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2025 (1) TMI 87
Interest on delayed refund of the Anti-Dumping Duty (ADD) deposited during the investigation - determination of interest on delayed refund as per Section 27 and 27A of the Customs Act, 1962 - time limitation - principles of unjust enrichment - HELD THAT:- It is settled position in law that interest on any amount deposited arises on two accounts – either as contractual liability or as statutory liability (prescribed by the statute). Appellant has not shown anything by which it can be shown that the interest being claimed by them is in terms of any contract entered between them and the DRI or the Customs Department. The interest being claimed has arisen as a result of the provisions of statute. As per the appellants own submissions in the appeal filed by the appellant, the amount claimed as refund has been deposited by them during the 2011.
Even if the claim of the appellant is accepted that the amount deposited by them should be treated as “deposit” or as “revenue deposit”, then alos the interest provisions as provided by Section 129EE of the Customs Act, 1962 as it existed on the dated of deposit shall be applicable.
It is settled principle in law that when the statute prescribes a manner of performance of an act then that is only method of performance all other methods are necessary barred. When the statute prescribed manner of computation of interest on the said deposits, then that would be only available method and all other methods are necessary barred - Admittedly all the amounts claimed as refunds were deposited in the year 2011 much prior to 06.08.2014 and hence the interest could not have been granted in terms of this section from the date of deposit.
It is also settled principle in law that tribunal being creature of statute cannot go beyond the provisions of the statute. Any order which has taken contrary view is beyond the jurisdiction vested in tribunal and hence should be treated as nullity. The case of Parle Agro [2021 (5) TMI 870 - CESTAT ALLAHABAD] relied upon by the appellant was in respect of deposit made on 01.12.2005. Section 129EE was inserted in the Customs Act, 1962 by Section 73 of the Finance Act, 208 (Act 18 of 2008). Prior to insertion of this section there was no specific provision in respect of interest o n the deposits made, and sought to be refunded as per the decisions of the appellate authority. Nearly all the decisions referred to by the appellant are in respect of the deposits made prior to this insertion, hence are distinguishable.
Reliance placed in the case of JINDAL PIPES LTD VERSUS COMMISSIONER, CGST, NOIDA [2024 (12) TMI 1448 - CESTAT ALLAHABAD] where it was held that 'Interest would be paid from the date of deposit made.'
Conclusion - The interest on the refund is payable from the date of filing the refund application, not from the date of deposit.
There are no merits in the appeal - appeal dismissed.
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2025 (1) TMI 86
Denial of request for amendment of the Bill of Entry under Section 149 of the Customs Act, 1962 - benefit of exemption in terms of Doctrine of Substantial Compliance - HELD THAT:- The respondent have undisputedly made an application for getting the duty exemption certificate to the concern ministry well in advance from the date of importation, it was only for the reason of non-receipt of the duty exemption certificate and to avoid any further demurrage charges, they cleared the goods on the basis of self assessment for payment of duty.
The respondent had taken all the necessary steps to obtain the said certificate well in advance which was being delayed in the concern ministry even the submission of that application and receipt thereof can be considered as a valid document for the purpose of allowing the benefit of exemption in terms of Doctrine of Substantial Compliance. Amendment as requested for in terms Section 149 of the Customs Act, 1962 should have been allowed. That is what Commissioner (Appeals) have also observed. Section 149 of the Act is wide enough for taking care of such exigencies, hence, denial of such amendment for the reason as stated in the appeal cannot be upheld and consequently the appeal filed by the revenue lacks merit.
Appeal dismissed.
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2025 (1) TMI 85
Mis-declaration of imported goods - enhancement of value - Chartered Engineer without making any inquiry, adopted the domestic market value of the imported goods - HELD THAT:- The present case arises out of examination and seizure of the imported goods pertaining to 18 import consignments. We find that M/s Skyblue International Trading Company have imported total 5 import consignment which were examined by the officers of DRI and during examination of the goods mis-declaration were observed in respect of value, quantity and other material particulars. The Ld. Commissioner in impugned order held that the declared value in respect to the containers is liable to be rejected under Rule 12 of the CVR, 2007 and to be re-determined under Section 14 of the Customs Act, 1962 readwith Rule 9 of the CVR, 2007. The report of the Chartered Engineer merits to be considered as the basis for arriving at assessable value of impugned goods. The Ld. Commissioner relied upon the Chartered Engineer reports and enhanced the value in terms of Rule 9 of the Customs Valuation Rules.
The Chartered Engineer completely failed to provide the justification as to what was the difference in the quality imported by the Appellant vis-a-vis the quality of goods which had been examined for arriving at the assessable value. The Chartered Engineer also failed to provide the details with respect to who were the suppliers / manufacturers for the goods which were examined against the imported goods to arrive the conclusion that the disputed goods are undervalued. Also, what were the differences with respect to the specification and characteristics of the goods making it differentiable with respect to the imported goods. It is also not provided what quality parameters were examined so as to differentiate the two products.
