This weekly round-up analytically summarises the key stories of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) reported at taxscan. in, from July 01 to July 07, 2023.
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that the transaction of purchase and sale of liquor by Rajasthan State Beverages Corporation, the appellant not under Business Auxiliary Service (BAS) and hence is not taxable.
A Two-Member Bench of the Tribunal comprising Justice Dilip Gupta, President, and Hemambika R Priya, Technical Member observed that “transaction of purchase and sale of liquor by the Corporation will not fall within the ambit of BAS and would, therefore, not be taxable. The two appeals filed by the department, therefore, deserve to be dismissed.”
The Delhi bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled in favour of Mount Everest Breweries Limited and held that service tax and penalty not demandable when non-payment of service tax on alcohol under business auxiliary services under bonafide belief.
A two member bench comprising Justice Dilip Gupta, President and Ms. Hemambika R Priya, Member (Technical) observed that “the appellant is that it was always under a bonafide belief that service tax was not payable by it, as it was a manufacturer in its own right and was not manufacturing alcohol for or on behalf of a client. After noting that this contention of the appellant is not correct since it was providing BAS and service tax would be leviable, the order holds that the appellant with mala-fide intention made a willful statement and suppressed facts with intent to evade payment of the service tax.”
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed service tax demand and observed that mere use of commission in the clause of payment does not mean commission was paid by the seller.
A Two-Member Bench of the Tribunal comprising observed that “Mere use of the word „commission‟ in the clause dealing with terms of payment would, in view of the aforesaid decisions, not mean that „commission‟ was paid by the seller. There is no third person who can be said to be acting as an agent and the goods were undoubtedly sold on a principal-to-principal basis.”
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that no appeal can be filed before the Commissioner of Customs when correctness of order has been examined by the High Court.
A Two-Member Bench of the Tribunal comprising Justice Dilip Gupta, President, and P Anjani Kumar, Technical Member observed that “Thus when the appeal was filed by the department before the Commissioner (Appeals) against an order the correctness of which stood decided against the department by the Delhi High Court, the order dated 26.06.2019 passed by the Commissioner (Appeals) on 26.06.2019 would be without jurisdiction.”
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that the Principal Manufacturer not filing requisite undertaking jurisdictional authority, job worker liable to pay excise duty.
A Two-Member Bench of the Tribunal comprising Justice Dilip Gupta, President and Hemambika R Priya, Technical Member observed that “In a case where a principal manufacturer did not file the requisite undertaking to the jurisdictional authority in terms of Notification No. 214/86, it is evident that the principal manufacturer had no intention to pay the duty on the final product and the job worker was liable to pay the duty on the goods manufactured.”
In the case of Godrej Consumer Product, the Chennai bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that service tax is not payable for services for periods for which they were not taxable.
A two-member bench comprising of Mr P Dinesha, Member (Judicial) and Mr Vasa Seshagiri Rao, Member (Technical) held that “the demand of Service Tax on the appellant for the normal period. Consequently, the penalties imposed are also set aside. We order to modify the impugned order to this extent.”
In a recent case, the Chandigarh bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) refunded admissible service tax paid on the transportation of empty containers from port to factory.
A two-member bench comprising Mr S S Garg, Member (Judicial) and Mr P Anjani Kumar, Member (Technical) has held that “the impugned order is not sustainable in law and set aside the same by allowing the appeal filed by the appellant with consequential relief, if any, as per law.”
The Chennai bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that ‘Dry Tomato Flavour’ falls under Customs Tariff Heading (CTH) 3302 and covers both natural and/or Synthetic Mixtures of Odoriferous Substances.
