the penalties imposed in the impugned order.”

Availing CENVAT Credit by Bills of Entry on basis of Forged VKGUY and DEPB License is Invalid: CESTAT Hindalco Industries Limited vs C.C.E-Bharuch 2023 TAXSCAN (CESTAT) 606

The Ahmedabad bench Customs, Excise and Service Tax Appellate Tribunal (CESTAT) availing Cenvat credit by bills of entry based on Vishesh Krishi and Gram Udyog Yojana (VKGUY) and Duty Entitlement Pass Book (DEPB)licences is invalid.

The two-member bench comprising Mr Ramesh Nair, Judicial Member and Mr C L Mahar, Technical Member observed that “the genesis of this case is the fraudulent obtainment of VKGUY & DEPB licences regarding that custom matter the appellants were issue show cause notice dated 05.11.2012 which was adjudicated vide order-in-original passed by customs commissioner.” Since the adjudication order in the customs matter was not considered by the Adjudicating Authority, the CESTAT remitted back the matter to the adjudicating authority for reconsideration. Accordingly, the impugned order was set aside and allowed the appeal by way of remand.

Commissioner can Remand Matter to Lower Authority for Examining Documentary Evidence Regards to Unjust Enrichment: CESTAT rules in Favour of Indian Oil Corporation C.C.E vs Indian Oil Corporation Ltd 2023 TAXSCAN (CESTAT) 680

Tin the case of Indian Oil Corporation, the Ahmedabad bench Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the Commissioner can remand the matter to a lower authority for examining documentary evidence regards to unjust enrichment.

The two-member bench comprising Mr Ramesh Nair, Judicial Member and Mr C L Mahar, Technical Member observed that “it is settled that Commissioner (Appeals) has indeed the power to remand the matter to Adjudicating Authority to decide afresh. Moreover, by remanding the matter to the Adjudicating Authority there is nothing prejudicial to the Revenue.” The CESTAT upheld the impugned order and dismissed the appeal of the revenue.

Penalty not Demandable when Assessee has Not Crossed the Threshold limit on Exemption: CESTAT sets aside Demand relying on Form H M/s.Annai Chemicals and Associators vs The Commissioner of GST & Central Excise 2023 TAXSCAN (CESTAT) 677

The Chennai bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that penalty is not demandable when the assessee has not crossed the threshold limit on the exemption and set aside demand relying on Form H.

The two-member bench comprising Ms Sulekha Beevi C.S., Member (Judicial) and Shri M. Ajit Kumar, Member (Technical) held that “it is observed from the record that the merchant exporter exported the goods which were not disputed at any point of time.” While allowing the appeal, the Bench set aside the impugned order.

No Penalty under Excise Act Invokable When Duty with interest Levied u/s 12BB on Clearance of Engine to Sister Concern: CESTAT M/s. Caterpillar India Pvt. Ltd vs Commissioner of GST & Central Excise 2023 TAXSCAN (CESTAT) 679

The Chennai bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that penalty under the excise act is not invokable when duty with interest levied under section 12BB on clearance of engine to sister concern.

It was evident that the condition has not been satisfied by the assessee. “Rule 12BB casts the liability on the recipient unit. The appellant is therefore liable to pay duty on the engines. It is also an admitted fact that there is a delay in making the payment. Rule 12BB not only defers the payment of duty but also shifts the liability on the recipient unit. The Rule itself states that if the condition is not satisfied the duty along with interest has to be paid by the recipient unit. We therefore do not find any grounds to interfere with the demand of interest and we uphold the same”, the two-member bench comprising Ms Sulekha Beevi C.S., Member (Judicial) and Shri M. Ajit Kumar, Member (Technical) held.

One-year Period for Filing Refund has to be from the Date of Finalization of the Bill of Entry when the Provisional Assessment was made Initially: CESTAT Shital Ispat Pvt Ltd vs C.C.-Jamnagar(prev) 2023 TAXSCAN (CESTAT) 678

The Ahmedabad bench Customs, Excise and Service Tax Appellate Tribunal (CESTAT) have held that One-year Period for Filing Refund has to be from the Date of Finalization of the Bill of Entry when the Provisional Assessment was made Initially.

The CESTAT directed to re-considered the matter after verifying the provisional assessment and final assessment of the bill of entry and also taking into consideration the above-cited tribunal’s judgment in the case of Bharat Ship Breakers Corporation and others. While allowing the appeal, the CESTAT set aside the impugned orders.

Allegation of Wrong Availment of Exemption by Abatement under Exemption Notification: CESTAT sets aside Demand of Service Tax in Absence of Misdeclaration M/s. Sundharams Private Limited vs Commissioner of G.S.T. and Central Excise 2023 TAXSCAN (CESTAT) 676

The Chennai bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) sets aside the demand of Service Tax in the absence of misdeclaration on the allegation of wrong availment of exemption by abatement under exemption notification.

