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Showing 361 to 380 of 1354 Records
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2024 (3) TMI 994
Levy / Demand of Countervailing Duty (CVD). - whether the appellant can be considered as an importer when the software has been imported by SAP India Pvt. Ltd. (subsidiary company) was contentious and reached before the Tribunal? - Validity of show cause notice - limitation - Interest - penalty - intent to evade customs duty or not - HELD THAT:- If the appellant pays CVD on the goods (software imported by them) they would be able to avail credit of such CVD paid by them. The entire situation is revenue neutral and there cannot be any intent to evade payment of duty. Further, the appellant was under bona fide belief that they have not imported the goods as they have only entered into an agreement with SAP India Pvt. Ltd. for purchase of the software.
The issue as to whether they can be considered as the importer was contentious and had travelled upto to the Tribunal. Taking these aspects into consideration, the issue is also interpretational in nature. We find that by the Department has not established any positive act on the part of the appellant in regard to suppression of facts with intent to evade Customs duty. Thus, we find that there are no grounds for invocation of extended period. The demand of CVD along with the interest and the imposition of penalties cannot sustain. The issue on limitation is answered in favour of the appellant. The impugned order is set aside on the ground of limitation. The appeal is allowed with consequential relief, if any, as per law.
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2024 (3) TMI 993
Refund application for refund of 4% SAD payment - Non-compliance with the mandatory condition of Notification No.102/2007 - issued a deficiency memo - Whether the Chartered Accountant certificate, is sufficient to meet the requirement of unjust enrichment and compliance of the conditions of Notification? - HELD THAT:- In the present case, only objection made by the adjudication authority to reject the refund application is that the Appellant failed to show the due amount of refund as receivable in the books of account and it amounts to non-compliance of the Notification. In impugned order it is further held that the onus of unjust enrichment also not complied. The issue was considered by various authorities and this Tribunal from time to time as stated in ibid paragraphs and it is well settled that once the Appellant produced certificate from concerned Chartered Accountant, it is sufficient to meet the requirement of unjust enrichment and compliance of the conditions of Notification.
The Department have no case that the goods were sold without payment of VAT or Sale Tax as applicable. In the absence of any other objection, impugned order rejecting the refund claim is unsustainable. Following the ratio of the decisions in the matter of Customs, Bangalore Vs M/s Apple India Pvt Ltd [2015 (1) TMI 573 - KARNATAKA HIGH COURT], Chartered Accountant certificate produced by the Appellant is sufficient to allow refund.
Appeals are allowed with consequential relief if any in accordance with law.
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2024 (3) TMI 992
Maintainability of Refund claim - order of assessment in appeal not challenged - quantity discount - import of the pre-fixed quantities - foreign supplier for supply of Chrysotile Asbestos Fibre - HELD THAT:- Admittedly, the appellants have not filed any application under Sections 144 & 149 of the Customs Act, 1962 for rectification or amendment of the Bills of Entry, therefore, the “case laws” relied by the appellants mentioned are no help.
Thus, following the decision of the Hon’ble Apex Court in the case of ITC Limited [2019 (9) TMI 802 - SUPREME COURT], the refund claims are not maintainable as neither Bills of Entry were modified nor the assessments of Bills of Entry were challenged by the appellants. Therefore, the appeals filed by the appellants are dismissed by upholding the impugned order.
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2024 (3) TMI 991
Validity of SCN proposing to declare the petitioners as wilful defaulters - Classification of Account as NPA - Impact of CIRP proceedings under IBC - Declaring the petitioners as wilful defaulters in terms of the Master Circular on Wilful Defaulters issued by the Reserve Bank of India (RBI) on July 1, 2015 - whether the injunction order passed by the writ court against the respondent-Bank, on the premise that the NPA classification was de hors the Master Circular, can be a relevant consideration for vitiating the Show-cause Notice? - HELD THAT:- In the present lis, even if the best case of the petitioners is taken into consideration, applying the Pandemic Circulars of the RBI extending the time for making good defaults, on and from November 30, 2020, the petitioner no. 1 was a defaulter. Apparently, no repayment has been made since then. Thus, it cannot be said that merely because the NPA classification is clouded in a writ petition, the respondent-Bank cannot proceed with the wilful defaulter proceeding.
However, it is made clear that the purported communications of the petitioners handed over by the Bank at the time of arguments cannot be looked into at this stage, having not been referred to in the Show-cause Notice. The principle laid down in MOHINDER SINGH GILL & ANR. VERSUS THE CHIIEF ELECTION COMMISSIONER, NEW DELHI & ORS. [1977 (12) TMI 138 - SUPREME COURT] is squarely applicable as well, precluding the respondent from furnishing new grounds which were not there in the original Show cause Notice.
Show-cause Notice contains reference to the assets of the petitioner nos. 2 to 9, who were Directors of the Company, which assets are not part of the assets of the borrower-Company - HELD THAT:- A Show-cause Notice need no plead in detail the full particulars of the requirements of the Master Circular but is required merely to outline the broad spectrum of offences committed by the borrower, its Directors and the guarantors to be labelled as wilful defaulters. The proper stage for consideration of compliance of Clause 2.6 on all other aspects is the order passed by the Wilful Defaulter Identification Committee on consideration of the Show-cause Notice and the reply thereto. Hence, the merits of the said allegation cannot be considered in detail.