A two-member bench comprising of Mr P Dinesha, Member (Judicial) and Mr Vasa Seshagiri Rao, Member (Technical) found that “the imported product is not meant to be directly used for human consumption. It is said to be for industrial use, for making food flavours and to impart a tomato profile. The products that are classifiable under Chapter Heading 2106 mostly consist of food and edible preparations which are meant to be used either directly or after processing such as cooking, dissolving or boiling in milk or water or other liquids, for human consumption. As per the HSN Notes, the said heading excludes a mixture of odoriferous substances, which can be either natural or synthetic or mixed or both, which are used as raw materials in the perfumery, food or drink industries.” The appellant has been arguing that the tomato flavour is of synthetic origin though it may contain some natural odoriferous substances and it cannot be directly or indirectly used in food preparations. In this regard, the appellant has also put forth that it is not necessary that it should be made of essential oil, resinoid or oleoresin alone to merit classification under Chapter Heading 3302 and that in any case, the product contains garlic oil, which is an oleoresin. The CESTAT held that “the item imported is correctly classifiable under CTH 3302 1010 of the Customs Tariff Act, 1975. So, the impugned order is set aside.”
The Kolkata bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has directed the re-adjudication since the adjudicating authority rejected the reconciliation statement without reason.
A two-member bench Shri P K Choudhary, Member (Judicial) and Shri K Anpazhakan, Member (Technical) observed that “there is no clear-cut findings by the Adjudicating Authority for rejecting the reconciliation submitted by them. The Appellants claim for receipt of reimbursements of expenses incurred has also not been examined.” The CESTAT set aside the impugned order and remanded the matter back to the adjudicating authority to pass a speaking order after going through the reconciliation statement along with relevant documents submitted by the appellant. The appeal of the assessee got allowed by way of remand to the adjudicating authority.
The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that service tax is not payable by Konkan Railway for the use of the Mangalore-Roha Line.
The tribunal comprising of Dr Suvendu Kumar Pati, Member (Judicial) and Mr Anil G Shakkarwar, Member (Technical) has held that the appellant and the Indian Railways are not separate entities. The Indian Railways are exempt from paying service tax for the prior period up to October 1, 2012. Therefore, confirmation of demand by the Commissioner is unsustainable, for which the order passed by the Commissioner is required to be set aside.
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), allowed cenvat credit on sugar cess paid as Countervailing Duty (CVD) on import of raw sugar.
A Two-Member Bench of the Tribunal comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member observed that “In view of the above Karnataka High Court judgment in favour of the appellant themselves, the issue is no longer res-Integra. Accordingly, the appellant is legally entitled for the cenvat credit on the sugar cess paid on import of raw sugar.”
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ordered fresh adjudication and observed that Rule 8(3A) of the Central Excise Rules 2002 is ultravires.
A Two-Member Bench of the Authority comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member observed that “After hearing both the sides and on perusal of the records, we find that impugned orders were passed by the Adjudicating authority. Whereas the Gujarat High Court decision in the matter of Indsur Global Limited vs. Union of India. Therefore, the matter is remanded to the adjudicating authority to decide the case afresh in view of the Gujarat High Court’s decision in the case of Indsur Global Limited (supra) after giving an opportunity of personal hearing to the appellant.”
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), granted service tax exemption on services related to construction of roads to Government authorities/agencies.
A Two-Member Bench of the Authority comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member observed that “This being a case of interpretation of provisions, charge of suppression of facts, wilful misstatement, fraud, etc., cannot be levelled, for initiation of SCN beyond the normal time limitation. It is settled law that there must be deliberate attempt by the Appellant to suppress the facts from Department with an intention to evade payment of Service Tax, which is not existing in this case.”
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), remanded back the matter in the case of Differential service tax demand on “Erection Service”, “Pipeline Service” and “Supply of Manpower Service”.
A Two-Member Bench of the Tribunal comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member observed that “We have carefully considered the submission made by both sides and perused the records. We find that the appellant had admitted the demand of Rs. 35,74,366/-, is sustainable on merit. As regard the appellant’s submission that the amount of Rs. 39, 46,367/- is not payable for various reasons has not been considered by the lower authority.” “Therefore, this matter needs to be remanded back to the Adjudicating Authority for re-quantification of the demand after considering the submission of the appellant. The Adjudicating Authority also needs to look into the aspect of larger period of demand and imposition of penalty under Section 78 of Finance Act, 1994” the Tribunal concluded.
In a significant case, the Chennai bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has allowed the appeal, since the department failed to deliver the sanction order of Special Additional Duty (SAD) refund to the assessee on time.
