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2024 (3) TMI 934
Valuation of imported goods - Cement Carrier ship - rejection of transaction value - redetermination of value - inclusion of handling charges, transportation, cost of insurance and landing charges in assessable value - failure to declare the value of Bunkers on board at the time of delivery at Colombo.
Mis-declaring the value of ship by not adding value of transportation, cost of insurance and lending charges - failure to declare the value of Bunkers on board at the time of delivery at Colombo - HELD THAT:- In the present case, though the invoice value of Rs. 26,91,00,000/- was declared at the time of import, as per the prevailing practice, at the request of appellant, it was subject to valuation by Chartered Engineer and as per the valuation report, chartered engineer assessed the value of ship as Rs. 27,00,00,000/- and based on the above said value, it was allowed to clear on payment of proper Custom duty. Now in addition to that, adjudicating authority is adding 20% as cost of transportation, handling charges of 1.125% and 1% of assessable value for confirming demand of Rs. 30,31,174/- - The inclusion of ‘freight’ and ‘insurance’ in the assessable value in commercial parlance, is designated as ‘CIF’ in transactions. The vessel, ever coursing the seas and oceans, does not take on additional insurance merely for the purposes of movement to a destination for registration and the cost of self-propulsion does not add to the value of the vessel. Moreover as per the estimated voyage cost produced by the appellant, they have added cost of Rs. 1,70,595/- towards cost of voyage and other expenses for the fuel from Colombo to Mangalore Port and paid customs duty. Consequently, the enhancement of ‘assessable value’ beyond the value assessed by Chartered Engineer fails on every count.
Adding the cost of Bunkers, based on the balance quantity of Bunkers at Mangalore port - HELD THAT:- The issue is squarely covered by the judgment of the Hon’ble Supreme court in the matter Mangalore Refinery & Petrochemicals Ltd. Vs. CC, Mangalore, [2015 (9) TMI 245 - SUPREME COURT] where it is held that the quantity actually received into the shore tank in port in India should be the basis for payment of Customs duty, being the goods imported into India. Considering the law laid down by the apex court, demand of duty for the balance quantity of Bunkers available in Colombo at the time of delivery of the ship cannot be added towards the cost of Bunkers.
Regarding value, as per the request of the appellant, Chartered Engineer carried out survey and as per the report No. AR/016/2011-12 dated 09.05.2011, value assessed the as Rs 27 Crores. Hence this appeal is allowed by accepting the assessable value of the goods as Rs. 27 Crores and additional demand of customs duty against cost of transportation, insurance and handling charges as demanded in the impugned order is set aside - Since there is no suppression of fact, confiscation of the ship and fine and penalty imposed by the adjudicating authority is set aside. The impugned order modified to the extent of confirming assessable value as Rs. 27 Crores.
Appeal allowed in part.
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2024 (3) TMI 933
Valuation of imported goods - Unwrought / Unrefined Zinc - enhancement of value - rejection of transaction value - demand of additional duty on the basis of NIDB data for primary Zinc ingots - contemporaneous imports or not - HELD THAT:- The Department has rejected the transaction value and redetermined the same on the basis of LME price considering the percentage of Zinc content in the consignments in terms of the Test Report of CRCL, Kolkata. As per the Test Report, the Zinc content in Bill-of-Entry No. 4533688 dated 10.03.2016 was 87.80% and the Zinc content in Bill-of-Entry No. 8650713 dated 19.03.2015 was 92.50%. The Ld. Authorized Representative appearing for the Revenue was asked to furnish a copy of both the Test Reports. However, the Ld. Authorized Representative could not submit a copy of the Test Report for the Bill-of-Entry No. 8650713 dated 19.03.2015. It is observed that the percentage of Zinc should be above 92% in “‘Zinc dross”. Only in the Bill-of-Entry No. 8650713 dated 19.03.2015, the Zinc percentage was found to be more than 92%. However, no such report has been produced by the Department to substantiate this claim. In the absence of a Test Report, it cannot be considered that the percentage of Zinc content in the goods imported by the respondent was above 92%.
In respect of the other Bill-of-Entry No. 4533688 dated 10.03.2016, the percentage of Zinc content was found to be only 87.80%, which is less than 92%. Accordingly, these goods cannot be considered as “Zinc dross” which are restricted as per the Foreign Trade Policy.
The Department has not brought any evidence on record to substantiate their claim that the percentage of Zinc content in both the Bills-of-Entry was more than 92% so as to classify the same as “Zinc dross”. Accordingly, there is no infirmity in the impugned order passed by the Ld. Commissioner (Appeals) and therefore, the impugned order passed by the Ld. Commissioner (Appeals) is upheld.