A two-member bench comprising Mr P Dinesha, Member (Judicial) and Mr Vasa Seshagiri Rao, Member (Technical) has observed that the claim of abatement available in the S.T.-3 returns which were only sought to be denied and that per se would not amount to misdeclaration because the appellant claimed the abatement based on its understanding of the law and the authority chose to deny the same perhaps giving a different interpretation of the Notification. While allowing the appeal, the CESTAT set aside the impugned order and allow the appeal with consequential benefits, if any, as per law.

CA Certificate is Not Enough to Prove Incidence of Duty: CESTAT Remand Matter to Original Authority Pelican Rubber Ltd vs Commissioner of Customs 2023 TAXSCAN (CESTAT) 675

In a significant case, the Hyderabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that a CA certificate is not enough to prove the incidence of duty.

A single-member bench comprising Mr AK Jyotishi, Member (Technical) referred back the matter to the Original Authority to go through the documents furnished by them and any other additional evidence or documents which he might require to conclude whether the principle of unjust enrichment is invokable in the instant case or otherwise. “Merely CA Certificate per se cannot be the sole ground for proving that they have not passed on the incidence of duty if the sanctioning authority is not satisfied with the documents and he may also rely in addition on any other documents to conclude as to whether duty incidence has been passed on to the customer or not in the facts of the case.”, the CESTAT bench held.

Place of Service of Business /commerce should be the location of Service of Recipient: CESTAT M/s. SNQS International Socks Private Limited vs Commissioner of Central Excise and Service Tax 2023 TAXSCAN (CESTAT) 674

The Chennai bench Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the place of Service of business or commerce should be the location for the service of recipient.

The two-bench member comprising of P. Dinesha (Judicial member) and Vasa Seshagiri Rao (Technical member) held that the activities of the appellant will be coming under business support services and would not be falling under intermediary services, the place of provision of the services applicable to the appellant, is the location of the service recipient, in terms of Rule 3 of the Place of Provision of Services Rules, 2012. The Rule 9 is not applicable to the appellant as the services rendered by him in relation to the procurement of goods to the foreign client are on his own account. The appellant is not said to be acting as an intermediary i.e. the services were performed by the appellant on a principal-to-principal basis and at an arm’s length basis. Therefore, the appeal was allowed with consequential relief.

Brand Promotion by Cricket Player Pinal Rohit Shah as per Agreement with Mumbai Indians does not fall under Business Auxiliary Service: CESTAT Pinal Rohit Shah vs C.C.E. & S.T.-Vadodara-ii 2023 TAXSCAN (CESTAT) 673

The Ahmedabad bench Customs, Excise and Service Tax Appellate Tribunal (CESTAT) have held that brand promotion by cricket player Pinal Rohit Shah as per agreement with the Mumbai Indians does not fall under Business Auxiliary Service.

The two-member bench comprising Mr Ramesh Nair, Judicial Member and Mr C L Mahar, Technical Member has held that the demand under Business Auxiliary Service does not sustain and set aside the impugned order.

Defunct Manufacturer Eligible for Refund of Unutilised CENVAT Credit accumulated on export of finished goods under Bond & LUT: CESTAT Remanded Matter Suraj Ropes vs C.C.E. & S.T.-Rajkot 2023 TAXSCAN (CESTAT) 672

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad has held that a Defunct Manufacturer is eligible for refund of the unutilised CENVAT Credit accumulated on export of finished goods under Bond & Letter of Undertaking (LUT) without payment of Duty and thus remanded the Excise Tax appeal back to the Original Authority for fresh consideration verifying the facts.

In result, the appeal is allowed by way of remand to the original adjudicating authority to decide the matter fresh.

No Separate Service Tax on Commission Received from BSNL When Assessee Included it in Gross Sale Price of SIM Card Sold Customers: CESTAT Messrs Hari Om Marketing vs C.C.E. & S.T.-Vadodara-i 2023 TAXSCAN (CESTAT) 670

The Ahmedabad bench Customs, Excise and Service Tax Appellate Tribunal (CESTAT) have held that no separate service tax demandable on commission was received from BSNL when the assessee included it in the gross sale price of sim card sold to customers.

In light of the Judicial decision, the two-member bench comprising Mr Ramesh Nair, Judicial Member and Mr C L Mahar, Technical Member set aside the impugned order and allowed the appeal.

Value of Free Supply Material Needs to be Added with Gross Value of Construction Service to Avail Benefit under Service Tax: CESTAT Smp Constructions Pvt Ltd vs C.C.E. 2023 TAXSCAN (CESTAT) 671

The Ahmedabad bench Customs, Excise and Service Tax Appellate Tribunal (CESTAT) have held that the value of free supply material needs to be added with the gross value of construction service to avail of the benefit under service tax.