In the present case, the IEC holder lent the IEC to Mr. Asif Sathi who carried the imported goods to his godown/warehouse located at Mumbai. In such circumstances, merely no business activities were noticed at the time of investigation would not lead to alleged smuggling of goods. In this context we also find that there is no provision under the Customs Act, 1962 which prohibits the use of IEC of third party who is holding valid IEC Number. In view of the above, the Appellant cannot be made liable for the alleged imports made in the name of IEC holders.
Penalties u/s 112, 114A and 114AA of the Customs Act, 1962 - HELD THAT:- There is no reason whatsoever to impose penalties on the three Appellants, accordingly penalties imposed on the said appellants are liable to be set aside.
Conclusion - i) The Chartered Engineer’s certificate and value of the subject imported goods worked out on the basis of said certificate are hereby rejected. ii) The value of subject imported goods shall be assessed on the basis of contemporaneous import/NIDB data after providing the details/ documents to the appellants. Only in cases where contemporaneous value based on NIDB is not available, the value shall be determined as per Valuation Rules sequentially and by deductive method on the price and the details/ documents of such price shall be first provided to the appellant. iii) The issue of penalty and the redemption fine in the matter being remanded is kept open.
Appeal disposed off.
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2025 (1) TMI 84
100% EOU - request for conversion of shipping bills from EOU to DEPB and drawback scheme - rejection of request for conversion on the ground that when the export has taken place under shipping bill mentioning EOU, the final de-bonding was not completed, the final de-bonding was completed only on 21.01.2010 - Applicability of Section 149 of the Customs Act, 1962 - Learned Commissioner while rejecting request for conversion neither issued any show cause notice nor granted any personal hearing - violation of principles of natural justice.
Violation of principles of natural justice - HELD THAT:- The decision taken for rejecting the conversion from EOU shipping bill to DBK/DEPB shipping bill is absolutely in gross violation of natural justice. Therefore the said decision is liable to be set aside on this ground alone. However, this Tribunal being a final fact finding authority considered the fact of the present case and it is found that there is no dispute that the appellant have been paying duty on all their clearances after debonding and also paid the duty on the closing stock, therefore all the goods cleared for export suffered the duty on the inputs raw material in process material therefore the appellant were clearly eligible for conversion of shipping bill from EOU to DBK/DEPB scheme. There is no fault on the part of the appellant in filling the EOU shipping bill for the reason that though the appellant had discharged all the duties and started paying duty for the subsequent clearances but since they were not given the final NOC, they could not have filed DBK/DEPB shipping bill. Therefore in these circumstances there are no reason for denying the conversion of EOU shipping bill to DBK/DEPB shipping bill.
Applicability of Section 149 of the Customs Act, 1962 - HELD THAT:- From the section 149, it is clear that the only condition to be fulfilled for conversion is that at the time of export the documentary evidence should be existed on the basis of which the conversion can be made. In the present case there is no dispute that the export of the goods have been made out of duty paid inputs and the EOU shipping bill was filed for want of final NOC. Therefore in this case the appellant’s case is clearly covered by Section 149 of the Customs Act, 1962.
Thus, the appellant is legally entitled for conversion of EOU shipping bill to DBK/DEPB shipping bill.
Conclusion - i) The decision taken for rejecting the conversion from EOU shipping bill to DBK/DEPB shipping bill is absolutely in gross violation of natural justice. ii) In the present case there is no dispute that the export of the goods have been made out of duty paid inputs and the EOU shipping bill was filed for want of final NOC. Therefore in this case the appellant’s case is clearly covered by Section 149 of the Customs Act, 1962.
The decision of the Commissioner rejecting the conversion of EOU shipping bill to DBK/DEPB shipping bill is set aside - Appeal allowed.
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2025 (1) TMI 83
Condonation of delay in filing of appeal - time limitation - HELD THAT:- Undisputedly, the normal period of limitation for filing appeal before Commissioner (Appeals) was till 24.02.2020 and appellant have filed the appeal alongwith the application for condoning of delay beyond the normal period as prescribed in law. Commissioner (Appeals) after examining the grounds stated in the condonation of delay application he could have condoned the delay of only 30 days.
As per the decision by Hon’ble Supreme Court in IN RE : COGNIZANCE FOR EXTENSION OF LIMITATION [2020 (5) TMI 418 - SC ORDER], after taking note of pandemic condition prevailing in the country during the period starting from 15.03.2020 has provided that the appeals should have been allowed to be filed even if the period of limitation would have expired. After that date the period of limitation available to the appellant alongwith the application of condonation of delay would have expired on 27.03.2020. It is observed by Hon’ble Supreme Court, do not makes any distinction between the appeal to be filed within the normal period of limitation or to be filed alongwith the condonation of delay. During the period of pandemic, it was expected that liberal views should have been taken and appeal to be considered on merits as in the light of decision by Hon’ble Supreme Court.