The appeal filed by the Department is rejected.
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2024 (3) TMI 932
Smuggling - Betel Nuts - foreign origin goods - town seizure - notified item or not - onus to prove - HELD THAT:- It is a case of town seizure of betel nuts which is not a notified item under Section 123 of the Customs Act, 1962. Therefore, the onus to prove that the betel nuts are a smuggled one is on the Revenue. At the time of interception, the appellant has produced documents pertaining to procurement of the said betel nuts through proper channel. In that circumstances, we hold that the Revenue has failed to discharge their onus to prove that the goods impugned are a smuggled one or of foreign origin.
As Revenue has failed to discharge their onus that the goods in question are a smuggled one, in these circumstances, the confiscation of the impugned goods is not sustainable in the eyes of law and therefore, confiscation of the impugned goods is set aside. As the goods are not liable for confiscation, consequently no penalty is imposable on the appellants.
The impugned order set aside - appeal allowed.
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2024 (3) TMI 931
Validity of declaring of the respondent as a Secured Creditor - retention of shares held as security - primary grievance of the petitioner is that the NCLT ought to have decided the Liquidator’s application under Section 25 of the Insolvency and Bankruptcy Code (IBC), 2016 prior to deciding the application under Regulation 21-A of the IBBI (Liquidation Process) Regulations, 2016 - direction to hand over the share certificates - HELD THAT:- The provisions of Regulation 21-A of the 2016 Regulations are to be examined. Clause (1) of the same provides that a Secured Creditor shall inform the Liquidator of its decision to relinquish its security interest to the liquidation estate or realize its security interest as the case may be. Alliance has filed a Form-D application expressing its interest to realize its security interest. The Liquidator, upon expiry of 30 days from the liquidation commencement, Alliance having not intimated its decision, filed the application under Regulation 21-A for presuming the assets covered under the security interest to be part of the liquidation estate - irrespective of the claim of Alliance to the pledged shares being sub judice in a separate suit, the fact remains that the effect of the order under Regulation 21-A is that the assets covered under the security interest that is the said shares, are presumed to be part of the liquidation estate.
By virtue of the order passed under Regulation 21-A treating the assets covered under the alleged security interest of Alliance (the shares-in-question) to be part of the liquidation estate, the interest of the secured creditors, be it the petitioner or others, cannot be adversely affected in any manner; rather, such order can only enure to the benefit of the secured creditors. The effect of the order is that, despite the claim of security interest of Alliance in the said shares, those are made a part of the liquidation assets, thereby subjecting the sale proceeds obtained after sale of such shares to the rigours of Section 53 of the IBC - Section 53 provides the order of priority for distribution of the proceeds from the sale of the liquidation assets. If the shares are treated to be liquidation assets and are sold as such, the proceeds from the said sale will be a part of the hotchpot of the liquidation assets and will be distributed in terms of Section 53 where the secured creditors will get their dues in accordance with the order of priority stipulated therein. The petitioner claims to be a secured creditor and, hence, could only be benefited, and not suffered, from the order under Regulation 21-A.
There are no irregularity in the order impugned herein. Since the Liquidator’s repeated efforts directing Alliance to hand over its shares failed, Section 25 of the IBC has been rendered academic. Section 25, it is to be noted, does not envisage any adjudication of the rights of a secured creditor to any of the assets. Only if a secured creditor in the liquidation proceedings realizes its security interest in the manner specified in section 52 of the IBC, under sub-section (1)(b) of the said Section, he shall inform the Liquidator of such security interest and identify the assets subject to such security interest to be realized, as per the provisions of sub-section (2) of Section 52 - the scope of an adjudication of the security interest during a liquidation process is provided only in Section 52(3). If Alliance had succeeded in having its way under Section 52(1)(a), it would not be the bounden duty of the Liquidator to adjudicate on the said rights under sub-section (3) of Section 52. However, since such bid of Alliance has failed by way of the impugned order under Regulation 21-A, presuming the shares-in-question to be a part of the liquidation asset and directing sale thereof, there cannot arise any question of such adjudication, since, in any event, the shares become a part of the liquidation estate, sufficiently subserving the interest of all secured creditors, including the petitioner (who claims to be a secured creditor), who would be getting their dues in order of priority under Section 53 of the IBC.