Sufficient ingredients to justify the allegations have been spelt out in the Show-cause Notice to bring the same within the broad purview of the Master Circular. The said ingredients, read in conjunction with the FAR and other documents which may be relied on by the Bank, are to be taken in conjunction at the time of consideration by the Wilful Defaulter Identification Committee and not at the show-cause stage. The composite effect of the documents and the broad allegations made in the Show-cause Notice are the subject-matter of adjudication by the said Committee, and thereafter the Review Committee. At the stage of Show-cause Notice, the court cannot adopt a fault-finding approach but such a Notice is to be seen in the perspective of disclosing sufficient ingredients to make the noticee aware of the nature of allegations made against it.
Moreover, it is well-settled that under normal circumstances, courts are loathe to interfere at the show-cause stage since the noticee has the remedy of giving a reply thereto available to it. The merits of the allegations and defences can only be gone into by the first committee while deciding the matter.
Thus, a wilful defaulter proceeding does not come within the contemplation of Section 14 or Section 96 of the IBC, which primarily pertains to legal actions to foreclose, recover or enforce security interest, or recovery of any property of the debt-in-question.
In P. MOHANRAJ & ORS. VERSUS M/S. SHAH BROTHERS ISPAT PVT. LTD. [2021 (3) TMI 94 - SUPREME COURT], the Supreme Court has repeatedly highlighted, particularly in paragraph nos. 35.2 and 35.3, that the moratorium concerns not merely recovery of debt but any legal proceeding even indirectly relatable to recovery of any debt. Hence, the moratorium applies to recovery proceedings and proceedings which directly or indirectly “relatable” to such recovery. A wilful defaulter proceeding cannot, by any stretch of imagination, be said to be even remotely relatable to recovery of debt but is merely an off-shoot of the debt. The corpus of debt is not the subject-matter of a wilful defaulter proceeding, unlike a recovery proceeding, but is a mere stimulus to spur the wilful defaulter proceeding into motion.
Petition is disposed of by directing the respondent-bank to serve a copy of the Forensic Audit Report and/or any other document, on which the bank intends to rely to substantiate the show-cause allegations, on the petitioners within a week from date.
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2024 (3) TMI 990
Declaration of Wilful Defaulter of the petitioner - Liability of Directors - It is argued that in none of the Committee Orders, any cogent ground has been made out under the Master Circular of the Reserve Bank of India (RBI) for declaration of Wilful Defaulters - HELD THAT:- The petitioner admittedly parked some amounts from its sales realizations not in the cash credit account but in a different account opened with a different Bank, that is, the ICICI Bank, Darjeeling Branch. Hence, at a time when the borrower-Company was duty-bound to channelize its entire funds through the respondent no. 1-Bank due to its agreement with the latter, it failed to meet such obligation, which was a condition of the cash credit facility, and routed some money through a different bank account. Such act is sufficient to come within the purview of diversion of funds as contemplated in the Master Circular.
Admittedly, an agreement was entered into in the year 2004 which was much prior to the directions of the Central Government to take over management from the borrower-company. Even the Division Bench order of this Court directed the management to be continued by the borrower-Company. Hence, the lame excuse of the workers’ interest is mere lip-service in the mouth of the petitioner, since the borrower-company, evidently without knowledge or permission of the lender-Bank, had transferred the security, invoking the umbrella of the Central Government directions - The moratoria contemplated in the IBC were introduced for the protection of the corporate debtor in order to facilitate resolution. Such legal fiction, however, was created only in order to sustain the business of the company in the hands of the successful resolution applicant, inter alia, to protect the interests of the workers and the business of the unit in general. However, even if CIRP commences, the Directors, who were the masterminds in control and charge of affairs of the Company at the relevant juncture, cannot be absolved of any wilful default committed by the borrower-Company at the relevant juncture.
In the present case, the petitioner was a Director and at the helm of affairs, responsible for the business operations of the company. The business decisions of the Company are attributable to the Directors, who are the living hands of the company which is a juristic person. Thus, the petitioner cannot be absolved of the wilful default committed by the borrower-Company in his capacity as a director and promoter, irrespective of an ongoing Corporate Insolvency Resolution Process.
There are no patent irregularity or perversity in the impugned decisions or the procedure adopted by the Committees for arriving at the same, sufficient to interfere under Article 226 of the Constitution of India.
The petition is dismissed on contest without any order as to costs.
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2024 (3) TMI 989
Seeking winding up of respondent company - Failure to pay outstanding dues - section 434 of the Companies Act, 1956 - HELD THAT:- The affairs of the respondent company in liquidation appear to be completely wound up. It is not feasible to proceed further in the winding up company. On perusal of OLR No.6/2024 including the documents on record, no other assets are available for realization of the dues of the creditors. All the assets of the company in liquidation had already been sold by the Bank and realized its dues. No secured creditors are available despite the issuance of notice. Therefore, this Court is of the considered opinion that this company petition deserves to be closed under the provisions of Section 481 of the Companies Act, 1956 and Rule 282 of the Companies (Court) Rules, 1959.
Accordingly, it would be just and reasonable in the circumstances to pass the order that the company in liquidation be dissolved from the date of this order. Consequently, the company is in liquidation viz. M/s. STI Phoenix Wear Private Limited stands dissolved - Petition disposed off.
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2024 (3) TMI 988
Rejection of Petitioner’s Settlement Applications - delay on the part of the Petitioner in making compliances of submission of documents and as per the Settlement Regulations, 2018 and more particularly Regulation 6(1)(b) - Petitioner made a representation to the Respondent requesting the Respondent to consider such documents by condoning the delay, which according to the Petitioner was not attributable to the Petitioner and for reasons which where not in Petitioner’s control - HELD THAT:- Certainly there was delay on the part of the Petitioner in not complying with the time lines on submission of the documents, which according to the Petitioner were relevant in regard to the Settlement Applications and as demanded by the Respondent in the course of the proceedings. We also find that the Respondent was required to follow the provisions of the Regulations in question.