On the interpretation of the explanation given in notification 15/2004 as well as Notification No.01/2006-ST, and in light of Judgement the two-member bench comprising Mr Ramesh Nair, Judicial Member and Mr C L Mahar, Technical Member held that the demand is not sustainable.

Payment of Interest does not Arise in Revenue Neutral Situation, no Duty to be Paid: CESTAT M/s. Jai Balaji Industries Limited vs Commissioner of Central Excise 2023 TAXSCAN (CESTAT) 665

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), recently ruled that the payment of interest does not arise in case of revenue neutral situation and hence no duty is to be paid.

A Two-Member Bench of the Tribunal comprising Ashok Jindal, Judicial Member and K Anpazhakan, Technical Member observed that “we hold that it is the revenue neutral situation, no duty is payable by the appellant therefore whatever duty paid by the appellant Cenvat credit of the same has been availed by the sister unit, the question of payment of interest does not arise.”

Process of Re-Crystallisation and Distillation not Manufacture under Central Excise Act: CESTAT quashes Excise Duty Demand M/s.Ganga Rasayanie vs Commissioner of Central Excise 2023 TAXSCAN (CESTAT) 666

Quashing the excise duty demand the Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), held that the process of re-crystallisation and distillation does not manufacture under the Central Excise Act, 1944.

A Two-Member Bench of the Tribunal comprising PK Choudhary, Judicial Member and K Anpazhakan, Technical Member observed that “we hold that the processes undertaken by the appellant would not amount to manufacture within the meaning of Section 2(f) of Central Excise Act, 1944 and hence the finished goods are not leviable to Central Excise duty. Accordingly, the demand made in the impugned order is liable to be set aside.”

Squid Liver Powder Classifiable as Other Preparations of Animal Feeding under Customs Tariff Act: CESTAT M/s. Avanti Feeds Limited vs Commissioner of Customs 2023 TAXSCAN (CESTAT) 662

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that the Squid liver powder is classifiable as other preparations of animal feeding under the head Preparations of a kind used in animal feeding in the Customs Tariff Act, 1975 (CTA).

A Two-Member Bench of the Tribunal comprising CS Sulekha Beevi, Judicial Member and M Ajit Kumar, Technical Member observed that “We find that the classification of the ‘Squid Liver Powder’ has been correctly done under CTH 23099090 and hence the impugned orders are upheld.”

Grant of Licence to Operate and Run Hotel Business Not Taxable under ‘Renting of Immovable Property Service’: CESTAT quashes Service Tax Demand M/s.Spencer International Hotels Ltd vs Commissioner of GST & Central Excise 2023 TAXSCAN (CESTAT) 667

Quashing the service tax demand, the Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that the grant of licence to operate and run hotel business is not taxable under the category of ‘Renting of Immovable Property Service’.

A Two-Member Bench of the Tribunal comprising CS Sulekha Beevi, Judicial Member and M Ajit Kumar, Technical Member observed that “After appreciating the facts, evidence and applying the decision in the case of Grand Royale Enterprises, we are of the considered view that the demand cannot sustain both on merits as well as on limitation and requires to be set aside which we hereby do.”

Ignorance of Indian Baggage Rules by Non-Resident Indians of UK: CESTAT Reduces Penalty Imposed Deepali Suresh Padhiar vs C.C 2023 TAXSCAN (CESTAT) 669

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), reduced the amount of penalty imposed on the ground that the ignorance of Indian Baggage Rules was made by a non-resident Indian of the UK.

A Single Member Bench of the Tribunal comprising Mr Ramesh Nair, a Judicial Member observed that “I find from the facts that, it does not appear that the appellant has any intention to smuggle the gold. This has already been recorded by the Commissioner (Appeals) in his order while reducing the penalty and redemption fine. The appellant being a non-resident Indian of the UK having a UK passport was unaware about the Baggage Rules of Indian Customs as stated in their affidavit.” “I find that the Commissioner (Appeals) though has considered the reduction of penalty and fine but in my considered view the appellant deserves further leniency in the matter. Accordingly, considering the overall facts and circumstances of the case, I reduce the fine from 50,000 to Rs. 20,000/- and penalty from 20,000 to Rs. 10,000” the Tribunal concluded.

Low Aromatic White Spirit not Classifiable under Light Oils and Preparations under Customs Tariff Act: CESTAT Sets Aside Confiscation M/s Kunjal Synergies Private Limited vs Commissioner of Customs (Port) 2023 TAXSCAN (CESTAT) 664

Setting aside the order of confiscation, the Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), held that Low Aromatic White Spirit is not classifiable under Light Oils and Preparations under Customs Tariff Act, 1944.

