CESTAT Weekly Round-Up

This weekly round-up analytically summarises the key stories related to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) reported at Taxscan.in during the previous week from March 1^st to March 12^th, 2022.

Rolex Watch Company Private Ltd vs Commissioner of CGST & Service Tax

In a relief to Rolex Watch Company Private Ltd, the Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has directed the service tax department to reconsider their refund claim. The Tribunal further observed that “the nature of the service is irrelevant for the purpose of rule 5. All that is required in compliance with the conditions laid down therein which, inter alia, include the undertaking of exports as specified in rule 6A of Service Tax Rules. As pointed out by Learned Counsel, all the conditions therein had been complied with; any counters thereto in the impugned order are, for the reasons supra, without the authority of law. Therefore, the denial of the refund is not within the authority of the law. The appellant, as the provider of ‘service’ outside the ‘taxable territory’, is entitled to be relieved of the tax burden in the value of ‘service’ so exported.”

M/s The Vardhman Developers vs Commissioner, Central Goods and Service Tax

The Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the developer is liable to pay service tax on the amount received as rental income on letting out of residential flats and commercial spaces.

M/s.Appu Hotels Ltd. vs Commissioner of GST & Central Excise

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai bench has held that the SSI Benefit cannot be denied to a manufacturer for clearing the goods using another brand name by considering the fact that such right to use of brand name was already granted to them under an agreement.

M/s. LSML Private Ltd vs Principal Commissioner of Customs

The Chennai bench of the CESTAT has held that redemption fee cannot be imposed for the escaped assessment of Anti-Dumping Duty. The bench comprising Mr. Ramesh Nair (JM) and Mr. P Anjani Kumar (TM) observed that in view of Section 3 of the Customs Tariff Act, 1975, Antidumping Duty is to be construed as Customs duty and therefore in view of the amendment that was carried out in 2009 all the provisions of Customs Act and the Rules made thereunder are squarely applicable to Antidumping Duty and as such in case of warehoused goods duty applicable as on the date of clearance from warehouse is to be recovered in terms of Section 15 of the Customs Act, 1962.

M/s Beriwala Impex Pvt. Ltd vs Commr. of Customs (Port), Kolkata

The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the show-cause notices issued by the DRI would become valid in view of the recent amendment in Finance Bill, 2022 only after the enactment of the Bill. The Tribunal bench comprising Mr. P K Chaudhary (JM) and Mr. P V Subba Rao (TM) was considering an appeal filed by M/s Beriwala Impex Pvt. Ltd wherein the appellants challenged the SCN issued by DRI proposing recovery of differential duty under section 28 along with interest, confiscation of the impugned goods and imposition of penalties.

M/s. Airport Authority of India / AAICLAS vs Commissioner of Customs (AIR)

The CESTAT, Chennai bench has granted an opportunity to file an objection against the penalty orders passed in connection with the recently attempted smuggling of red handers case. Quashing the impugned order, the Tribunal held that “As per Regulation 12(6), the appellant is to file a representation on the inquiry report within 30 days from the receipt of the inquiry report. Though various contentions have been raised in regard to the inquiry report, the appellant has not filed any representation against the inquiry report. It is also seen that the appellant can ask for an examination of witnesses, cross-examination of witnesses relied on the inquiry officer. The learned counsel has requested that the appellant be given a further chance to file objections/counter representation to the inquiry report so that they can adduce evidence to establish their defence. After considering the submissions made and the fact that the custodian is Airports Authority of India, which is a legal body, I am of the view that the appellant has to be given a further chance to establish their case.”

M/s Luit Developers Private Limited vs Commissioner of CGST & Central Excise, Dibrugarh

The CESTAT, Kolkata bench, last week held that the figures shown to the income tax authorities cannot be used to determine the service tax liability.

Pramukh Realty vs C.C.E. & S.T.-Daman

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad bench has held that the builder shall be eligible to get a refund of service tax paid after the refund paid to customers on cancellation of sale of flats.

M/s.Bird Audio Electronics vs Commissioner of CGST

The Principle Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ),New Delhi, held that the absence of the requisite SCN the amount got deposited at the instance of audit team is liable to be refunded to the appellant. The Tribunal while set aside the challenged order made it clear that payment made by the appellant at the time of audit, in absence of any SCN for the same, cannot be held to be the payment against the demand raised by the Departmentand the absence of the requisite SCN the amount got deposited at the instance of audit team is liable to be refunded to the assesse.

M/s Mithila Drugs Pvt. Ltd vs Commissioner, Central Goods and Service Tax

The Delhi bench of the CESTAT observed that where the company paid CVD and SAD during GST regime, the same is allowable as refundunder the provisions of Section 142(3) and (6) of the CGST Act.

M/s Varun Beverages Limited vs Commissioner of Central Excise & Service Tax, Alwar

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has upheld the issuance of two show cause notices demanding the duty, which was short paid, and denying Cenvat credit respectively for the same period. “Section 11A deals with the duty which the assessee has to pay on final products. Rule 14 deals with the credit of duty on inputs which someone else had paid which the assessee has taken credit of. Any denial of Cenvat taken will not affect the duty liability. Similarly, any demand of duty will not affect the Cenvat credit. If Cenvat credit is wrongly availed, a penalty can be imposed under Rule 15 of CCR, 2004. If duty is short paid, penalty can be imposed under Section 11AC. Therefore, we do not find any illegality in the Revenue issuing two show cause notices; one for recovery of irregular availed Cenvat credit (which is subject matter of the present appeal) and another show cause notice for recovery of duty short paid. It does not amount to two assessments for the same period in this case,” the bench said.