The petitioner cannot claim to have been aggrieved in any manner, as the order passed under Regulation 21-A did not adjudicate on the rights of Alliance in respect of security interest to the disputed shares. Rather, the Liquidator has rightly submitted that the said shares would be shown in the auction sale to be subject to the pending suit.
The argument of the petitioner that the order is devoid of reasons is entirely misplaced. In the absence of any adjudication on the issue of Alliance’s rights to the pledged shares, there arises no question of any reason being provided for such non-existent adjudication - there is no scope of interference in the present writ petition.
Petition dismissed.
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2024 (3) TMI 930
Rejection of transfer application - proceedings were initiated by the Financial Creditor under Section 7 which proceedings were initially admitted and the application to recall the said order was rejected - HELD THAT:- The facts indicate that the order of admission of the CIRP and the order rejecting the application of the Corporate Debtor for recall of the order was set aside by this Tribunal on 26.09.2023 and thereafter Section 7 proceedings revived before the Adjudicating Authority to be proceeded and decided in accordance with law.
There can be no dispute to the preposition of law that mere apprehension of bias is sufficient for transfer of a proceeding. The question is as to whether the facts and sequence of the events in the present case reflect any apprehension of bias. Having adverted to the submission and facts and sequence are fully satisfied that neither there is bias reflected nor any apprehension of bias which can be imputed the Bench hearing the matter. In the impugned order, Hon’ble President has looked into the submission and has rejected the application for transfer in which there are no error.
Appeal dismissed.
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2024 (3) TMI 929
Liability to contribute towards Liquidation Process Costs - scope of Financial Institution - Appellant points out that neither the Appellant nor the Debenture Holders, it acts on behalf of the fall within the definition of Non-banking Institution, under Section 45-I(e) of the RBI Act and hence, not liable to contribute towards Liquidation Costs - HELD THAT:- As a matter of fact, in view of the rejection of the Resolution Plan, by the Members of the Committee of Creditors, and in view of the CIRP Period, expiring on 17.02.2020, the Resolution Professional, preferred an Application, as per Section 33(1) of the Code, seeking Liquidation of the Corporate Debtor. The Adjudicating Authority / Tribunal, by an Order dated 13.03.2020, passed an Order of Liquidation, for the Corporate Debtor. Also that, the Adjudicating Authority, had appointed the 1st Respondent / Liquidator as Liquidator, through an Order dated 13.03.2020.
The 1st Respondent / Petitioner / Liquidator, had informed the 3rd Respondent / Phoenix ARC Private Limited, through letter dated 26.08.2020, their respective Share of Liquidation Costs of Rs.36,74,771/-, (which includes, the approved Liquidation Costs and Liquidator Fee) and requested to remit their respective Share as a whole or at least 30% within 5 days, from the issuance of the Letter. In fact, the 1st Respondent / Petitioner / Liquidator, had provided the Liquidator’s Fee Estimate, as per Letter dated 26.08.2020, as per Regulation 4(2)(b) of the Liquidation Process Regulations, 2016 - It is represented on behalf of the 1st Respondent / Petitioner / Liquidator that any delay, in depositing the Liquidation Costs by the Respondents, is delaying the Liquidation Process and the Liquidator, is unable to perform his duties, as mandated under the I & B Code, 2016.
Petition is filed in a Bona fide manner, and in the interest of Justice, the said Application, may be allowed by issuing necessary directions to the Respondents, to forthwith defray the portion of Liquidation Process costs, as per Regulation 2A of the IBBI (Liquidation Process) Regulations.
The filing of a Certified Copy (Paid Cost Copy), is not an empty ritualistic formality, in the considered opinion of this Tribunal. It cannot be gainsaid that only when the Petitioner / Appellant / Aggrieved Party, applies within the prescribed period of Limitation, as envisaged, under Section 61 (2) of the Code, the time taken to secure the Certified Copy, will be excluded from the Computation of Period of Limitation - In terms of Rule 22(2) of the NCLAT Rules, 2016, a Certified Copy of the Impugned Order, shall accompany every Appeal to be filed, before the Office of the Registry. Only in a Paid Certified Copy, by an Aggrieved Party, the details Viz. when the Application for Certified Copy of the Impugned Order was made by the Applicant, when it was made ready, when it was handed over / taken delivery, etc., will find a place, ofcourse, duly signed by the Deputy / Asst. Registrar of the Adjudicating Authority / Tribunal.