A Two-Member Bench of the Tribunal comprising P. K. Choudhary, Member (Judicial) and K. Anpazhakan, Member (Technical) observed that “We find merit in the arguments of the Appellant. In the impugned order, the Commissioner (Appeals) has rejected the Classification of the goods under CTH 27101239. When the goods do not satisfy the criteria fixed under Note 4 of Chapter 27, the goods cannot be classified under CTH 27101239. The remaining option available in the Tariff is to classify the same under CTH 27101990 which is the only residuary entry available for classification.”

Chick Drinker, Auto Feeder, Poultry Cage Classifiable under Machinery for Preparing Animal Feeding Stuffs under Customs Excise Tariff Act: CESTAT M/s. Autotex Private Limited vs The Commissioner of GST & Central Excise 2023 TAXSCAN (CESTAT) 668

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that the chick drinker, auto feeder, poultry cage classifiable under Machinery for preparing animal feeding stuffs under Customs Tariff Act, 1985 (CETA).

A Two-Member Bench of the Tribunal comprising CS Sulekha Beevi, Judicial Member and M Ajit Kumar, Technical Member observed that “We hold that the impugned goods merit classification under CETH 84361000, as adopted by the appellant. The duty demand, interest and penalty therefore cannot sustain and requires to be set aside, which we hereby do.”

State Must Restrict Statutory Intervention Only within Intent of Statute: CESTAT Allows Re-Export of Rough Diamonds Commissioner of Customs vs Kiran Gems Pvt Ltd 2023 TAXSCAN (CESTAT) 663

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), allowed re-export of rough diamonds and commented that State must restrict their statutory intervention only within the intent of the statute and any excess of that will not only imperil their action but also have consequences in law.

A Two-Member Bench of the Tribunal comprising CJ Mathew, Technical Member and Ajay Sharma, Judicial Member observed that “Hence, the discarding of the proposals for confiscation under section 111(d) of Customs Act, 1962 and for denial of the option of redemption are, after the refusal of the first appellate authority to admit the appeal of Commissioner of Customs, no longer available for agitating before the Tribunal.”
Allowing the re-export of rough diamonds, the Bench further noted that “The valuation is purely academic and we, thus, reiterate our earlier observation that agencies of the State must restrict their statutory intervention only within the intent of the statute. Any excess of that will not only imperil their action but also have consequences in law.”

Packed Goods before Sterilization are Semi-Finished Goods: CESTAT quashes Service Tax Demand Universal Medicap Limited vs Commissioner of Central Excise & ST 2023 TAXSCAN (CESTAT) 660

The Ahmedabad Bench of the Customs Excise and Service Tax Appellate Tribunal (CESTAT), quashed the service tax demand thereby noting that packed goods before sterilization are semi-finished goods.

Quashing the service tax demand, a Two-Member Bench of the Tribunal comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member observed that “In the present case, the packed goods were supplied to the appellant for carrying out process of sterilization therefore the packed goods before sterilization are semi-finished goods. Therefore, the contention of the Revenue that only raw material should be processed to be eligible for the exemption is incorrect as semi-finished goods are also allowed to be processed for making eligible for the above notification.”

Demand of Amount on Exempted Service in Terms of Rule 6 of Cenvat Credit Not Allowable when Assessee Paid Back the Entire Cenvat Credit along with interest: CESTAT Commissioner of Central Excise & ST vs Galaxy Diesel & Electricals 2023 TAXSCAN (CESTAT) 661

The Ahmedabad bench Customs, Excise and Service Tax Appellate Tribunal (CESTAT) have held that demand of amount on exempted service in terms of rule 6 of Cenvat Credit is not allowable when the assessee paid back the entire Cenvat credit along with interest.

“The demand of 8%/6%/5% cannot be made in the facts of the present case when the respondent has admittedly paid back the entire Cenvat credit along with interest which was partly attributed to exempted service. Therefore, the demand is not sustainable.”, the two-member bench comprising Mr Ramesh Nair, Judicial Member and Mr C L Mahar, Technical Member held. The CESTAT dismissed the appeal and upheld the impugned order.

FFC Charges are not Consideration Received for Providing Supply of Tangible Goods: CESTAT quashes Service Tax Demand M/s.Inox Air Products Ltd. vs The Commissioner of GST & Central Excise 2023 TAXSCAN (CESTAT) 661

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed service tax demand and held that Fixed Facility Charges (FFC) are not consideration received for providing the supply of tangible goods. A Two-Member Bench of the Tribunal comprising Sulekha Beevi CS, Judicial Member and M Ajit Kumar, Technical Member held that “Since it is clarified by the Board in the appellant’s own case that the said charges have to be included in the transaction value for payment of excise duty, we find no reason to hold that FFC charges are in the nature of consideration received by the appellant for providing supply of tangible goods. Relevant Board circular is binding on the department.”

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