This weekly round-up analytically summarizes the key stories of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) reported at taxscan.in, from January 13, 2024 to January 19, 2024.
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) disallowed pay back on credit balance on the ground of manufacture of dutiable 100% cotton.
A Two Member Bench comprising observed that “We find that the provision for lapsing of balance credit as on the date when the assessee opt for exemption is not applicable when the assessee manufacture and clear dutiable as well as exempted goods. In the present case there is no dispute that the appellant was manufacturing dutiable goods viz. other than 100% cotton as well as exempted final product ( articles of 100% cotton ) hence, the credit balance available as on 07.12.2008 was available for utilization for payment of duty on dutiable products.”
The Bangalore Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) ordered to recalculate the customs duty and noted that the unit price for pair of bra cups used for one brassier should be taken as per the unit price.
A Two-Member Bench comprising P A Augustian, Judicial Member and R Bhagya Devi, Technical Member observed that “In this case, the Chapter 6212 clearly includes Brassier and when there is a specific description, the goods cannot be classified based on the content of the material used to manufacture the same. The Interpretative Rules reproduced below as seen under clause 2(a) the essential character of the product decides the classification and here the bra cups undoubtedly are used as part of a Brassier and the impugned products are more akin to the description given under 6212 and therefore rightly classifiable under 6212 90 as per clause 4 of the Interpretative Rules.”
The Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) observed that the statutory limitation period prescribed under Section 11B of the Central Excise Act, 1944 is not applicable to refund when the amount paid by the appellant is not tax.
A Single Bench of PK Choudhary, Judicial Member observed that “In the present case, when admittedly the Appellant is not required to pay any amount, then the Appellant was clearly entitled to refund of the amount deposited under-protest and consequently the revenue has no authority to retain such amount as it would be in violation of Article 265 of the Constitution.”
The Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that no service tax leviable on services of design work of slaughter house established for kolkata municipal corporation.
A Two-Member Bench comprising PK Choudhary, Judicial Member and Sanjiv Srivastava, Judicial Member observed that “We find that the slaughter house was established for Kolkata Municipal Corporation in terms of Article 243W read with Schedule 12th of the Constitution of India. Nothing as observed by the Commissioner (Appeals) has been placed on record to show that the said slaughter house was for commerce and industry. On the contrary in terms of Article 243W this was the responsibility of the municipal corporation. That being so, Appellant is entitled to benefit of Sr. No.12(a) of Mega Exemption Notification No.25/2012-ST dated 20.06.2012.”
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) observed that service tax paid on general insurance service is admissible as cenvat credit.
A Two-Member Bench of Ramesh Nair, Judicial Member and Raju, Technical Member observed that “it can be seen that in many cases the identical issue has been considered and it has been consistently held that the service tax paid on the general insurance service is admissible as cenvat credit as the service is directly or indirectly related to manufacture of the final product in the appellant’s factory. Accordingly we are of the view that the issue is no longer res integra. Since we have decided the matter on merit, we do not incline to address the issue on limitation.”
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that the business of providing Stock Market related tips and advice not covered under taxable service of ‘Banking and other financial Services’.
A Two-Member Bench of Ramesh Nair, Judicial Member and Raju, Technical Member observed that “It can be seen from the above reproduced clarification that CBEC was of the view that any services to fall under the category of banking and financial services, the expression ‘any other person needs to be read “ejusdem generis” with the preceding words and the services are to be provided by any person should be similar to a bank or financial institution. In the case in hand, as recorded by us, it is undisputed that appellant is not a financial institution. Hence their activity of giving tips/information on shares would not fall under the “Banking and other financial services”, consequently not taxable.” To Read the full text of the Order CLICK HERE
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) upheld the penalty on reversal of cenvat credit in the matter regarding electricity supplied to sister concern.
A Two-Member Bench of the Tribunal comprising Ramesh Nair, Judicial Member and Raju, Technical Member observed that “As regard the short reversal of cenvat credit on electricity supplied to the sister concern, the appellant has paid the amount of Rs. 25,589/- and on merit no contest was raised.”
A Two-Member Bench of the Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) observed that no excise duty can be demanded on waste and scrap of machinery on availment of cenvat credit.