Considering the entire conspectus of the attendant facts and circumstances of the instant case, in an encircling manner, comes to an irresistible conclusion that the Impugned Order, dated 25.05.2023 in IA No. 399 / BB / 2020 in CP (IB) No. 189 / BB / 2018, passed by the Adjudicating Authority / NCLT, Bengaluru Bench, in directing the Appellants, 1st Respondent and two other Respondents, to Defray their portion of Liquidation Process Costs, is free from any legal infirmities.
Appeal dismissed.
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2024 (3) TMI 928
Admission of section 7 application - financial debt owed by the Corporate Debtor or not - default was committed by the Corporate Debtor in not carrying out the construction due to interim order or not.
Whether Grandstar Reality Pvt. Ltd., auction purchaser under SARFAESI Act, 2002, on 17.06.2016/ 19.07.2016 can be held to be Financial Creditor of the Respondent allottees, who were issued allotment letters/ Builder Buyers Agreement by Akme Projects Ltd. (the predecessor of the Corporate Debtor)? - HELD THAT:- The definition of Financial Creditor means that any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to. The crucial word in the definition is “any person to whom a financial debt is owed” becomes a Financial Creditor. Further, the expression “includes a person to whom such debt is legally assigned or transferred to” is only incidence of further elaboration of person to whom the financial debt is owed. In the facts of the present case, there can be no denying that financial debt, which was owed by Akme to the allottees is now the debt owed by Grandstar Reality Pvt. Ltd. The Grandstar Reality Pvt. Ltd. is fully covered by the definition of Section 5, sub-section (7), who owed the debt towards the allottees.
The financial debt can be owed in more than one manner. Assignment or transfers are two modes, which has been expressly included in the definition. In cases of amalgamation and demerger under the Companies Act, 2013 of a Corporate Debtor with another entity is obviously considered as Corporate Debtor on account of transfer/ vesting of assets and liabilities to the amalgamated/ transferee Company. Transferee Company cannot be permitted to escape the rigours of the Code by claiming that disbursement was not done to it directly. In the present case, where Grandstar Reality Pvt. Ltd. has taken over the Project under the SARFAESI Act, cannot escape the rigours of the Code and defeat the rights of the homebuyers under the Code - there is a financial debt and the filing of the Application by the allottees under Section 7 cannot be faulted on this ground.
Whether no default was committed by the Corporate Debtor in not carrying out the construction due to interim order passed by the Hon’ble Supreme Court in Rameshwar and Ors. vs. State of Haryana and Ors. [2018 (3) TMI 1964 - SUPREME COURT], M/s Akme Projects Ltd. vs. YES Bank & Anr.Whether no default was committed by the Corporate Debtor in not carrying out the construction due to interim order passed by the Hon’ble Supreme Court in Rameshwar and Ors. vs. State of Haryana and Ors.; in M/S. AKME PROJECTS LTD. VERSUS YES BANK LTD. & ANR. [2016 (10) TMI 1397 - DELHI HIGH COURT]? - HELD THAT:- The learned Counsel for the Respondent is right in her submission that even in additional affidavit filed on 19.01.2024 by the Appellant, no such facts have been stated, which may indicate that Grandstar Reality Pvt. Ltd. has been taking steps for completion of the Project. In the additional affidavit, the Appellant has placed reliance on letter dated 09.05.2023 issued by Tehsildar in terms of the order No.17/LAC dated 12.04.2023 passed by District Revenue Officer cum Land Acquisition Collector Gurugram. On looking into the said letters/ orders, it is clear that said orders were issued on a request made by one Om Prakash Yadav in the Rameshwar’s case. Hence, order of the District Revenue Officer dated 12.04.2023 and letter dated 09.05.2023 by Tehsildar are not relevant for the present case - in the facts of the present case default was clearly proved on the part of the Grandstar Reality Pvt. Ltd. and the findings recorded by the Adjudicating Authority that Section 7 Application is complete and deserved to be admitted, does not warrant any interference.
There are substance in the submission of learned Counsel for the Respondent that since the Project has been taken over by the Grandstar Reality Pvt. Ltd. in 2016 and it is now the obligation of Grandstar Reality Pvt. Ltd. to continue the Project, the filing of the claim by the allottees against the CIRP of Akme Project, cannot preclude the allottees from agitating their claim by filing Application under Section 7 against the Grandstar Reality Pvt. Ltd., who has taken over the Project.
There is no error in the order of the Adjudicating Authority admitting Section 7 Application. The Appeal is dismissed.