Considering the peculiar facts of the case and the reasons which are set out by the Petitioner, in our opinion in not submitting these documents within the prescribed time, the Petitioner would certainly deserve an opportunity of his Settlement Applications being considered by the Respondent and it ought not to become inconsequential on account of a delay of 15 days in submission of the documents. This would certainly cause prejudice to the Petitioner. We are thus inclined to set aside the impugned order passed by the Respondent and restore the proceedings of the Settlement Applications with the Respondent to be decided in accordance with law.
Petitioner submits that the documents are already part of the record of the Settlement Applications, hence, there would not be any impediment for the Respondent to decide the Settlement Applications as filed by the Petitioner expeditiously.
Let the decision on the Settlement Applications be taken as expeditiously as possible within period of eight weeks from the date of copy of the order is made available to the parties.
All contentions of the parties on the adjudication of the Settlement Applications are expressly kept open.
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2024 (3) TMI 987
Approval of Resolution Plan by the Adjudicating Authority - plan was approved by the Committee of Creditors - constitution of CoC. - Group of 77 homebuyers as a class of creditors seeking rejection of plan.
Sustainability of the argument advanced by the Learned Counsel for the Appellant that the constitution of the CoC stood vitiated because of the related party status of the Financial Creditor and Corporate Debtor - HELD THAT:- In view of absence of material placed on record and lack of substantiation of pleadings made by the Appellant of related party status of the Financial Creditor/Respondent No. 2 and the Corporate Debtor, it is not inclined to subscribe to the bogey of related party issue raised by the Appellant. Having failed to adequately demonstrate the related party status of the Financial Creditor/Respondent No. 2, and the Corporate Debtor, there are no irregularity on the part of the RP in constituting the CoC with the Financial Creditor/Respondent No. 2 as a member thereof.
Financial Creditor/Respondent No. 2 was assigned a higher vote share than its entitlement - HELD THAT:- There was discriminatory treatment of the claims made by the Appellant as against what was offered to the Financial Creditor/Respondent No. 2 is clearly misconceived since the RP was diligently updating the claims and the corresponding vote share of the financial creditors. Not having pointed out any irregularity on the part of the RP in constituting the CoC with the Financial Creditor/Respondent No. 2 having majority vote share prior to the CoC approving the resolution plan, it cannot be agitated now at this belated stage when the resolution plan stands approved. Thus, to answer the second issue, the CoC is found to have been validly constituted based on the duly verified claims of the financial creditors, to which no objections were raised by the Appellant, there are no cogent reasons to hold the decisions taken by the CoC to be either irregular or invalid.
Whether the RP was actively following up the TMC reservation issue or not? - HELD THAT:- The CoC was periodically kept apprised of the follow up steps taken by the RP in dealing with this issue which included visit to the TMC office and filing of an RTI application to find out the correct status of the reservation. The Resolution Professional had also taken up the matter through the architect to enquire about the reservation status besides seeking legal opinion on the matter and appointing a legal firm to seek appropriate legal remedy. Thus, the Resolution Professional cannot be held responsible for having suppressed any material fact pertaining to the TMC reservation issue from the CoC members including the AR. Keeping in mind the above-cited multifarious efforts made by the RP, the bonafide of the RP in this regard cannot be doubted. Hence, there are no infirmity or error in the findings recorded by the Adjudicating Authority in respect of the conduct of the Resolution Professional.
The RP at all stages had facilitated the Homebuyers in raising their concerns and objections to the resolution plan through the AR and in fact also provided them the window of opportunity of taking up their issues with the SRA. Under such circumstances, but for bald assertions, there is nothing to show that there has been negligence or dereliction of duties and responsibilities cast on the RP which can be said to have caused any serious miscarriage of justice to the Appellant - thus no cause of action survives on this count.
Whether the approval of the resolution plan by the Adjudicating Authority deserves to be set aside or the CoC approved resolution plan be sent back for the SRA/Respondent No. 3 to make necessary changes to the plan in the order to cater to the needs and demands of the Homebuyers as has been urged by the Appellant? - HELD THAT:- It is an undisputed fact that the resolution plan of the SRA has been approved by the CoC with requisite vote share. This resolution plan duly approved by the CoC with 89.05% vote share was placed before the Adjudicating Authority which has already approved the resolution plan. In the instant case, we find that when the resolution plan came up for consideration and approval before the Adjudicating Authority, the SRA improvised and upwardly revised its offer by way of an affidavit agreeing to pay 100% of the principal amount of the Homebuyers as against refund of approximately 40% of the claim amount admitted by the RP which was initially contained in the CoC approved resolution plan. This amount was acceptable to the Homebuyers and has not been objected to by any of the 77 Homebuyers.
Whether in the given circumstances, the Appellant as a disgruntled solitary homebuyer or at best representing 77 Homebuyers can raise objections against the collective business decision taken by the CoC approving the resolution plan of the SRA? - HELD THAT:- In the present matter at hand, neither any contravention of law nor material irregularity has been brought on record. It is settled law that once the CoC has approved the resolution plan by requisite majority and the same is in consonance with applicable provisions of law and nothing has come to light to show that the RP had committed any material irregularities in the conduct of the CIRP proceedings, the same cannot be a subject matter of judicial review and modification. In any case, quite apart from the fact that the resolution plan is already under implementation it has also not been controverted by the Appellant that all the 77 Homebuyers including the Appellant have accepted the offer of 100% of their principal amount from the SRA.
