This round-up analytically summarises the key stories related to the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) reported at Taxscan.in during October 21 to 27, 2023.
In a significant ruling, the bench of Vasa Seshagiri Rao (Technical Member) and Sulekha Beevi C.S. (Judicial Member) of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has declared that the demand for service tax on composite contracts for Commercial or Industrial Construction Services (CICS) is not sustainable, both before and after 01.06.2007.
The central issue at hand was whether the demand for service tax under ‘Commercial or Industrial Construction Services’ was sustainable. The Tribunal noted that the definition of “Commercial or Industrial Construction Service” referred to a simple contract that did not involve the supply of goods or materials. However, after the introduction of ‘Works Contracts Service’ (WCS) on 01.06.2007, the definition incorporated the value of goods used in composite contracts. The Tribunal relied on a previous decision by the Supreme Court, which held that the demand for WCS on composite contracts, such as construction of residential complexes, commercial or industrial construction services, erection, commissioning, and installation services, could not be sustained. This was especially applicable when the composite contract included both the supply of goods or materials and the rendering of services. The decision in M/s. Real Value Promoters Pvt. Ltd. was cited as a precedent, and the Tribunal reiterated its stance that the demand under CICS was untenable. In light of the above analysis and legal precedents, the Tribunal concluded that the demand for service tax under ‘Commercial or Industrial Construction Services’ (CICS) is not sustainable.
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad bench has held that the denial of refund for anti-dumping duty on past clearances, even after it was determined that no dumping had occurred, violates Article 265 of the Constitution of India.
The bench found that this interpretation contradicted the scheme of anti-dumping laws and was in violation of Article 265 of the Indian Constitution. In result, the two-member bench comprising Shri Raju (Technical Member) and Shri Somesh Arora (Judicial Member) set aside the order and allowed the appeal filed by the appellant. The bench upheld the principle that once a finding is made by the Designated Authority that there was no dumping and no basis for the imposition of anti-dumping duty, there should be no preservation of authority to impose or maintain such duty for past clearances, in line with the Constitutional mandate and the prevailing anti-dumping laws. The decision provides clarity and protection for importers who have paid anti-dumping duty in situations where it is later determined that no dumping occurred.
The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) granted relief to JSW Steel by quashing the disallowance of CENVAT credit of service tax on input services rendered by the assessee on the ground of non-violation of rule 2(l) of the CENVAT Credit Rules (CCR), 2004.
The Bench observed that the service tax paid on the transportation of the final product from the place of removal up to the first point, whether it is the depot or the customer had to be allowed for CENVAT credit. The two-member bench comprising Ajay Sharma (Judicial) and C J Mathew (Technical) quashed the disallowance of CENVAT credit of service tax while allowing the appeal filed by the assessee.
The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the rejection of the refund claim of service tax on the grounds of absence of ground in the show cause notice (SCN).
The Bench observed that in the case of Bajaj Auto Ltd. Vs. Union of India, the court held that the ground taken in appeal according to the appellate order cannot travelled beyond the ground mentioned in the show-cause notice and here the Commissioner (Appeals) had traveled beyond the scope of the show-cause notice and applied entirely the different rule for rejection of refund benefit in favour of the assessee and order cannot sustain for judicial scrutiny. The two-member bench comprising Mohanty (Judicial) and Parthiban (Technical) quashed the rejection of the refund claim while allowing the appeal filed by the assessee.
The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) granted relief to Huawei Telecommunications by quashing the customs duty demand on the import of interface cards on the grounds of proper classification.
The Bench observed that the imported goods namely ‘interface cards’, which are concluded in the impugned order as a product of Optical Transport Network (OTN), and was being used in cloud engine switches providing the function of data packet processing and traffic management, would not be categorized as an ‘apparatus or machine’. The two-member bench comprising Mohanty (Judicial) and Parthiban (Technical) quashed the Customs duty demand while allowing the appeal filed by the assessee.
The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) granted relief to Cable Corporation of India by quashing the excise duty demand on the ground of eligibility for Excise duty exemption.
The Bench observed that in the case of K.E.I Industries Ltd, the court held that water supply/treatment plants are eligible for exemption under exemption notifications. The two-member bench comprising Ajay Sharma (Judicial) and C J Mathew (Technical) held that the assessee was eligible for an exemption claim and quashed the excise duty demand.
The Mumbai bench of Customs, Excise and Service Tax Appellate Tribunal quashed the appeal by the Commissioner of Customs, Air Special Cargo (The Appellant) demanding Customs Duty and Penalty for smuggling computer parts as per Section 28 of the Customs Act, 1962 from Deepak Dilani (The Respondent) as required documents were not submitted.