A two-member bench comprising of Mr P Dinesha, Member (Judicial) and Mr Vasa Seshagiri Rao, Member (Technical) found that this is the usual practice by the original authority wherein the Order-in-Original itself contains the printed number of the order as well as the date. While allowing the appeal, the CESTAT accepted the contention of the assessee since it was evident that the date of sanction was much earlier.
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), remanded back the matter in the case of Differential service tax demand on “Erection Service”, “Pipeline Service” and “Supply of Manpower Service”.
A Two-Member Bench of the Tribunal comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member observed that “We have carefully considered the submission made by both sides and perused the records. We find that the appellant had admitted the demand of Rs. 35,74,366/-, is sustainable on merit. As regard the appellant’s submission that the amount of Rs. 39, 46,367/- is not payable for various reasons has not been considered by the lower authority.” “Therefore, this matter needs to be remanded back to the Adjudicating Authority for re-quantification of the demand after considering the submission of the appellant. The Adjudicating Authority also needs to look into the aspect of larger period of demand and imposition of penalty under Section 78 of Finance Act, 1994” the Tribunal concluded.
In a significant case, the Chennai bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has allowed the appeal, since the department failed to deliver the sanction order of Special Additional Duty (SAD) refund to the assessee on time.
A two-member bench comprising of Mr P Dinesha, Member (Judicial) and Mr Vasa Seshagiri Rao, Member (Technical) found that this is the usual practice by the original authority wherein the Order-in-Original itself contains the printed number of the order as well as the date. While allowing the appeal, the CESTAT accepted the contention of the assessee since it was evident that the date of sanction was much earlier.
The Chennai bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld the invocation of an extended period since non-filing of ST-3 returns by subcontractors for a long period will make the intent to evade tax.
“The provisions of the proviso to Section 73 (1) of the Finance Act, 1994 are pari pasu and pari materia to the provisions of the proviso to Section 11A of the Central Excise Act, 1994. The intention to evade payment of tax is manifest and articulated by the non-disclosure of the details of the provision of services and receipt of consideration. Non-filing of ST-3 returns for such a long period i.e., from March 2006 to March 2010 will make the intent to evade tax obvious. So invocation of extended period is justified, consequently, the imposition of penalty are also required to be upheld.”, the two-member comprising Mr P Dinesha, Member (Judicial) and Mr Vasa Seshagiri Rao, Member (Technical).
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that the demand under Rule 6(3) of Cenvat Credit Rules, 2004 (CCR) not sustainable on reversal of cenvat credit on input services to exempted services.
A Two-Member Bench of the Tribunal comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member observed that “We are of the view that once the assessee reversed the cenvat credit on the input services attributed to the exempted services, the demand under Rule 6 (3) of CCR is not sustainable. We also find that since in the show cause notice demand was raised at of 6% /7% and not considered the reversal of cenvat credit, the matter needs to re-considered only for the limited purpose of quantification and correctness of reversal of cenvat credit along with payment of interest.”
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), upheld recovery of interest and ruled that Lead Acid Batteries supplied to individual customers is to be valued under Section 4A of the Central Excise Act, 1944.
A Two-Member Bench of the Tribunal comprising observed that “there is no difference in the nature of the clearance made to individual customer wherein the valuation was admittedly done by the appellant under Section 4 A and the nature of clearance made to the dealers. Therefore, the clearance made to dealers is also to be valued under Section 4 A of Central Excise Act, 1944.”
The Chennai bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that claim of duty on goods can’t be denied when assessee reverses ineligible credit and allowed the payment of a 1% duty rate on Fruit pulp for Pepsico India.
In light of the case Jai Beverage Pvt. Ltd. Vs. CCE, the two-member bench comprising Ms Sulekha Beevi C.S., Member (Judicial) and Shri M. Ajit Kumar, Member (Technical) held that “the appellant was eligible for payment of an effective rate of duty of 1% on the ‘fruit pulp or fruit juice based drinks’ cleared by them, during the impugned period, by availing exemption under Notification No. 1/2011-CE dated 1.3.2011”
The Ahmedabad Bench of the Tribunal comprising observed that the service tax refund cannot be rejected as invoice raised to agent is as good as invoice raised to principal.