Conclusion - The period of limitation expired on 24.02.2020, and the delay in filing the appeal was much beyond the period of 30 days. The appeal is time barred.
Appeals are allowed by way of remand to Commissioner (Appeals).
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2025 (1) TMI 82
Maintainability of petition - availability of alternative remedy - Money Laundering - territorial jurisdiction of Rajasthan High Court to entertain the writ petition challenging the order of the NCLT, Mumbai - jurisdiction of NCLT, Mumbai to vacate the attachment orders issued by the Enforcement Directorate (ED) under the PMLA, 2002 - vacation of attachment order in exercise of powers under Section 238 of the IB Code read with Rule 11 of the NCLT Rules - petitioner was not made party in the proceedings before the NCLT, Mumbai - violation of principles of natural justice.
Violation of principles of natural justice - HELD THAT:- The order dated 27.09.2023 was passed by the High Court of Bombay after hearing and in presence of the counsel for ED but no such argument, which was raised herein as referred in the stay order dated 06.07.2023 was made by the counsel for ED, rather even after dismissal of the writ petition with aforesaid observations, the order dated 27.09.2023 was not put to challenge by the ED in any manner. It is not worthy that the SLPs preferred against the judgment and order dated 27.09.2023 have also been dismissed by the Hon'ble Supreme Court in NARESH SUNDARLAL JAIN VERSUS UDAIPUR ENTERTAINMENT WORLD PRIVATE LIMITED & ANR. [2023 (10) TMI 1478 - SC ORDER].
Further, a perusal of stay order dated 06.07.2023 also reveals that counsel for petitioner strongly raised another point that the petitioner was not impleaded as party in the CIRP before the NCLT, Mumbai and the order dated 24.02.2022 has been passed by the NCLT, Mumbai behind back of the petitioner, which suffers from blatant violation of the principles of natural justice.
In respect of such plea of petitioner, for violation of principles of natural justice, this Court, having considered the rival contentions of counsel for both sides and gone through the undisputed documents on record, prima facie, finds that the petitioner was well aware about the pending proceedings before the NCLT, Mumbai under the IB Code - It is noteworthy that the ED also replied one letter and e-mail dated 22.06.2021, through its reply letter dated 25.06.2021 to the resolution professional. Thus, such material on record explicitly reflects that the petitioner cannot make out a case to the effect that petitioner was not aware about proceedings pending before the NCLT, Mumbai, at the instance of respondents under the IB Code and further, this factual aspect has also not been disputed by the counsel appearing for and on behalf of petitioner. Thus, prima facie, it appears that the petitioner cannot take resort of the violation of principles of natural justice and cannot plead unawareness to the proceedings before the NCLT, Mumbai and the order dated 24.02.2022 passed therein. Therefore, this Court is prima facie of the opinion that in such view of the undisputed factual matrix, the petitioner cannot be allowed to take a pretext of non-imleading him as party before the NCLT, Mumbai, rather it is a case where petitioner, knowingly and deliberately, himself did not opt to intervene in the matter and CIRP pending before the NCLT, Mumbai.
Maintainability of petition - availability of alternative remedy - HELD THAT:- The petitioner was well aware of the proceedings and the order dated 24.02.2022 passed by the NCLT, Mumbai, yet he did not avail the statutory remedy of filing of appeal against the order dated 24.02.2022 before the NCLAT, Delhi within prescribed period of 45 days (30+15 days), which was available to the petitioner under Section 32 read with Section 61 of the IB Code, 2016. Hence, after losing the available statutory remedy, petitioner has invoked the writ jurisdiction of the High Court by filing the writ petition on 10.03.2023, which has been filed after a delay of about one year from passing of the impugned order dated 24.02.2022 by NCLT. From this angle also, petitioner has no prima facie case to sustain the stay order dated 06.07.2023 and same deserves to be vacated.
Power and jurisdiction of the NCLT, to vacate the attachment orders issued by the ED - HELD THAT:- This Court refraining itself to give any findings on such legal issue, at this stage, which may affect merits of the writ petition. However, such legal issue shall be considered and decided whenever the occasion comes to hear the writ petition on merits. Similar is in respect of all other contentions, made by the respective counsels for parties, which also touch to the maintainability and merits of the writ petition, hence, same shall be considered at the time of final hearing of the writ petition.
Conclusion - i) The petitioner cannot take resort of the violation of principles of natural justice and cannot plead unawareness to the proceedings before the NCLT, Mumbai and the order dated 24.02.2022 passed therein - ii) The stay order was vacated, and the court directed the petitioner to address the jurisdictional issue and consider converting the writ petition under Article 226 of the Constitution.