The two-member bench consisting of S.K. Mohanty (Judicial Member) and M.M. Parthiban (Technical Member) after hearing both sides held that “we find that denovo proceedings have been conducted in accordance with the law, abiding by the principles of natural justice duly giving opportunity for personal hearings, the opportunity for cross-examination and submission of documents/evidence by both the parties to the dispute. Further, various legal provisions regarding the demand of duty, and imposition of penalty have been examined by the learned Commissioner (Adjudication) on the basis of evidence after examining the burden of proof under Section 123 ibid and on the basis of the decision of the Apex Court” and the appeal by the revenue was dismissed.
The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) rejected the order by the Adjudicating Authority which denied the Cenvat Credit available to Pidilite Industries Ltd (The Appellant) and upheld the order by the Commissioner of Central Excise (CCE) (The Respondent) on the ground of inability to use domestic layouts.
The two-member bench consisting of Ajay Sharma (Judicial Member) and C.J. Mathew (Technical Member) after hearing both sides held that “It is necessary for the application for refund to be restored to the original authority for determination of the amount of refund eligible in accordance with the said notification. To enable that, we set aside the impugned order and remand the matter to the original authority for fresh decision” and the matter was remanded for fresh adjudication.
The Mumbai bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) imposed penalty for the failure of not being proactive for fulfilling regulation 10(d) of Customs Brokers Licensing Regulations (CBLR) 2018 on Ramesh Transport Company (the Appellant), in the appeal by them against Principal Commissioner of Customs (General) (The Respondent).
The two-member bench consisting of S.K. Mohanty (Judicial Member) and M.M. Parthiban (Technical Member) after hearing both sides held that “the appellants could have been proactive in fulfilling their obligation as Customs Broker for exercising due diligence, when the exports goods were not brought to Customs within 15 days time, by bringing it to the notice of the Customs department about the non-compliances in export transactions of ABCCPL. Thus, to this extent we find that imposition of penalty for failure in not being proactive for fulfilling of regulation 10(d) of CBLR, 2018 is appropriate and justifiable.” The bench further held that “we do not find any merits in the impugned order passed by the learned Principal Commissioner of Customs (General), Mumbai in revoking the license of the appellants and for forfeiture of security deposit, inasmuch as there is no violation of regulations 10(d), 10(e) and 10(m) and the findings in the impugned order is contrary to the facts on record” and the appeal was allowed.
The Kolkata bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that Educational Cess (EC) and Social Welfare Surcharge (SWS) were in the nature of surcharge and non-levying of Educational Cess applies to Social Welfare Surcharge on imported goods, allowing the appeal by Enami Agrotech Ltd (the Appellant) against Commissioner of Customs (Port).
The two-member bench consisting of P.K Choudhary (Judicial Member) and Rajeev Tandoon (Technical Member) after hearing both sides held that “The decision of the Bombay High Court in the La Tim Metal Case is not only later in time but also takes into consideration the earlier contrary decision of the learned Single judge of the Madras High Court in the Gemini Case (supra) as also the decision of the Supreme Court in the Unicorn Case (supra)” and the appeal was allowed.
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai bench has held that trader-importers are eligible for a refund of 4% Additional Duty of Customs, even if their invoices do not contain the specific endorsement “credit of duty is not admissible”.
The bench held that a trader-importer, who had paid SAD on imported goods, discharged VAT or ST liability on subsequent sales and issued commercial invoices without specifying any details of the duty paid, would still be entitled to the benefit of the exemption under Notification 102/2007-Cus, provided other conditions of the notification were met. The two-member bench comprising Ms. Sulekha Beevi C.S. (Judicial Member) and Mr. Vasa Seshagiri Rao (Technical Member) clarified that while the endorsement about the non-admissibility of duty credit is an important procedural requirement, it should not deprive trader-importers of the refund if all other conditions are met.
The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) recently held that no service tax is payable on contribution towards social security as a part of salary paid by the employer to employees under Reverse Charge Mechanism(RCM).
After careful consideration of the case and the arguments put forth, the CESTAT found that service tax was not required to be paid for the contribution towards social security that formed a part of employees’ salaries. Despite this, the Revenue had not refunded the service tax paid by the appellant, who had also availed cenvat credit of the same amount. Therefore, the CESTAT held that there was no loss to the exchequer. The CESTAT bench of Anil G. Shakkarwar, Member (Technical) relied on the Bombay High Court’s ruling in a similar case and set aside the impugned order-in-appeal, effectively granting relief to the appellant.
The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) granted relief to Kalki industries by quashing the excise duty demand on clearance of electrical and lighting accessories on the ground of Small Scale Industry (SSI) exemption.
The Bench observed that the assessee was eligible to avail the small-scale industry exemption and the demand was not sustainable. The two-member bench comprising Ajay Sharma (Judicial) and C J Mathew (Technical) quashed the excise duty demand while allowing the appeal filed by the assessee.