A Two-Member Bench of the Tribunal comprising observed that “It can be seen that, in the service provider’s invoice that is issued by M/s Indev Logistics Pvt. Ltd. the name of appellant is appearing as shipper name and in the corresponding invoice of the 4 Star Enterprises which is the appellant’s CHA is showing the exact amount of M/s Indev Logistics Pvt. Ltd. therefore the proper co-relation has been established.” “In the case of Chamundi Textiles Ltd, the tribunal held that even though a document is in the name of another entity but on account of assessee credit cannot be denied on such document. Considering this decision in the case of refund also even though the invoice was raised to the agent of the appellant the refund cannot be rejected as invoice raised to the agent is as good as invoice raised to the appellant being the principal” the Bench noted.
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that the service tax is not leviable on service of “Construction of Residential Complex” provided to Surat Municipal Corporation under the Jawaharlal Nehru National Urban Renewal Mission.
A Two-Member Bench of the Tribunal comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member observed that “The service provided to the service recipient namely Surat Municipal Corporation under Jawaharlal Nehru National Urban Renewal Mission are not taxable.”
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), allowed cenvat credit and observed that the services for the treatment of industrial waste in relation to overall manufacturing activity are input services.
A Two-Member Bench of the Tribunal comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member observed that “It can be seen that the issue is no longer res-integra as the services availed in respect of effluent treatment plant for treatment of industrial waste is in relation to the overall manufacturing activity of the appellant’s final product in the appellant’s factory therefore, the said services are input service hence, the credit is admissible.”
The Chennai bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that onsite support service rendered by the US branch office of M/s. Cognizant Technology Solutions India Private Limited (CTS) USA to is Associated Enterprises(AE) situated outside India is exempted.
A two-member bench comprising Ms. Sulekha Beevi C.S., Member (Judicial) and Shri M. Ajit Kumar, Member (Technical) held that “the main charge against the appellant fails on merits. This being so, the other issues relating to CENVAT credit and the extended time limit also do not survive. We are hence inclined to set aside the impugned order and allow the appeal with consequential relief, if any, as per law. We order accordingly”
The Hyderabad Bench of the Customs, Excised and Service Tax Appellate Tribunal (CESTAT), observed that cenvat credit is allowable on warranty services when included in assessable value of the final product.
A Two-Member Bench of the Tribunal comprising Dr Rachna Gupta, Judicial Member and Hemambika R Priya, Technical Member observed that “We conclude that the Cenvat credit was allowed for both the period prior to and post the amendment of 2011 on the ground that the warranty charges were included in the value of goods sold to the customers and Central Excise duty was paid on this value. It is thus clear that it is the consistent view that the services provided to fulfil warranty obligation would be eligible as input services being a service in relation to manufacture.” “Therefore, the Cenvat credit in relation to warranty services, value whereof is included in the assessable value of final product is available to the appellant as it contributes to the marketability of the product” the Tribunal concluded.
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that service tax is leviable on Legal and Professional Charges under Business Auxiliary Services (BAS).
A Two-Member Bench of the Tribunal comprising Dr Rachna Gupta, Judicial Member and Hemambika R Priya, Technical Member observed that “ We observe that though appellants were drafting and preparing legal reports but only for banks/financial institutions that too for ensuring the viability of loan and for verifying the property title documents for which such verification was sought by such banks. We opine that such activity is nothing beyond a due diligence of financial records of the customers of these banks/ financial institutions. Thus, it cannot a service provided as assistance in any branch of law.” “It actually becomes the service provided to a business entity/a financial institute/bank, to support the business or commerce of the said bank. These observations are sufficient for us to hold that the services, in question, have rightly been held to be the Business Support Service which is a taxable service” the Bench noted
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed differential duty demand and observed that the Light Displacement Tonnage (LDT) not relevant factor to determine assessable value of goods.
A Two-Member Bench of the Tribunal comprising observed that “It is observed that parties have agreed upon a lump sum price of USD 5,815,747 for the ship as a whole and absent any allegation or evidence of extra consideration having been made by the importer over and above the said price, transaction value as declared by the importer has to be accepted. Lower authorities clearly erred in loading the assessable value entirely based on the LDT when the LDT is irrelevant for assessment of duty.”