In the opinion of this Court, stay order dated 06.07.2023 is liable to be vacated and hence, as a final conclusion, the stay order is hereby vacated. The application filed by the respondents under Article 226(3) of the Constitution of India stands allowed and consequentially the stay application of petitioner is hereby dismissed.
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2025 (1) TMI 81
Non-admission of the claim by the Resolution Professional - direction to IRP to get the Resolution Plan modified so as to comply with Regulation 42 and 44 of the Liquidation Process Regulations, 2016 - deduction of amount from the final payment to be made to Applicant as per the scheme of distribution of amount under Resolution Plan - direction to Respondent Resolution Professional to further include amounts towards LC payments and towards Bank Guarantee (BG) payments in the total admitted claim of Applicant - HELD THAT:- The Resolution Plan came to be approved by the CoC with vote share of 70.07%. The appellant has voting share of 6.64% and Appellant voted against the Resolution Plan and thus, was a dissenting financial creditor. The Resolution Plan which is approved in commercial wisdom of the CoC binds all stakeholders including the dissenting financial creditor.
The commercial wisdom of the CoC approving the Resolution Plan is binding on all, which is law laid down by the Hon’ble Supreme Court in K. Sashidhar vs. Indian Overseas Bank & Ors. [2019 (2) TMI 1043 - SUPREME COURT] and the Hon’ble Supreme Court decision in Committee of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta and Ors. [2019 (11) TMI 731 - SUPREME COURT] where it was held that 'The NCLAT judgment which substitutes its wisdom for the commercial wisdom of the Committee of Creditors and which also directs the admission of a number of claims which was done by the resolution applicant, without prejudice to its right to appeal against the aforesaid judgment, must therefore be set aside.'
One of the subject on which CoC is to approve a Resolution Plan is “the manner of distribution proposed”. As noted above, the manner of distribution which was approved by the CoC in 31st CoC meeting contained an approval of deduction of Rs.33.34 Crores from payout of the Appellant. Appellant-Financial Creditor by IA No.222 of 2020 had challenged in effect the decision of the CoC taken in 31st CoC meeting held on 07.02.2020 approving the distribution and opting for second option i.e. deduction of Rs.34 Crores from payout of the Appellant. Appellant- Dissenting Financial Creditor is fully bound by the decision of the CoC and cannot be allowed to challenge the same - It is relevant to notice that by order of the same date 09.07.2020 when IA No.222 of 2020 was decided Resolution Plan was also approved.
Conclusion - No grounds have been made out to interfere with the order passed by the Adjudicating Authority - The CoC's decision to deduct Rs.34 Crores from the Appellant's payout was deemed valid, based on its commercial wisdom and the binding nature of the Resolution Plan. The Appellant, as a dissenting financial creditor, was bound by the CoC's decision, and no grounds were found to interfere with the adjudicating authority's order.
Appeal dismissed.
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2025 (1) TMI 80
Seeking issuance of ex-parte ad-interim order directing the Respondents not to access and copy the contents of Mobile phone of the Applicant No. 2 - issuance of ex-parte ad-interim order staying the effect and operation of summons under Section 50 of the PMLA issued to the Applicant No.2 and the summons - HELD THAT:- Issue notice on the application seeking interim relief, returnable on 17th February, 2025.
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2025 (1) TMI 79
Rejection of the application under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) - grievance of the respondent before the learned Single Judge was that, it was ready and willing to pay the amount as notified by the appellants in Form No. 2 for availing the benefit of the SVLDR scheme.
HELD THAT:- The learned Single Judge has in the impugned order given a finding that the impugned communication dated 30.01.2020 is contrary to the circular dated 12.12.2019 which is issued regarding the applicability and maintainability of the scheme.
In fact, the learned counsel for the appellants would concede to the fact that, the circular dated 12.12.2019 do not contemplate a situation wherein the audit having been carried out before 30.06.2019, an action can be taken after that date, more so when the appellants have issued Form No. 2 and the respondent submitted Form 2A - the appellants concede that, the Form No. 2 which was issued to the respondent has not been withdrawn.
Conclusion - The timelines granted by the learned Single Judge are extended by 15 days, 4 weeks and 2 weeks respectively from the date of receipt of a certified copy of this order.
Appeal dismissed.
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2025 (1) TMI 78
Quantification of education cess and secondary & higher education cess - to be calculated on the gross service tax amount or the net service tax amount after deducting the R&D cess exemption? - computation on best judgment basis - invocation of extended period of limitation - HELD THAT:- It is found that in the Appellant’s own case for the subsequent period pertaining to financial year 2014-15 and 2015-16 involving the identical issue as involved in the present case, the Commissioner vide Order-in-Original No. 08/ST/COMMR/VMJ/RTK/2017-18 dated 29.12.2017 has allowed the benefit in favour of the Appellant and the department has accepted the said order and has not filed any appeal against the same.