The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the services provided to universities in foreign countries as export of services cannot be treated as ‘intermediaries’ under rule 2(f) of the Place of Provision of Service Rules,2012.
The Bench observed that the assessee was not providing any service to prospective students in India and providing service to universities located in foreign countries who are paying consideration to the assessee and the services covered by these proceedings are export of services. The two-member bench comprising Anil G. Shakkarwar (Technical) and Dr. Suvendu Kumar Pati (Judicial) held that the assessee was eligible for a refund claim.
The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the excise duty demand on the manufacture of IPCO creamy snuff on the grounds of limitation.
The Bench observed that the entire demand was beyond the normal period of limitation. Hence the same was not sustainable on the grounds of time bar and the demand itself was not sustainable, penalties on the assessees also not be sustainable. The two-member bench comprising Ramesh Nair (Judicial) and Raju (Technical) quashed the excise duty demand while allowing the appeal filed by the assessee.
The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) granted relief to Hindustan Unilever by quashing the penalty imposed under rule 26(2) of the Central Excise Rules,2002.
The two-member bench comprising Ramesh Nair (Judicial) and Raju (Technical) quashed the penalty imposed on the assessee while allowing the appeal filed by the assessee.
The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the customs duty demand on the undervaluation of plastic granules or flakes of powder on the grounds of the absence of corroborative evidence.
The Bench observed that the goods in question are plastic stickers and there was no undervaluation in respect of such goods. The two-member bench comprising Ramesh Nair (Judicial) and C L Mahar (Technical) quashed the Customs duty demand while allowing the appeal filed by the assessee.
The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the availment of CENVAT credit of service tax allowable on Input Service Distributor (ISD) invoice which was issued by the head office without having any ISD registration.
The two-member bench comprising Ramesh Nair (Judicial) and Raju (Technical) held that the demand for reversal of CENVAT credit was not as per the law and liable to be quashed while allowing the appeal filed by the assessee.
The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the Small Scale Industry (SSI) Exemption allowable for submersible pumps when its final products were manufactured as per the standards of Bureau of Indian Standards (BIS).
The Bench observed that there was no malafide on the part of the assessee with intent to evade payment of duty and the demand under extended period in the present case for the period 01.01.2007 to 18.03.2009, the show cause notice was issued on 04.04.2012 which was much after the normal period of one year, thus the demand was barred by limitation. The two-member bench comprising Ramesh Nair (Judicial) and Raju (Technical) quashed the demand raised by the department while allowing the appeal filed by the assessee.
The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that no excise duty demand was sustainable under rule 6(3) of the CENVAT Credit Rules (CCR),2004 when the CENVAT credit reversed on common input service attributed to exempted steam clearance.
The Bench observed that there was no dispute on the fact that the assessee had reversed the CENVAT Credit on the common input service attributed to the exempted steam cleared by the respondent from their factory and the demand raised by the department was not sustainable and rightly dropped by the adjudicating authority. The two-member bench comprising Ramesh Nair (Judicial) and Raju (Technical) upheld the dropping of demand raised by the revenue while dismissing the appeal filed by the revenue.
The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the management consultancy service was covered by rule 6(5) of the CENVAT Credit Rules (CCR),2004 which was permitted to avail 100% of CENVAT Credit of Service Tax.
The Bench observed that Since rule 6(5) of the CENVAT Credit Rules excludes the credit availed on Management Consultancy Service from the application of Rules 6(1), 6(2), and 6(3) of CCR, no reversal of CENVAT credit was required. The two-member bench comprising Ramesh Nair (Judicial) and Raju (Technical) quashed the demand for reversal of CENVAT credit while allowing the appeal filed by the assessee.
The Mumbai bench of Customs, Excise and Service Tax Appellate Tribunal held that the amount given as Corporate Guarantee is not liable for service tax if there is no commission and allowed the appeal by UltraTech Cement Ltd (the Appellant) against the Commissioner of CGST (The Respondent).
The bench held that “Insofar as levy of service tax is concerned, the same should be on the amount of consideration received for provision of such service. In the present case, since there is no involvement of any commission amount in the form of consideration, the appellants cannot be saddled with the service tax liability as demanded in the impugned order” the bench relied on the decision of this Tribunal in the case of Commissioner of CGST & Central Excise Vs. Edelweiss Financial Services Ltd., 2022. Hence the appeal was allowed.
The Mumbai bench of Customs Excise and Service Tax Appellate Tribunal (CESTAT) held that the penalty under section 11AC of the Central Excise Act, 1944 cannot be imposed in the absence of allegation for evasion of excise duty and modified the impugned order in an appeal by Siddheshwar SSK Ltd (The Appellant) against the Commissioner of Central Excise (CCE) (The Respondent).