The intent, objective and purpose of IBC being time bound resolution of insolvency of the Corporate Debtor, it clearly does not provide any leeway or scope to dissatisfied individual Homebuyers in a minority like the present Appellant to override the commercial wisdom of the majority in the CoC. There are no merit in the contention of the Appellant to reject the CoC approved resolution plan which has since been approved by the Adjudicating Authority. Any indulgence shown would tantamount to derailing the resolution process and setting the clock back which we cannot countenance.
There are no sufficient and plausible grounds made which warrant any interference with the impugned order. There is no merit in the appeal - Appeal dismissed.
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2024 (3) TMI 986
Works contract service - entitlement to benefit under the Composition Scheme - requirement of first formally informing the department in writing that the appellant is exercising the option to pay service tax under the Composition Scheme - HELD THAT:- This issue was examined by a Division Bench of the Tribunal in M/S. ABL INFRASTRUCTURE PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NASHIK [2015 (2) TMI 801 - CESTAT MUMBAI] and in connection with rule 3(3) of the Composition Scheme and it was held that the appellant was executing work in a new contract from 5-6-2007 and was therefore eligible under the category of Works Contract Service.
Subsequently, a Division Bench of the Tribunal in CCE, JAIPUR VERSUS M/S ZUBERI ENGINEERING COMPANY AND (VICE-VERSA) [2017 (11) TMI 1334 - CESTAT NEW DELHI], after referring to the decisions of the Tribunal in ABL Infrastructure and Nagarjuna Construction Company, observed when the appellant/assessee did not pay any tax on such works contract service and starts paying tax after availing concession, such payment of tax under the scheme should be construed as exercising the option.
The Calcutta High Court in M/S. LARSEN & TOUBRO LIMITED VERSUS ASSISTANT COMMISSIONER, SERVICE TAX COMMISSIONERATE, DIVISION-III, KOLKATA & OTHERS [2022 (12) TMI 523 - CALCUTTA HIGH COURT] also examined the issue and observed that In the absence of statutory format can the department be heard to say that the option should be exercised in a particular fashion and cannot be by conduct, that is by paying the service tax equivalent to 2% of the gross amount charged for the works contract.
In view of the aforesaid decisions of the Tribunal and judgment of the Calcutta High Court, it has to be held that payment of service tax contemplated under the Composition Scheme and filing the return would be sufficient compliance of exercising the option under the Composition Scheme.
The impugned order dated 29.03.2017 passed by the Commissioner, therefore, cannot be sustained and is set aside - appeal allowed.
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2024 (3) TMI 985
Levy of service tax - Business Auxiliary Service - arranging the transportation for delivery of goods manufactured by them to their clients/buyers so as to facilitate those buyers, have generated some income by retaining some part of the freight charges as were received from their buyers while making payments to the transporters - HELD THAT:- SCN alleged the said amount to be a consideration for rendering a Business Auxiliary Service. The order under challenge has held the said amount to be a brokerage or commission. This particular perusal is sufficient to hold that Commissioner (Appeals) has gone beyond the scope of show cause notice which is not at all permissible. Confirming a demand on a different count which was not brought to the notice of the assessee/appellant before confirmation of the service tax amounts to confirmation of tax under new categories and the same is not legally permissible as it was held by this Tribunal in the case of M/S BALAJI CONTRACTOR VERSUS COMMISSIONER OF CENTRAL EXCISE JAIPUR-II [2017 (3) TMI 181 - CESTAT NEW DELHI]. Hon’ble Supreme Court also in the case of COMMISSIONER OF CUSTOMS, MUMBAI VERSUS TOYO ENGINEERING INDIA LIMITED [2006 (8) TMI 184 - SUPREME COURT] has held that the department cannot travel beyond the scope of show cause notice. These observations are sufficient to set aside the order under challenge.
The buyer of goods manufactured by appellant cannot be held to be the service recipient, he being the party to contract of sale/purchase order. There is no contract between appellant and the transporter. No question of later being the service recipient at all arises. Thus there is no activity of appellant which may be called as Business Auxiliary Service. No question arises of providing Business Auxiliary Service as is alleged in show cause notice by the appellant to the said buyer.
The mere activity of sale cannot be called as taxable service. Earning profit in the said arrangement therefore cannot come under the service tax net. Thus, the findings of Commissioner are otherwise not sustainable. The transaction in question is between principal manufacturer to principal buyer. The freight charges are in addition to the value of the goods. The surplus is earned by the appellant by not acting as a service provider to the transporter nor to the buyer.
The order under challenge is hereby set aside - Appeal allowed.
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2024 (3) TMI 984
Short payment of service tax - Works Contract Service - composition scheme - cost of materials was not taken into account for payment of the service tax, which is primary condition of works contract - HELD THAT:- In view of the reasoning noted by the Adjudicating Authority that there is a standard practice that the Departmental Audit is conducted for a specified period, which has been clearly mentioned in IAR as April, 2006 to September, 2009 in Col.-9 in Part-I and the appellant has not shown anything that the period specified was extended by the proper officer, there is no merit in the submission of the learned Counsel that IAR No.07/2010 dated 20.04.2010 covered the period from October – December, 2009.