Since the department has accepted the order of the Commissioner dated 29.12.2017, which has now attained finality and the present proceedings have also arisen on the basis of same audit, therefore, it is held that the issue is squarely covered in favour of the Appellant. Further, the Appellant had rightly paid the education cess and secondary & higher education cess on the amount of net service tax i.e. service tax after deducting the amount of R&D cess i.e. exempted amount.
Conclusion - The appellant had rightly paid the education cess and secondary & higher education cess on the amount of net service tax i.e. service tax after deducting the amount of R&D cess i.e. exempted amount.
The impugned order is not sustainable in law - Appeal allowed.
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2025 (1) TMI 77
Liability of appellant to pay service tax - appellant is a car dealer collecting handling charges in their sale bill of selling of car to individual customer - HELD THAT:- In the facts of the present case there is no dispute that the handling charges is shown in the sale bill of the car and on the total elements that is sale price of the car, handling charges and other charges, the appellant have calculated the VAT at the rate of 12.5%+2.5% and the total bill value was collected from the customer of the car, Therefore the total bill value is a sale value of the car and the handling charges is part of the sale price on which the VAT has been paid. Therefore the handling charges being the part of the sale price the same again cannot be subject to levy of service tax.
From the decision in JIVAN JYOT MOTORS PVT LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE & ST, SURAT [2023 (7) TMI 1178 - CESTAT AHMEDABAD] it can be seen that the issue in hand is squarely covered by the decision. Therefore the handling charges is not liable to service tax.
In the present case there is no dispute from the VAT department that the handling charges whether is liable to VAT or otherwise. Since the appellant has charged the VAT on handling charges and the same attained finality as there is no record whether the charging of VAT is incorrect the handling charges in the fact of the present case cannot be charged to service tax.
Conclusion - The handling charges included in the sale invoice of the car, on which VAT was paid, are not liable for service tax.
The impugned order is set aside. Appeal is allowed.
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2025 (1) TMI 76
Levy of service tax - Export of Services or not - services provided by the appellant to its group companies situated outside India - whether the foreign establishment who is the service recipient is the establishment of the appellant or it is separate? - HELD THAT:- The adjudicating authority has not properly understood that the appellant and the service recipient are whether separate entity referring to item b of explanation 3 of Clause 44 of Section 65B of the Finance Act, 1994, therefore the entire matter needs a reconsideration in the light of the judgments in the identical facts.
The issue involved in the present case is squarely covered by the decision in the case of CELTIC SYSTEMS PRIVATE LIMITED VERSUS C.C.E. & S.T. -VADODARA-I [2022 (6) TMI 306 - CESTAT AHMEDABAD] where it was held that 'it is clear that in the present case the appellant and the service recipient are two distinct person, hence, the service provided by the appellant to M/s. Celtic Cross Holding Inc. USA clearly falls under export of service.'
Conclusion - The adjudicating authority has not properly understood that the appellant and the service recipient are whether separate entity referring to item b of explanation 3 of Clause 44 of Section 65B of the Finance Act, 1994 and the matter needs remand.
Matter remanded to the adjudicating authority for passing a fresh order.
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2025 (1) TMI 75
Classification of service - Erection, Commissioning and Installation service or Commercial or Industrial Construction service - abatement claim rejected on the ground that the appellant has not included the value of free supply material in the taxable value - revenue neutrality.
HELD THAT:- Iit is an admitted fact that the major portion of the demand is confirmed under the category of 'Commercial or Industrial Construction' Services. Further, lying of long-distance gas pipeline can only be considered as a 'Works Contract service'. Moreover, abatement was denied by the original authority on the ground that some of the goods are supplied by the main contractor. The issue of inclusion of the value of free supply material in the taxable value is covered in the case of COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [2018 (2) TMI 1325 - SUPREME COURT] - in this case the period involved is 01.06.2005 to 30.09.2006.
As per the judgment of the Hon’ble Supreme Court in the case of COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS M/S LARSEN & TOUBRO LTD. AND OTHERS [2015 (8) TMI 749 - SUPREME COURT], the activity of the appellant can be considered only as a works contract since it involved supply of goods and services and prior to 01.06.2007 the activity is not taxable under the category of 'Commercial or Industrial Construction Service'.
Conclusion - The activity is not taxable under the category of 'Commercial or Industrial Construction Service' prior to 01.06.2007 as the activity involved supply of goods and services.
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2025 (1) TMI 74
Classification of service - Online Information Data and Access Retrieval’ (OIDAR) Service or not - refund claims under Rule 5 of the CENVAT Credit Rules, 2004 - export of services or not - HELD THAT:- As per the agreement, foreign entity provides raw data to the Appellant in form of manuscripts, articles, photographs and other content required for carrying out the various activities by the Appellant such as copyediting, typesetting, formatting, proofreading, graphic designing, indexing, coding, etc. by using human skill and labour on such data and sends the same in electronic form through internet for access by foreign entity. In this whole process, the ownership of the data vests solely with the foreign entity and is not transferred to the Appellant. The services provided by the appellant do not qualify as OIDAR services as per the above definition.