The Bench of Ramesh Nair, Judicial Member and Raju, Technical Member noted that “we find that the department could not establish that the waste and scrap generated from the machinery and on such machinery any cenvat credit was availed at the time of receipt and installation thereof. Therefore, unless and until the department shows that the appellant have availed any Cenvat credit, no demand on waste and scrap of such machinery can be made. Therefore, the demand of duty on the waste and scrap of the machinery is not sustainable, hence, the same is set aside.”
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) ruled that excess freight collected compared to freight paid to transporter is not includable in assessable value of excisable goods.
A Two-Member Bench comprising Ramesh Nair, Judicial Member and Raju, Technical Member observed that “Accordingly, we are of the considered view that the excess freight collected by the appellant as compared to the freight paid to the transporter is not includable in the assessable value of the excisable goods. Consequently, the demand on this count shall not sustain. In the result, impugned order is set aside, appeal is allowed with consequential relief.”
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) quashed excise duty demand as the charges of creating dummy units for keeping value of clearances below small scale industry ( SSI ) exemption is not sustainable.
A Two-Member Bench comprising Ramesh Nair, Judicial Member and Raju, Technical Member observed that “We find that nowhere it can be established that there was mutual flow back of funds amongst the units, control of both financial & management aspect by the same set of persons. We find that all the units are totally independent with no interdependence, no financial flow back, no mutuality of interest between firm, flow back of profit. There is no supporting evidence for common finance and common management and there is no finding that M/s Varun has floated, financed and incorporated the SSI units.
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad Bench ruled that cenvat credit cannot be denied merely because godown was situated outside factory premises.
A Two-Member Bench comprising Ramesh Nair, Judicial Member and Raju, Technical Member observed that “As regard the issue of cenvat credit of service tax paid on renting of godown situated outside the factory premises for an amount of Rs. 36,191/- we are of the view that merely because the godown was situated outside the factory premises, cenvat cannot be denied for the reason that the said godown was used for storage of the goods which was used in the manufacture, therefore, in our view the credit is admissible.”
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) observed that service tax is not leviable on charges collected on behalf of stock exchange.
A Two-Member Bench of Ramesh Nair, Judicial Member and Raju, Technical Member observed that “It is settled that all the charges which are involved in the present case have been held as not the service charges of the broking firm and hence not liable to service tax and this consistent view has been taken in the other judgments cited by the appellant. Therefore, in the present case also all the charges which were collected on behalf of the stock exchange are not liable to Service Tax.”
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that when complete possession and control of de-humidifier machine given to customer during entire renting period, then it does not amount to supply of tangible goods.
A Two-Member Bench comprising Ramesh Nair, Judicial Member and Raju, Technical Member observed that “In the present case as per arrangement between the appellant and the service recipient, since after giving the equipment on hire to the service recipient, the right to possession and effective control is with the service recipient who possessed the equipment and operated the same with their own employee.”
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) allowed benefit of abatement notification and noted that Make My Trip is facilitator between hotel and customer for short-term accommodation service.
A Two-Member Bench comprising Justice Dilip Gupta, President and Hemambika R Priya, Judicial Member observed that “. It is the hotel that has provided the service of short-term accommodation to the customers, and the appellant has merely acted as a facilitator between the hotel and the customer for the provision of short-term accommodation service by the hotels to the customers. The appellant is thus not a hotel. The appellant cannot, therefore, be said to be the provider of short-term accommodation service to the customers.”
The Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal(CESTAT) has held that no service tax is leviable for providing services of sale and purchase of SIM cards. The department viewed that the appellant is providing ‘Business Auxiliary Service’ to BSNL.
On the SIM cards, recharge coupons etc., where the service tax has been paid on the M.R.P. by the main operator the commission agent/distributor need not pay service tax on the commission received by him because the commission also forms part of the M.R.P. on which service tax has already been discharged.” A two-member bench comprising Mr S S Garg, Member (Judicial) And Mr P Anjani Kumar, Member (Technical) held that the impugned order is not sustainable in law, and therefore, set aside the same by allowing the appeal of the appellant with consequential relief.