It is found from the order of the Adjudicating Authority that the appellant though had the opportunity to substantiate their claim and present documentary evidence in their support, however, they have only presented IAR No.07/2010, which is based on the documents produced by the appellant but the short payment of service tax was calculated only for the period under audit, i.e. April, 2006 to September, 2009 as per serial no.9 of IAR No.07/2010.
In absence of any documents placed by the appellant, both the Adjudicating Authority and the Appellate Authority have not found favour with the appellant and hence, confirmed the demand. In the interest of justice that the appellant may be granted an opportunity to place on record the requisite documents, as mentioned above before the Adjudicating Authority as the stand taken by the appellant is that the bills of VAT/Sales Tax on materials used in the ‘Works Contract Service’ have already been provided by the appellant to the Superintendent, Service Tax.
From the records of the case, it is found that the ST-3 Returns were filed by the appellant on 24.04.2010 for the period October, 2009 to March, 2010 and the Audit Report No.1192/2010 was dispatched to them on 3.5.2011. Subsequently, the jurisdictional Range Officer sent letters dated 18.05.2011, 13.06.2011, 25.04.2012, 27.04.2012 and 08.01.2013 calling upon them to submit information and documents etc. However, the appellant, after two years of filing the periodical ST-3 Returns submitted that the value of the taxable services in the said returns has been wrongly given. The submission of the appellant was found to be noncorroborative without any documentary evidence and was found to be of no merit. On this aspect also, the learned Counsel for the appellant was required to substantiate his case with the supporting documents, which he failed to do so.
The reliance placed by the appellant on the earlier Audit has been found to be distinguishable by the Adjudicating Authority as according to it, the preceding Audit team must have prepared the audit on the basis of the information presented by the assessee themselves. All these facts and submissions can be made by the appellant before the Adjudicating Authority once again along with the necessary and corroborative documents in that regard.
It would be just and fair that the matter is remanded before the Adjudicating Authority, granting liberty to the appellant as well as to the Department to place on record the documents and the Adjudicating Authority may consider the same on merits - appeal is allowed by way of remand.
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2024 (3) TMI 983
Demand as proposed in the SCN on the basis of mismatch of ST-3 Returns and Balance Sheets/26AS - Invocation of Extended period of limitation - penalties - HELD THAT:- It has been held in a catena of decisions that only the amount received by the Appellant was liable to Service Tax, amounts reflected in Balance Sheets cannot be used to determine the Service Tax liability. The Hon’ble Madras High Court in FIRM FOUNDATIONS & HOUSING PVT. LTD. VERSUS PRINCIPAL COMMISSIONER, OFFICE OF THE PRINCIPAL COMMISSIONER OF SERVICE TAX [2018 (4) TMI 613 - MADRAS HIGH COURT] held that the reporting of income in the P & L is irrelevant for the purposes of determination of service tax payable and thus the basis of the impugned assessment is erroneous. Moreover, income reflected in the Balance Sheet is for Income Tax purposes, which cannot be used for the purpose of service tax without any corroboratory evidence as also supported by M/S LUIT DEVELOPERS PRIVATE LIMITED VERSUS COMMISSIONER OF CGST & CENTRAL EXCISE, DIBRUGARH [2022 (3) TMI 50 - CESTAT KOLKATA].
It is found that since the Appellant was filing ST-3 Returns regularly, the Department’s stand that it could examine the correct facts only on going through the Balance Sheets cannot be sustained as CBEC Circular No.113/7/2009-S.T., dated 23-4-2009 vide F.No.137/158/2008-CX. 4 and CBEC Circular No.185/4/2015-ST dated 30.6.2015 vide F.No137/314/2012 categorically puts duty on the assessing officer to effectively scrutinize the returns at the preliminary stage, as held in M/S. GANNON DUNKERLEY & CO. LTD. VERSUS COMMISSIONER (ADJUDICATION) OF SERVICE TAX, NEW DELHI [2020 (12) TMI 1096 - CESTAT NEW DELHI].
Extended period of limitation - HELD THAT:- Extended period of limitation cannot be invoked solely on audit queries and objections. It is observed that the Department has not adduced any positive evidence to show mala fide intention for evasion of service tax and therefore extended period is erroneously invoked. There are no ingredient of fraud or suppression with an intent to evade payment of tax - the demand raised is completely barred by limitation and accordingly the demand is set aside.
Penalty - HELD THAT:- Since there is no element of fraud or suppression, penalty under Section 78 is liable to be set aside.
Appeal allowed.
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2024 (3) TMI 982
Maintainability of appeal - requirement to make pre-deposit - HELD THAT:- The appellate authority could not have entertained the appeal without noting the compliance with the conditions as laid down as per this section. Since the appellant has failed to comply with the conditions as laid down under this section, Commissioner (Appeal) refused to entertain the appeal and dismissed the same without considering the same on merits.
Undisputedly appellant has now made the pre-deposit of 10% for filing this appeal before CESTAT, which is more than 7.5 % of disputed tax amount, which was required to be deposited as pre-deposit for the first appellate authority to entertain the appeal.
Taking note of the fact that no order has been passed in the matter on merits and the appeal was dismissed only for the requirement of pre-deposit, it is found that this matter is fit case for being remanded back to the Commissioner Appeals for consideration of the appeal before him on merits.
Appeal is allowed by way of remand to Commissioner (Appeals). Commissioner (Appeals) to decide the appeal in de-novo proceedings on merits within 90 days of the receipt of this order.