As per the provisions of the said services, appellants are not owing or providing any data through the network of computers to anybody, their services do not fall under the category of OIDAR Services. A basic requirement for classification under the said category that services should have been in respect of the data owned by the person by way of providing access and retrieval of the same to some other person. Nothing has been brought on record to show that appellants have provided any of such services. Just for the reason that appellants have got themselves registered under this category, cannot be a reason for holding that the services provided by the appellants fall under this category.
The services provided by the appellants do not fall under the category of OIDAR Services, there are no merits for denial of the refund claims filed by the appellants under Rule 5 of Cenvat Credit Rules read with Notification No.27/2012-ST dated 18.06.2012.
Conclusion - The classification of services must be based on the nature of the services provided, not merely on registration categories. Export of services is determined by the location of the service recipient and the nature of the transaction. The services provided by the appellants are not OIDAR services. The appellants are entitled to a refund under Rule 5 of the Cenvat Credit Rules as the services qualify as exports.
Appeal allowed.
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2025 (1) TMI 73
Classification of services - Appellant undertook activities of advertisement and sale promotion of concentrate/flavor belonging to Coca Cola India Pvt. Ltd. and received support price in consideration - Business Auxiliary Service or not - scope of SCN - extended period of limitation.
Whether the Respondent was right in extending the scope of the show cause notice by way of confirming the disputed demand under “Business Auxiliary Service” when evidentially the show cause notice has not demanded the Service Tax under any particular service head? - HELD THAT:- Reliance is placed in the case of SYNIVERSE MOBILE SOLUTIONS PVT LTD., (EARLIER TRANSCIBERNET INDIA PVT LTD.) VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE & SERVICE TAX, HYDERABAD – IV [2023 (6) TMI 463 - CESTAT HYDERABAD], wherein it has been held it is essential for the show cause notice issuing authority to clearly indicate the sub-clause under which the service tax in question would fall.
It is a settled principle of law that the Adjudicating Authority cannot go beyond the scope of SCN which has been laid down by the Hon'ble Supreme Court, inter alia, in cases of COMMISSIONER OF CUSTOMS, MUMBAI VERSUS TOYO ENGINEERING INDIA LIMITED [2006 (8) TMI 184 - SUPREME COURT], COMMISSIONER OF CENTRAL EXCISE, NAGPUR VERSUS M/S BALLARPUR INDUSTRIES LTD [2007 (8) TMI 10 - SUPREME COURT] it has been held that the SCN is the foundation of the case against the assesse and it is not open for the Adjudicating Authority to confirm the demand by travelling beyond the scope of the SCN. Therefore, in the light of the above, the Impugned Order is liable to be set aside.
Whether there is any element of service, particularly in the nature of “Business Auxiliary Services” as defined under Section 65(19) of the Finance Act, 1994, involved in receipt of reimbursement amount received from M/s. Coca Cola India Pvt Ltd for joint promotional activities conducted by the Appellant on cost sharing basis with CCIPL, with an objective of promotion of sale of beverages manufactured by the Appellant? - HELD THAT:- The Appellant has undertaken promotion, marketing of their final product i.e. beverage and not that of concentrates (i.e. industrial input), therefore, the conditions specified in clause (i) of Section 64 (19) of the Act are not fulfilled. Accordingly, the demand in the present case is liable to be set aside - Appellant has not provided any “Business Auxiliary Services” to the CCIPL as per the provision of law, therefore, the Adjudicating authority has completely erred in invoking the Section 65(19)(i) in the instant case.
Whether the Respondent is right in confirming the demand on the extended period of limitation? - HELD THAT:- The onus to prove that Appellant has deliberately suppressed the facts from the Department and that such suppression was with intent to evade payment of duty is on the Department. However, in the impugned SCN, the Respondent has neither put forth any averment nor has produced any documentary evidence for establishing the suppression and mala fide intent on part of the Appellant. Therefore, the question of invocation of extended period of limitation does not arise at all.
In the identical case of Commissioner of Central Excise & ST., Lucknow vs. M/s. Brindavan Bottlers Limited [2019 (3) TMI 1428 - CESTAT ALLAHABAD], the Tribunal held that there is no element of service in expenses for achieving the sales target, incentive or advertisement and publicity expenses reimbursed to the Appellant by the Coca-Cola Company Ltd. There is no element of service, and the Appellant therein is not providing any service to Coca Cola Company Ltd and the Appellant therein and Coca Cola are working on a principal-to-principal basis.