The two-member bench consisting of Ajay Sharma (Judicial Member) and C.J. Mathew (Technical Member) after hearing both sides held that “We also find no reason to sustain the penalty imposed under section 11AC of Central Excise Act, 1944 as there is no allegation of evasion of duty otherwise payable on account of non-availability of sufficient credit on clearance of dutiable goods.” The impugned order was modified to limit recovery available under rule 6 of CENVAT Credit Rules, 2004.
The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the effluent treatment service received by the assessee is in or in relation to the manufacture of the final product was admissible as input service and CENVAT credit must be allowed.
The two-member bench comprising Ramesh Nair (Judicial) and Raju (Technical) held that effluent treatment activity was indeed in or in relation to the manufacture of the final product, therefore the CENVAT credit cannot be denied while allowing the appeal filed by the assessee.
The Mumbai bench of Customs, Excise and Service Tax Appellate Tribunal held that Section 111(m) of Customs Act, 1994 could only be invoked only upon material particulars being declared and was a detriment in addition to the duty liability determined and dismissed the appeal by Shashi Dhawal Hydraulics Pvt Ltd (The Appellant) against Commissioner of Customs (Import) (The Respondent).
The two-member bench consisting of Ajay Sharma (Judicial Member) and C.J. Mathew (Technical Member) after hearing both sides held that the issue for consideration was the acceptability of facts relating to the import and assessment under section 17 Customs Act, 1962 that, on their own, would merit restricting the demand, if any, under section 28 of Customs Act, 1962 to the normal period of limitation and, if not, the legality of distinguishing ‘suppression/misrepresentation’ and ‘misdeclaration’ for independent consequences. The bench also stated that the impugned order has clearly elaborated on the transactions that a ‘sister concern’ had had with the manufacturer from whom the supplier of the appellant had sourced the impugned goods and that the variation in the transacted prices was within the knowledge of the authorized persons of the appellant-importer. The bench further held that “We, therefore, find ourselves unable to accept the submission of the appellant that relief from confiscation amounts to relief from being subjected to the ‘extended period’ for recovery of duty under section 28 of Customs Act, 1962” and the appeal was dismissed.
The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the CENVAT credit cannot reversed before clearance/removal of the goods.
The Bench observed that in the case of Hello Minerals Water (P) Ltd, the court held that the reversal of CENVAT credit amounts to non-taking of credit on the inputs. Hence the benefit had to be given to the notification granting exemption/rate of duty on the final product since the reversal of the credit on the input was done at the Tribunal’s stage. The two-member bench comprising Ajay Sharma (Judicial) and C J Mathew (Technical) held that no reversal of CENVAT Credit can be done before clearance or removal of goods.
The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that clearing Spent Sulphuric Acid to the fertilizer companies, which are exempted from payment of excise duty in terms of Notification No.4/2006-Central Excise.
The Bench observed that as per the exemption notification no: 4/2006 of Central Excise the clearing of Spent Sulphuric Acid to the fertilizer companies, which are exempted from payment of duty. The two-member bench comprising Ashok Jindal (Judicial) and Anpazhakan (Technical) held that the assessee was eligible for the exemption from the payment of excise duty for the spent sulphuric acid which emerged as a byproduct.
The Bangalore bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that the Frequency converter/Variable- frequency Drive (VFD) used for controlling the rotational speed of an AC electric motor was classifiable under the category of ‘electric inverter’.
The Bench observed that in the case of Larsen & Toubro Ltd. V. Commissioner of Central Excise Mumbai, the court held that the primary function of the VFD was the controlling electrical speed of the AC, and the revenue was rightly classified under the category of electric inverter. The two-member bench comprising D M Misra (Judicial) and Bhagya Devi (Technical) upheld the classification proposed by the revenue and held that the VFD was rightly classifiable under the category of electric inverter while dismissing the appeal filed by the assessee.
The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the penalty under rule 25 of the Central Excise Rules,2002 imposed on the manufacture of textile machinery on the ground of absence of malafide intention.
The Bench observed that there was no malafide intention on the part of the assessee and in the present case also the assessee cannot be liable for penalty under Rule 25 of the Central Excise Rules. The two-member bench comprising Ramesh Nair (Judicial) and Raju (Technical) quashed the penalty imposed under rule 25 of the Central Excise Rules against the assessee.
The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that no service tax is payable on “Address Commission” as the same is like the discount and not a payment for the provision of any taxable service.
The Bench observed that the payment of ‘Address Commission’ would only mean a slight reduction in the freight rate and the ‘Address Commission’ was not paid towards the rendering of any service. The two-member bench comprising Muralidhar (Judicial) and Anpazhakan (Technical) held that no service tax is payable on “Address Commission” as the same was like the discount and not a payment for the provision of any taxable service.
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