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2024 (3) TMI 981
Condonation of delay of 1191 days in filing this appeal - HELD THAT:- The belated manner in which the present appeal has been filed would not call for reiteration. Therefore, accepting the submissions of learned counsel for the respondent the appeal is dismissed on the ground of delay, leaving open the question of law, if any, which arises in this appeal to be agitated in any other appropriate appeal.
Application disposed off.
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2024 (3) TMI 980
Process amounting to manufacture or not - raw material fuller’s earth lumps were being subjected to undergo a process of getting crushed in job crusher and pulverized in pulveriser - manufacturing and selling of “Activated Bleaching Earth” and “Activated Carbon” - excisable goods or not - Whether this process and the resultant product can be classified as activated bleaching earth? - suppression of material facts or not - HELD THAT:- From the finding of fact given by the authority passing the Order-in-Original, what is established is that though fuller’s earth is the raw material which is subsequently converted into an “Activated Bleaching Earth” or an “Activated Carbon” through a mechanical process which includes a chemical treatment after crushing the fuller’s earth lumps altering the clay into powder and by increasing its bleaching potential. The very purpose of subjecting the fuller’s earth clay to chemical treatment in a mechanical manner is to alter the nature of the product. Further, the bleaching ability is enhanced by way of mechanical and chemical process and the filtration rate of the product also gets enhanced and becomes faster.
Another fact which stands established is that the raw material fuller’s earth in itself cannot be used for those purposes which it is subsequently used after the mechanical chemical process is undertaken. Yet another fact which is established from the pleadings is that the use of the Activated Bleaching Earth cannot be achieved if fuller’s earth is used as it is without the chemical treatment and the mechanical process which includes the heating process etc. The mechanical process which fuller’s earth is subjected to is to increase its bleaching performance and filtration properties and the product is also tailor made as per the specifications required by the client as per use at their plants.
The bleaching earth has a set of advanced formula of different combinations and it is applied by the manufacturer by using the production technology to manufacture different grades of Activated Bleaching Earth. All these process put together alters the fuller’s earth clay into an Activated Bleaching Earth giving it the properties that increases its bleaching potential.
The finding so arrived at by respondent No. 2 which stands affirmed by yet another detailed reasoned order passed by respondent No. 1, both of which again subjected to test before the Tribunal and the Tribunal also giving specific reasons in the course of affirming the orders passed by respondent Nos. 1 and 2 - there are no substantial merit in the arguments advanced by the learned counsel for the appellant calling for an interference to the findings given by the Tribunal.
Appeal dismissed.
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2024 (3) TMI 979
Clandestine Removal - Manufacture of Tobacco taking place or not - FFS packing machine was found installed in the unregistered premises during the search on 24.01.2012.
Whether the evidences available on record indicate that one FFS packing machine installed in the unregistered premises was in working condition and used for manufacturing of Chewing Tobacco? - HELD THAT:- There is no finding in the impugned order against the claim of the appellant that two vital parts namely, ‘Disc’ and ‘Suit’ were not fitted with the machine and it cannot be used to pack Chewing Tobacco. The investigation has not brought in any other evidence such as purchase of raw material, purchase of packing material, excess consumption of power during the period, buyers of the clandestinely cleared material, statements from transporters, etc., to prove clandestine manufacture and clearance of Chewing Tobacco - Mere presence of the packing machine alone is not sufficient to establish manufacture and clandestine clearance of chewing tobacco. In the absence of any other evidence, we hold that the investigation has not established that the packing machine was in operating condition and used for clandestine manufacture and clearance of Chewing Tobacco - question is answered in negative.
Whether evidences available indicate that Rule 18(2) of the CTPM Rules is applicable in this case to demand duty in respect of one FFS packing machine, from 08th March, 2010 onwards, as provided in the said Rules? - HELD THAT:- The investigation has not brought in any other evidence such as purchase of raw material, purchase of packing material, excess consumption of power during the period, buyers of the clandestinely cleared material, statements from transporters, etc., to establish clandestine manufacture and clearance of Chewing Tobacco from the unregistered premises - the one FFS packing machine found in the unregistered premises has not been fixed with two vital parts, without which the machine cannot be operationalized. In such circumstances, the investigation must have probed further to establish the manufacture and clandestine clearance of Chewing Tobacco by means of other evidences. Instead, the investigation has relied solely on the mere presence of the machine in the unregistered premises to demand duty. There is no evidence available on record to disprove the claim of the Appellant that the machine was non-operational and not used for manufacture of Chewing Tobacco. Mere presence of the packing machine alone is not sufficient to establish manufacture and clandestine clearance of chewing tobacco - the provisions of Rule 18(2) cannot be invoked in this case to demand duty for the period from 08th March, 2010 to 31st January, 2012 - question answered in negative.
Whether penalty under Section 11AC of the Central Excise Act, 1944, is imposable in this case? - HELD THAT:- Penalty is imposable under Rule 18 of the CTPM Rules read with Section 11AC of the Central Excise Act, 1944, only when it is established that Chewing Tobacco was produced and clandestinely removed. In view of the above findings, it is held that the investigation has not established manufacture and clandestine clearance of Chewing Tobacco. Hence, the penalty provisions are not applicable in this case. Accordingly, the penalty imposed on the Appellant is liable to be set aside.
Thus, the demand of Central Excise Duty confirmed in the impugned order is not sustainable. As the duty demand of duty is not sustainable, the demands of interest and penalty are also not sustainable - appeal allowed.