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad bench has held that the Transaction Value declared by the Importer shall be deemed to be the Assessable Value unless the same is being rejected for Specific Reasons under the Customs Valuation Rules, thus invalidated the enhancement of value solely based on National Import Database (NIDB Data).
The two-member bench consisting of Shri Raju (Technical Member) and Shri Somesh Arora (Judicial Member) held that the declared transaction value should be accepted unless there are valid reasons for rejection based on the Customs Valuation Rules. The bench further ruled that the enhancement of value solely on the basis of NIDB data was not valid. The bench also clarified that the assessee is also found eligible for exemption from CVD under Notification No. 30/2004-CE.
The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chennai bench has held that the application for refund of Customs Duty paid on import shall be invalid without modification of self-assessment and duty re-determination.
The two-member bench consisting of Mr. P. Dinesha (Judicial Member) and Mr. Vasa Seshagiri Rao (Technical Member)found that the first appellate authority erred in holding that the assessee was eligible for the refund. In conclusion, the order of the first appellate authority was set aside and the rejection of the refund claims by the adjudicating authority was upheld.
The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chennai has held that the capital goods for import once registered with the Project Report is irreversible and Concurrent Exemptions are not available as the valuation is tied to Project Rate.
The bench held that by virtue of the doctrine of merger, the orders of the lower authorities had merged with the previous order of this Bench and it is only consequent to the directions of this Bench that the de novo Order-in-Original was passed and therefore, the de novo Order-in-Original is valid. Furthermore, it was also found that the assessee had not made a convincing case on merits for an intervention by the bench. The discrepancy in the import of capital goods was seen acknowledged by the assessee, and the denial of concurrent benefit of exemption resulting in the demand for differential duty is deemed lawful. Consequently, the bench dismissed the appeal upholding the earlier decision and confirming the demand for differential duty.
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), granted benefit of cum-duty price on absence of evidence of inclusion of excise duty in the price charged from buyer.
A Two-Member Bench of the Tribunal comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member observed that “We further observed that in the present matter appellant also claimed the benefit of cum-duty price which was denied by the learned Commissioner on the ground that no evidence of inclusion of excise duty in the price charged from the buyer has been produced by the Appellant before him. However, we find that the benefit of the same is liable to be extended to the appellant.”
The Chennai bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that intermediate goods can be cleared without duty payment only on condition of clearing them as the final product within six months.
The two-member bench comprising Ms Sulekha Beevi C.S, Member (Judicial) and Shri M. Ajit Kumar, Member (Technical) observed that “The duty liability for the manufacture and clearance of engines is on the Hosur unit and not on the appellant. Only because appellant opted for the facility of Rule 12BB, the duty burden is shifted to the appellant unit. In such circumstances, when the duty liability is paid with interest, the penalty levied under Sec. 11AC is unwarranted. In the peculiar facts of this case, we are of the considered opinion that the penalty imposed requires to be set aside which we hereby do.”
The Kolkata Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that denial of credit of service tax merely on the ground that coal and iron ore mines situated away from the factory are separate entities is invalid.
A two-member bench comprising Shri P K Choudhary, Member (Judicial) and Shri K Anpazhakan, Member (Technical) held that “the denial of credit of service tax by the Commissioner in the instant case is unsustainable. We also find that the statutory ER-I returns were being filed along with a statement containing invoice-wise details of the credit taken and the ISD registration was obtained after disclosing all the relevant facts vide letter dated 25 April 2008 addressed to the Superintendent, Jharkhand Commissionerate.” The CESTAT set aside the impugned order and penalty.
The Chennai bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) have held that duty exemption on gasket cannot be denied merely because of a mismatch that occurred initially which in later rectified.
The two-member bench comprising Ms Sulekha Beevi C.S., Member (Judicial) and Shri M. Ajit Kumar, Member (Technical) held that “the appellant is eligible for availing exemption from duty under Notification No. 6/2006 CE dated 1.3.2006 for the impugned goods. This being so demand for interest and penalty do not survive.” The bench set aside the impugned order and allowed the appeal.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