Reliance placed in SMV Beverages Private Limited vs. Commissioner of Central Excise, Nagpur [2017 (3) TMI 942 - CESTAT MUMBAI] wherein in the identical set of facts the Tribunal has held that when the concentrate is sold on payment of excise duty to the main appellant, which would indicate that once the sale takes place, the concentrate does not remain the property of PFL.
Conclusion - i) It is a settled principle of law that the Adjudicating Authority cannot go beyond the scope of SCN. ii) Appellant has not provided any “Business Auxiliary Services” to the CCIPL as per the provision of law. iii) in the impugned SCN, the Respondent has neither put forth any averment nor has produced any documentary evidence for establishing the suppression and mala fide intent on part of the Appellant. Therefore, the question of invocation of extended period of limitation does not arise at all.
The impugned order cannot be sustained - appeal allowed.
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2025 (1) TMI 72
Refund of the accumulated CENVAT credit under Rule 5 of the Cenvat Credit Rules 2004 - It was alleged that the credit was not admissible because the services on which credit was taken were not falling under the definition of ‘Input Service’ - HELD THAT:- Since no SCN has been issued previously disputing the taking of Cenvat credit itself, the same cannot be disputed at the stage when the Appellant has filed refund applications under Rule 5 of Credit Rules. As the credit has not been denied under Rule 14, therefore the same is available to the Appellant and a refund of the same is to be allowed under Rule 5 of the Credit Rules. Even as per Rule 5 and Notification No. 27/2004, the requirement was to ascertain whether services were exported and whether the balance of CENVAT Credit as claimed is available with the assessee or not. It was not the requirement to ascertain the correctness of admissibility of CENVAT Credit at the stage of refund proceedings.
The reasons based on which the Department filed the appeal before the Commissioner (Appeals) were not legally tenable and justified. The provisions of Rule 5 or the Notification No. 27/2012 do not require one-to-one correlation of the input services with the output services exported by the Appellant. The foreign service provider was not an Assessee under the Finance Act, 1994 and documents were not issued in terms of Section 4A of the Act. However, the Appellant being an Assessee in India, paid the service tax on reverse charge basis under the appropriate service classification and such payment was accepted by the department. Further, the absence of invoices in terms of Rule 4A of the Service Tax Rules does not disentitle the Appellant to claim refund of the CENVAT Credit as the service providers were not bound to issue such invoices.
Conclusion - The admissibility of CENVAT Credit cannot be disputed at the refund stage without prior denial under Rule 14. There is no requirement for one-to-one correlation between input and exported services for refunds under Rule 5. The absence of Rule 4A invoices does not bar refund claims if service tax is paid on a reverse charge basis.
Appeal allowed.
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2025 (1) TMI 71
Eligibility of cenvat credit can be questioned at the stage of refund without issuing a Show Cause Notice (SCN) under Rule 14 of the CENVAT Credit Rules, 2004? - CENVAT Credit - input services - jurisdiction to deny CENVAT credit at the refund stage without prior proceedings under Rule 14.
HELD THAT:- In the absence of any proceedings under Rule 14 of the CENVAT Credit Rules, 2014 observations recorded by the Assistant Commissioner are only in the nature of observations and cannot be taken as denial of CENVAT Credit. Even the Assistant Commissioner has nowhere said so.
The Tribunal in the case of MICROSOFT GLOBAL SERVICES CENTER (INDIA) PRIVATE LIMITED AND MICROSOFT INDIA (R & D) PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE & SERVICE TAX HYDERABAD-IV [2020 (10) TMI 57 - CESTAT HYDERABAD] held 'In the present case, it is an undisputed fact on record that the department had not proceeded against the appellant for effecting recovery of the allegedly availed irregular Cenvat credit, by taking recourse to Rule 14 ibid read with Section 73 ibid. On the other hand, the department had raised the issue of non-establishment of nexus between the input services and exported output service for the first time, while adjudicating the subject refund claims filed under Rule 5 ibid by the appellant.'
Further the Respondent-Assessee filed the appeal before the Commissioner (Appeals) not against the order of the Assistant Commissioner but against the observations made in discussion and findings of the Order. Learned Commissioner (Appeals) multiplied these findings without any change in the order portion which in any case was in accordance with the claim filed by the Respondent-Assessee.
Conclusion - The department had not proceeded against the appellant for effecting recovery of the allegedly availed irregular Cenvat credit, by taking recourse to Rule 14 ibid read with Section 73 ibid.
Appeal of Revenue dismissed.
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2025 (1) TMI 70
Time limitation - revenue neutrality - levy of service tax under reverese charge mechanism - services provided by foreign service providers to the Appellant, which were performed outside India - royalty payments for technical know-how - Intellectual Property Right services or not - levy of penalty.
HELD THAT:- The appellant had a bona fide belief that since the services are provided outside India and received outside India the service being performed in non taxable territories the same is not taxable. There are force in the appellant's bona fide belief. Moreover, if at all, the service tax is payable the appellant would have been eligible to take Cenvat credit of service tax. Therefore, on this ground alone, the extended period cannot be invoked as due to revenue neutrality there cannot be any intention to evade payment of service tax.