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2024 (3) TMI 978
Classification of goods - Reusable Insulin Delivery Device bearing the brand name “All Star” - classifiable under Central Excise Tariff Heading 9018 3100 availing the benefit of concessional rate of duty as per Notification No. 12/2012-CE dated 17.03.2012 under Serial No. 310 or under Serial No. 309? - Department is of the view that appellant have wrongly availed Cenvat credit on the inputs and input service used in the manufacture of their finished products i.e. Reusable Insulin Delivery Device - HELD THAT:- It can be seen that Reusable Insulin Delivery Device is nothing but a ‘Syringe without needle’ and is rightly classifiable under Chapter sub-heading 9018 3100. So far as the availability of Notification No. 12/2012-CE is concerned, the entry at Serial No. 309 covers only parts and accessories of goods of heading 9018 and 9019 whereas we find more specific serial number for concessional rate of duty under the exemption Notification No. 12/2012-CE for the product will be under Serial No. 310 which reads as “All goods (other than parts and accessories thereof)”.
The impugned manufactured product is ‘Syringes without needle’ and the same cannot be classified as ‘parts and accessories’ of the goods of heading 9018. Therefore, the impugned product will be entitled for concessional rate of duty under Serial No. 310 of exemption Notification No. 12/2012-CE dated 17.03.2012. Accordingly, the appellant have rightly been paying excise duty at the concessional rate of 6% and they are entitled for Cenvat credit on the inputs and input services availed by them.
There are no merit in the impugned orders-in-appeal and the same are set-aside - appeal allowed.
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2024 (3) TMI 977
CENVAT Credit - credit denied on the ground that the appellant have taken credit on Aluminium ingots and thereafter it was removed without payment of duty as the same was not used in the manufacture - allegation solely based on the statements of transporter - transporter was not cross-examined - violation of principles of natural justice - Time limitation - Imposition of redemption fine - HELD THAT:- The allegation is solely based on the statements of transporter however, the transporter was not cross-examined and as per section 9D of Central Excise Act, 1944. It is mandatory on the part of the Adjudicating Authority to do examination in chief and thereafter allow the noticee for cross-examination for the witness which in the present case was not done by the Adjudicating Authority. Therefore, the statement of transporter cannot be relied upon. Moreover, the entire investigation and the witnesses were used for issuing show cause notice dated 30.08.2011 to Hiren Aluminium wherein the charge was that M/s. Hiren Aluminium has not received ingots sent by the appellant. Accordingly, the Cenvat credit availed by Hiren Aluminium on the same ingots was sought to be denied.
The entire chain, right from procurement of aluminium ingots from NALCO upto the delivery of aluminium conductors, the transaction was established and accepted by the Settlement Commission. This finding was given by Settlement Commission after considering the investigation and all the evidences which were also relied upon in the appellant’s present case. Therefore, once all those investigation and evidence have been appreciated and Settlement Commission has come to the conclusion as reproduced above, there is no scope for the Adjudicating Authority to rely upon the same evidences for taking contrary view to the findings given by the Settlement Commission and to confirm the demand of Cenvat credit. Therefore there is no material evidence with the department to establish their charge of clandestine removal of ingots on which the appellant has taken Cenvat credit.
Time Limitation - HELD THAT:- There is no dispute that the present case relates to period February 2008 to March 2008 and entire investigation was carried out in a case made out against Hiren Aluminium in the show cause notice dated 30.08.2011 for denial of Cenvat credit on standard wires wherein there was no allegation that the credit taken on ingots by the appellant was made. Thereafter the appellant was served a show cause notice dated 06.03.2013. In these facts, it is absolutely clear that entire information about the transaction were available with the department way back in October 2008 even then the department took five years to issue show cause notice to the appellant. Therefore, the demand is clearly time-barred.
Imposition of redemption fine - HELD THAT:- As it is held that the appellant have not cleared aluminium ingots clandestinely and demand on that count is not sustainable consequently, no confiscation can be made and no consequential redemption fine will sustain. Secondly, without prejudice, the goods on which redemption fine was imposed was not available for confiscation - It is settled legal position by the Larger Bench of this Tribunal in the case of SHIV KRIPA ISPAT PVT. LTD. VERSUS COMMISSIONER OF C. EX. & CUS., NASIK [2009 (1) TMI 124 - CESTAT MUMBAI] as well as in COMMISSIONER OF CUSTOMS, MUMBAI VERSUS RISHI SHIP BREAKERS [2008 (8) TMI 650 - CESTAT, MUMBAI] that in case goods are not available, no redemption fine can be imposed therefore, on both counts, redemption fine imposed on the appellant is not sustainable.
The impugned order is not sustainable hence, the same is set-aside - Appeal allowed.
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2024 (3) TMI 976
Area Based exemption in Kutch district - admissibility of exemptions for goods manufactured using plant and machinery installed after the cut-off date of 31.12.2005. - Wrongful availment of benefit of N/N. 39/2001-CE dated 31.07.2001 by availing re-credit/refund of duty paid on finished excisable goods manufactured by both the oil splitting units - Penalty on managing director.
HELD THAT:- It is pertinent to note that the exemption under the Notification was limited to twice the value of the investment, for each year, in cases where the original value of the plant and machinery installed in the factory was below Rupees 20 crores on the date of commencement of the commercial production and in cases where the original value of investment in plant and machinery was in excess of 20 crores, there was no limitation with respect to the extent of the exemption available under the Notification.
The Notification, as initially enacted, did not provide for any time period within which the commercial production had to commence, being the date relevant for reckoning the original value of investment in plant and machinery as also for reckoning the 5 year period for which the exemption was to be available. All that was required was that any civil construction work in the factory premises and any installation of plant and machinery therein commences only after 31st July 2001 but before the cut-off date.