A two member bench of CESTAT comprising S.S.Garg (Member, Judicial) and P. Anjani Kumar (Member, Technical) held the appellant’s arguments were acceptable and they were of the opinion that the machinery manufactured by the appellants by establishing a separate unit which started production after 07.01.2003, is eligible for benefit of Notification No.50/2003. The bench also observed that there was no condition in the said notification, so as to restrict benefit to only those units which were permitted by the District Industries Centre or any other authority.
The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal(CESTAT) has held that the classification of the vehicle as per rule 2 (a) of general rules for interpretation is not valid as the vehicle at the time of clearance did not possess the essential character of the ambulance.
A two-member bench comprising Justice Dilip Gupta, President and Ms Hemambika R Priya, Member (Technical) observed that the goods have to be assessed in the form in which they are presented at the time of clearance and not in the form they may ultimately take. The vehicles at the time of clearance did not have the essential character of an ambulance. What was purchased were bare delivery vans without any fittings. The order passed by the Commissioner classifying the vehicles under ETI 8703 33 92 of the First Schedule to the Tariff Act cannot be sustained.
The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal(CESTAT) upheld the order dropping the proceeding against the import of poppy seed. The show cause notice (SCN) was issued demanding customs duty cannot be issued without investigating facts of mismatch in declared value.
As per our above discussion, the enhancement of the price and consequential demand, interest etc. are not sustainable. Accordingly, the impugned order is set aside and appeal is allowed with consequential relief.” In view of the judgement, the two-member bench comprising Shri Ashok Jindal, Member(Judicial) and Shri Rajeev Tandon, Member(Technical) upheld the impugned order and dismissed the appeal of the revenue.
The Mumbai bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) held that the services which are beyond the purview of Finance Act, 1994 lies within exclusive powers of the State Government.
The bench comprising of Ajay Sharma( Member, Judicial ) and C J Mathew( Member, Technical ) observed “We find that the issue lies in the narrow compass of applicability of rule 6(3) of CENVAT Credit Rules, 2004 insofar as the period prior to specific exclusion of ‘trading activity’ is concerned.” The bench held that there was no reason for further proceedings except insofar as notice under rule 14 of CENVAT Credit Rules, 2004 and penalty under rule 15 CENVAT Credit Rules, 2004 is to be confined to non-adherence to the terms as set out. The court set aside the appeal.
The responsibility to demonstrate Intentional Misuse of Tax Credit Provisions lies with the Excise Department: CESTAT
A single member bench of CESTAT set aside the order against assesse on the ground that there was no grounds for initiating proceeding against the asseesee.
The bench observed that the show cause notice should not have been issued in view of proviso to section 73 of the Finance Act, 1994. The bench also observed that amountunt which is ordered to have been appropriated was reversed much prior to issuance of SCN.CESTAT set aside impugned order. The appellant was represented by J.M.Sharma(Consultant) and Pooja Agarwal (Chartered Accountant)
The Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal(CESTAT) has held that the value of scrap cannot be included in the assessable value in terms of alternate procedures of Rules 4(5)(a) of Cenvat Credit Rules (CCR), 2004.
A two-member bench comprising Dr Suvendu Kumar Pati, Member (Judicial) and Mr Anil G Shakkarwar, Member (Technical) set aside the demand against the Appellant for the reason that the value of scrap need not be included in the assessable value. The appeal of the assessee was allowed.
The Mumbai bench of CESTAT set aside the order passed against the appeal and allowed the appeal filed by the petitioner.
The bench comprising Ajay Sharma (Member, Judicial) and C J Mathew (Member, Technical) observed that loss in transit is not includible for computation of ‘assessable value’. The court set aside the impugned order. The Appellant was represented by Payal Nahar. Respondent was represented by Xavier R Mascarenhas.
The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) observed that no service tax can be levied on ONGC on the consideration received for the right to use natural resources.
A Two-Member Bench comprising Vasa Seshagiri Rao, Technical Member and CS Sulekha Beevi, Judicial Member observed that “The demand raised is indeed on the basis of Sl.No.61 of the exemption notification. Para 15 of the SCN also would show that the demand has been raised on the basis that the royalty which is paid periodically is not exempted from service tax. The argument put forward by the Counsel that the liability is derived on the basis of an exemption notification and not charging provision is not without substance.”