This view is supported by the Tribunal’s decision in the case of EMERSON PROCESS MANAGEMENT I PVT. LTD VERSUS C.C.E. & S.T. -DAMAN [2024 (2) TMI 911 - CESTAT AHMEDABAD] wherein Tribunal has held that 'The present case is on much batter footing as the appellant has paid service tax on the part of the activity of the service received from abroad. Therefore, there was no suppression of fact on the part of the appellant. Moreover, the present case is clearly of revenue neutral. In the present case, the demand was raised for the period from March, 2006 to March, 2008 whereas the show cause notice was issued on 20.06.2011 i.e. much after the normal period.'
From the above decision, which has relied upon various judgments on the issue of Revenue neutrality, it has been held that the demand for the extended period is not sustainable.
Conclusion - In the present case since, there is revenue neutrality in the entire exercise of service tax payable and the Cenvat credit available thereof to the appellant, the demand being under extended period will not be sustainable.
The impugned order set aside - appeal allowed.
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2025 (1) TMI 69
Non-payment of service tax - artificial bifurcation of one single contract for payment of service tax on value of services and payment of VAT on the value of supply of goods under the said contracts - application filed under Service Tax Voluntary Compliance Encouragement Scheme (VCES) 2013 - HELD THAT:- Similar issue was considered by the division bench of this Tribunal in the matter of LAXMI ENGINEERING P LTD VERSUS C.S.T. -SERVICE TAX – AHMEDABAD [2023 (4) TMI 348 - CESTAT AHMEDABAD] wherein it was held that 'Once, the sales tax has been paid on the materials, then on the same, service tax also cannot be charged.'
The issue is otherwise covered by the decision of Hon’ble Supreme Court in case of SAFETY RETREADING COMPANY (P) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, SALEM, M/S TYRESOLES INDIA PRIVATE LMITED VERSUS THE COMMISSIONER OF CENTRAL EXCISE, GOA AND M/S LAXMI TYRES VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE [2017 (1) TMI 1110 - SUPREME COURT] wherein it is observed 'The invoices which the appellant assessee has also brought on record by way of illustration show the break up of the gross value received. There is again no contest to the same. Leaving aside the question that the case now projected, with regard to lack of proof of incurring of expenses on goods and materials which has been transferred to the recipient of the service provided, appears to be an afterthought, even on examination of the same on merits we have found it to be wholly unsustainable.'
It can be seen from the preamble of the Notification that it exempts the services of commercial or industrial construction services and works contract services provided in relation to port or other port. It is well established principle of law that wherever the words used “in relation to”it expand the scope of the subject. It is undisputed that the Respondent assesee has carried out the installation of high mast lighting tower on Jetty No. 8 of the Kandla Port. Therefore, the same is covered within the scope of the above exemption notification - The Respondent assessee has arrived at the value of service portion in the works awarded to them and declared the liability of service tax of Rs. 91,74,594/- under VCES 2013 which Ld. Commissioner has accepted and not challenged by either party in these appeals. The Respondent Assessee has correctly paid service tax of Rs.91,74,594/- under VCES-2013.
Conclusion - The contracts involving both goods and services can be bifurcated for tax purposes if distinct parts are identifiable. Additionally, services related to port construction can qualify for exemptions under specific notifications.
The demand of service tax in both these appeals is not sustainable - revenue’s appeals are dismissed.
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2025 (1) TMI 68
Cenvat credit - input services or not - refund claim - 'locus standi' to file this appeal - HELD THAT:- The department has filed the appeal without even invoking Rule 14 of the Credit Rules, and without even issuing a SCN, hence the department does not have any 'locus standi' to file this appeal and hence this appeal should be dismissed on this ground only. The respondent has relied upon the decision of the Tribunal in the case of MICROSOFT GLOBAL SERVICES CENTER (INDIA) PRIVATE LIMITED AND MICROSOFT INDIA (R & D) PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE & SERVICE TAX HYDERABAD-IV [2020 (10) TMI 57 - CESTAT HYDERABAD] wherein it is held that 'In the present case, it is an undisputed fact on record that the department had not proceeded against the appellant for effecting recovery of the allegedly availed irregular Cenvat credit, by taking recourse to Rule 14 ibid read with Section 73 ibid. On the other hand, the department had raised the issue of non-establishment of nexus between the input services and exported output service for the first time, while adjudicating the subject refund claims filed under Rule 5 ibid by the appellant.'
Conclusion - The department has filed the appeal without even invoking Rule 14 of the Credit Rules, and without even issuing a SCN, hence the department does not have any 'locus standi' to file this appeal and hence this appeal should be dismissed on this ground only.
Appeal of Revenue dismissed.
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