It is impermissible to read in any condition or word into an exemption notification, especially a benevolent one which has been issued with the objective of encouraging investment in the earthquake ravaged region of Kutch. In our view there is neither any legal basis nor rationale for reading in the word 'ALL' in the exemption notification and with reference to the same construe that since some machinery was installed after the cut-off date, the benefit of the exemption would not be available, to goods manufactured using the said machinery.
This Tribunal has also in the case of M/S WELSPUN LTD. VERSUS C.C.E. & S.T. RAJKOT [2019 (1) TMI 371 - CESTAT AHMEDABAD] held that in the context of this very notification that there is no bar in installing Plant and Machinery post 31.12.2005 as long as the unit has commenced commercial production not later than 31.12.2005.
The reasoning of the adjudicating authority that under the Himachal/Uttarakhand exemption scheme, exemption was even extended to existing units, undertaking substantial expansion, which was missing in Kutch, would in our view make no difference, to the question whether any addition of plant and machinery after the cut-off date would dis-entitle the unit to the benefit of the exemption. The aspect regarding the unit commencing commercial production by a cut-off date equally applies to the Kutch as also the Himachal/Uttarakhand exemption notification - the clarification issued by the CBEC vide Circular No. 939/29/2010-CX dated 22.12.2010 to the effect that there is no bar or restriction on any addition/modification in the plant or machinery or on the production of new products by an eligible unit after the cut-off date and during the exemption period of ten years, would apply equally in the context of the Kutch notification.
The presumption of the adjudicating authority that this second splitting column was installed within 7 days of the same having been shipped by the manufacturer in October 2006, which does not seem to be logical and reasonable especially when viewed in light of the statement recorded under Section 14 of the installation agency, as per which the column was installed in March 2007.
The combined production achieved even after the installation of the second Splitter seems to be lesser than what could have been achieved by a single Splitter alone. Further the 200 TPD capacity as explained by the appellant is the output guaranteed by the supplier of technology at 99% degree of split. Obviously the production numbers clearly show that the daily production was higher than 200 TPD and that the plant was functioning operating at a lesser degree of Split and was able to achieve a production of around 15000 MT per month - the second Splitter was installed with a view to improve the quality of the output and not to increase the production, which fact seems to be vindicated by the production data. We are therefore of the view that, applying the TRU clarification dated 10.7.2008 the additional plant and machinery having been installed with a view to improve the quality of production and not with a view to increase the production, the benefit of exemption cannot be denied to goods manufactured using the second Splitting Column.
The imposition of penalty on the Managing Director, Mr.Rustom Joshi is also not sustainable.
The impugned order is set aside. The appeals are allowed.
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2024 (3) TMI 975
Manner of computation of proportionate reversal of credit determined under Rule 6(3A) of the Rules - Interpretation of statute - Rule 6(3A)(b)(ii) of CCR - Cenvat credit on inputs and input services used for manufacture of LPG & SKO - contention of the department is that for the purpose of reversal, the “Total Cenvat Credit Taken on Input and Input services” should be considered while the contention of the appellant is that “Total Cenvat credit taken on Input and Input services” should include only common Input and Input services used in exempted manufactured goods - HELD THAT:- It would be clear from a conjoint reading of sub-rules 6(1), (2) and (3) of Rule 6 that the total Cenvat credit for the purpose of formula under Rule 6(3A) is only total Cenvat credit of common input and input service and cannot include Cenvat credit on input and input service exclusively used for the manufacture of dutiable goods. If the interpretation of the Revenue is accepted, then the Cenvat credit of part of Input and Input service even though used in the manufacture of dutiable goods, shall stand disallowed, which is not provided under any of the Rule of Cenvat Credit Rules, 2004.
The Government has substituted the sub-rule (3A). The legislators very consciously substituted the Rule with intention to give a clarificatory nature to the provision of sub-rule (3A) so as to make it applicable retrospectively. It was all along not the intention of the Government to deny Cenvat credit on the input/input service even though used in the dutiable goods. Keeping the said view in mind, the substitution in sub-rule (3A) of Rule 6 was made. Therefore, the substituted provision of sub-rule (3A) shall have retrospective effect being clarificatory. In the case of GOVERNMENT OF INDIA VERSUS INDIAN TOBACCO ASSOCIATION [2005 (8) TMI 113 - SUPREME COURT], the Hon’ble Supreme Court held that “the word “substitute” ordinarily would mean “to put (one) in place of another”; or “to replace” - As per the interpretation of the Hon’ble Supreme Court, the sub-rule (3A) being substitution shall have a retrospective effect and will be applicable for all time since when the Rule was enacted. Therefore, for this reason also, for the purpose of calculation of Cenvat credit reversal, in the formula, total Cenvat credit shall mean credit of only common input and input service and not of input and input service exclusively used for the manufacture of dutiable product on which the Cenvat credit is eligible to the appellant in its entirety.
Availment of Cenvat credit on inputs and input services used for manufacture of LPG & SKO - HELD THAT:- The issue is no more res integra in view of the Hon’ble High Court of Gujarat decision in the case of RELIANCE INDUSTRIES LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI [2022 (11) TMI 923 - CESTAT MUMBAI], wherein the Hon’ble High Court has held that LPG is a by product generated in the process of refining and no reversal is required in this matter.
Since the issue decided in respect of above by-products in above terms, it is not required to deal with issues of what value to be considered for reversal.
The impugned order is set aside. Appeal is allowed.
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