M/s Global Adsorbents (P) Limited vs The Commissioner of Central Excise, Hyderabad-I Commissionerate

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad bench has held that the activity of repacking from retail to bulk and labelling do not amount to manufacture under the Central Excise Act, 1961. CESTAT president Justice Dilip Gupta and Technical Member Mr. P.V. Subba Rao observed that “apart from the fact that its purchase invoices / bill of entry do not indicate the grade of the material, while the sale invoices indicate the grade there is no other evidence brought on record by the Revenue that the Activated Carbon was sieved by the assessee. Since the assessee is registered with the Central Excise Department, officers could have gone and inspected and found out if the appellant had the equipment required for sieving the activated carbon to the required grades and was also carrying out this process. In the absence of such direct evidence, the Commissioner has drawn an indirect inference that material was received was sieved only on the ground that the purchase invoices did not have the grade of the material but the sale invoices. In our considered view, this discrepancy may be a cause for doubt but it required further investigation especially when the assessee had categorically denied having ever sieved the material before repacking. In the absence of any positive evidence, we are unable to accept the finding in the impugned order that the assessee had carried out this process.”

M/s Sahni Electric Works vs Commissioner of Service Tax

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi bench has held that the “works contract service” under Section 65 (105) (zzza) of the Finance Act, 1994 does not include works contract towards winding of motor. Relying on the decision of the Tribunal in Raj Engineering and National Pump Services, the bench held that “At any rate, if the contract is for a composite works contract, it should be treated as a separate species of contract and it is chargeable to service tax only under the head of “works contract service” as per the judgment of Supreme Court in Larsen & Toubro7 . The definition of “works contract service” under Section 65 (105) (zzza) does not include works contract towards winding of motor. For that reason also the demand cannot be sustained.”

Rajesh Exports Ltd vs Commissioner of Customs, Bangalore

The CESTAT, Chennai bench has held that the restrictions imposed under the DGFT notification dated. 18.12.2019 not applicable to prior import of Gold imported as normal importer. “In view of the above analysis, we hold that prior to the notification dated 18/12/2019, the gold was also freely importable by the Normal importer in terms of RBI Guidelines. 7. In view of the above analysis, we hold that the appellant imported the goods as a normal importer; therefore, the restrictions contained in Notification No. 34/2017 dated 18/10/2017 are not applicable to the appellant and the import has been done prior to introduction of the Notification dated 18/10/2017,” the Tribunal said.

M/s.R.S. Arunachalam vs The Commissioner of Customs

The Chennai bench of the CESTAT, in a recent ruling held that the Customs House Agent cannot escape from liability pleading ignorance of the transaction in a scheme of conspiracy as held by the Madras High Court in the case of Rama ThennaThaylan.

HINDUSTAN COCA COLA BEVERAGES PVT LTD vs COMMISSIONER, CENTRAL EXCISE & CGST, JAIPUR I

The Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), in a setback to Hindustan Coca Cola Beverages, dismissed the appeal filed by the Company and upheld an order of the department imposing interest and penalty while recovering an amount of Rs.75,930/-.

HOTEL UTSAV vs C.C.E. & S.T. SURAT-I

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad bench has held that the activity of sale of packed food which is sold as take away either on the counter of the restaurant or through delivery boys to the customer’s place does not attract service tax under the provisions of Finance Act, 1994.

Associated Soap Stone Distributing Company Pvt Ltd vs C.S.T.-Service Tax – Ahmedabad

The CESTAT, Ahmedabad bench has held that the activity of excavation and removal of soil would be treated as “Mining Services” for the purpose of the Finance Act and therefore, service tax cannot be levied for the period 16-6-2005 to 31-5-2007.

M/s. Hera Shipping Solutions Pvt. Ltd vs Commissioner of Customs

The Chennai bench of the CESTAT has held that in order to attract the provisions relating to confiscation of goods under section 113 of the Customs Act, 1962, the department shall prove the abetment of offence in accordance with section 114 of the Act.

M/s. MTL Instruments Private Limited vs The Commissioner of G.S.T. and Central Excise

The CESTAT, Chennai bench has held that the definition of input service as it stood prior to April 1, 2011, in which the phrase "activities relating to business" was included, which had a very wide ambit and would include almost all services used for the activities of business, however, after the amendment the services for personal use or for employees has been excluded from the definition of "input services".

PRASAR BHARATI vs COMMISSIONER OF SERVICE TAX, DELHI

The CESTAT, Delhi bench, while holding that Prasar Bharati has no service tax liability on the advertising services, directed the Company to make the refund to the customers as the former collected the same during the pendency of proceedings under the apprehension that the tax demand may be confirmed. The Company is also directed to furnish a compliance report with the registry of this Tribunal within 15 days thereafter.

Tata Consumer Products Ltd vs Commissioner Of Central Tax & Central Excise, Cochin

The Delhi bench of the CESTAT, in a major relief to Tata Consumer Products Ltd, has directed the central excise department to re-consider the refund claim of the Company. “In view of the above, the impugned order is set aside and the appeal is allowed by way of remand. The adjudicating authority shall pass a speaking order as per my observations hereinabove, preferably within a period of 3 months considering the fact that the issue pertains to the period April 2015 to June 2015. While passing a speaking order as per my directions, the adjudicating authority shall give sufficient/reasonable opportunities to the appellant of being heard,” the Tribunal added.

M/s Gelnova Laboratories (I) Pvt. Ltd vs Commissioner of Central Excise, Belapur

The Mumbai bench of the CESTAT, while granting relief to M/s Gelnova Laboratories (I) Pvt. Ltd, held that the cenvat credit is available even if the supplier has classified the goods 94032010 and goods falling under the said Chapter is not covered within the definition of “capital goods” as provided in Rule 2(a) of the CENVAT Credit Rules, 2004.

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