In a recent judgement, the Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) set aside the penalty under the Customs Act, 1962 which was imposed on the Customs Broker. The Penalty proceedings were initiated on an attempt toexport 19650 kg Red Sanders which was Violative of Foreign Trade Policy (FTP).
A two-member bench comprising Mr Ashok Jindal Member (Judicial) and Mr Rajeev Tandon Member (Technical) held that the department case falls woefully short of substantiating the invocation of penalty under Section 114(i) of the Customs Act and set aside the order passed by the Adjudicating Authority. The appeal of the assessee was allowed.
In a significant case, the Bangalore Bench of the Customs, Excise and Service Tax Appellate Tribunal(CESTAT) has held that excise duty exemption on packing materials procured from the domestic market cannot be denied when the assessee complied with procedures under exemption notification.
A two-member bench of Dr D M Misra, Member (Judicial) and Mrs R Bhagya Devi, Member (Technical) observed that the appellant had complied with the procedures laid down under Notification No.43/2001-CE(NT) dated 26.6.2001 in procuring the packing materials which are being used in the manufacture of readymade garments and the finished goods are ultimately exported under the scheme. “Denying the benefit of Notification No.43/2001-CE(NT) dated 26.6.2001 in procuring the packing materials duty-free alleging violation of Condition 8 of the Notification No.94/2004-Cus. dated 10.9.2004, in our view cannot be sustained.”, the CESTAT viewed while setting aside the impugned order.
In the case of concealment of foreign currency, the Bangalore Bench of the Customs, Excise and Service Tax Appellate Tribunal( CESTAT ) remanded the matter for adjudication on confiscation of currency under the Customs Act, 1962.
A two-member bench comprising of Mr P A. Augustian, Member (Judicial) and Mrs R Bhagya Devi, Member (Technical) observed that the Order-in-Original passed by the Deputy Commissioner was set aside by CESTAT and therefore, the Orderin-Original had become null and void. Accordingly, the CESTA allowed the appeal of the Revenue and remanded the matter to the Commissioner to decide the issue of confiscation of foreign currency and vehicle having Registration No.KRM-1911 as proposed in the show cause notice. To Read the full text of the Order CLICK HERE
The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal(CESTAT) has observed that the CTC machine for tea leaf cutting cannot perform versatile functions beyond leaf cutting and it does not fall under Tariff Heading of ‘Other Machines’. The two-member bench allowed the exemption as per the Excise Notification.
The bench comprising Mr R Muralidhar, Member (Judicial) and Mr K Anpazhakan, Member (Technical) observed that the Department had failed to bring in any evidence to the effect that the CTC machine was capable of multiple functions. The letter issued by the Tea Board and the Chartered Engineer confirms that the CC machine is used for Cutting Tea Leaves only. The Department has not rebutted these letters with any cogent documentary evidence. The CESTAT held that the confirmed demand for the extended period is not legally sustainable and set aside the same while allowing the appeal. To Read the full text of the Order CLICK HERE
The Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal(CESTAT) has held that reimbursable expenses incurred by Customs House Agent (CHA) on behalf of the service recipient are not includible in the gross value of CHA service. The CESTAT set aside the service tax demand on reimbursable expenses.
A two-member bench comprising Mr Ramesh Nair, Member (Judicial) and Mr C L Mahar, Member (Technical) viewed that as per the provisions of Rule 5 of the Service Tax (Determination of Value) Rules, 2006, the reimbursable expenses also need to be included in the value of taxable services rendered. In view of the Apex Court judgment in the Intercontinental case and the Board circular, the CESTAT held that the reimbursable expenses incurred by the appellant on behalf of the service recipient are not includible. While allowing the appeal, the impugned order was set aside.
In the case of concealment of foreign currency, the Bangalore Bench of the Customs, Excise and Service Tax Appellate Tribunal(CESTAT) set aside Penalty under section 114 of the Customs Act, 1962 in the absence of evidence other than the statement of the co-accused.
A two-member bench comprising of Mr P A Augustian, Member (Judicial) and Mrs R Bhagya Devi, Member (Technical) observed that any additional evidence other the statements of the co-accused produced by the Revenue other than those that have been placed before the trial court based on which the trial court has acquitted the appellant. The CESTAT set aside the impugned order only to the extent of the penalty imposed on the appellant under Section 114 of the Customs Act, 1962.
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