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2024 (3) TMI 927
Seeking impleadment of Successful Auction Purchaser/Appellant as one of the Respondents - HELD THAT:- This ‘Tribunal’, makes a pertinent mention that all pleadings exchanged prior to and non-impleadment, to overcome direction issued by the ‘Adjudicating Authority/Tribunal’, in regard to impleadment shall not be anyway to be construed that the concerned party had an effective and adequate opportunity to putforth its views/grievances, in terms of the ‘principles of natural justice’.
This ‘Tribunal’, is of the considered view that even though the ‘Adjudicating Authority/Tribunal’ had observed among other things “Liquidator is permitted to start e-auction process afresh allowing the ‘Applicant/Successful Bidder’ and other persons to participate in the process. It was also submitted that the mistake was bona fide and he is willing to allow the ‘Successful Bidder’, to participate with the amount already ‘furnished/deposited’ and ultimately, proceeded to pass an order, that there will be a ‘fresh auction’ and the ‘Applicant, Successful Bidder’ and other persons would be permitted to participate in the ‘fresh e-auction’ is liable to be set aside, to secure the ‘ends of justice’ because of the latent and patent fact that the ‘Appellant/Proposed Impleading Party, who was directed earlier by the ‘Adjudicating Authority/Tribunal’ through its order dated 30.01.2024 to be impleaded as the ‘Appellant/Successful Bidder’, as one of the ‘Respondents’, was not added as a party as one of the Respondents, this ‘Tribunal’ is of the considered view that the said omission is a vital one and goes to the root of the matter and affects the impugned order on the file of the ‘Adjudicating Authority/National Company Law Tribunal, Division Bench Court-I, Chennai.
Appeal allowed.
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2024 (3) TMI 926
Money Laundering - scheduled offences - cognizance of offence - issuance of summons without conducting an enquiry as prescribed under Section 202 of Cr.PC - petitioner not charged with the predicate offence, still be prosecuted for the offence under the PMLA Act or not - sufficient evidence to establish that the petitioner - accused No. 7.
Is it permissible to take cognizance and issue summons without conducting an enquiry as prescribed under Section 202 of Cr.PC? - HELD THAT:- Upon examination of Clause (b) to Sub-Section 1 of Section 44, it is evident that the Special Court, irrespective of the provisions in the Code of Criminal Procedure, possesses the authority to take cognizance of an offence under Section 3 without being committed to trial. In the present case, the complaint was lodged by the respondent, an authorized Officer, and the Special Court can take cognizance without resorting Section 202 of Cr.PC, thus, the argument presented by the learned Senior Counsel for the petitioner, asserting that the issuance of summons violated Section 202 of Cr.PC is untenable.
Can the petitioner, who is not charged with the predicate offence, still be prosecuted for the offence under the PMLA Act? - HELD THAT:- In the present case, the scheduled offences are under investigation by the jurisdictional police. Therefore, the petitioner can be subjected to prosecution under the PMLA, if it can be established that the petitioner has prima facie committed an offence under Section 3 of the PMLA.
Does the investigation under the PMLA Act provide sufficient evidence to establish that the petitioner - accused No. 7 has prima facie committed the offence alleged? - HELD THAT:- There is no evidence to suggest that the petitioner, who is a payment gateway, had knowledge that the funds transferred to the merchant IDs of accused No. 5 were derived from criminal activity related to a scheduled offence, nor did they knowingly assist accused No. 5 in concealing or transferring illicit proceeds as clean money. Even if we accept the statements from the Director of accused No. 5 and the employee of accused No. 7, at most, it indicates that accused No. 7 was negligent in setting up the merchant IDs in the name of accused No. 5. Intent is essential to constitute an offense under Section 3 of the PMLA. Therefore, the commission amount earned by accused No. 7 cannot be deemed a result of facilitating the illegal money-lending business of accused No. 5, as there is no evidence to establish that accused No. 7 had the intention to commit the crime under Section 3 of the PMLA - When there is no prima facie material to substantiate that the Accused No. 7 knowingly facilitated the transfer of proceeds of the crime, no presumption can be drawn that the Petitioner was involved in money laundering as stated under Section 24, and the burden is on Petitioner to prove otherwise.
The complaint averments does not apparently satisfy the essential elements to constitute the offences alleged against the Petitioner, and, therefore the continuation of the criminal proceedings will be an abuse of the process of the law - Petition allowed.
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2024 (3) TMI 925
Recovery of arrears of tax in terms of Section 124(1)(c) of the Sabka Vishwas (Legacy Dispute Resolution Scheme Rules, 2019 in the Finance Act, 2019 - jurisdiction under Section 74 of the Finance Act, 1994 was invoked to rectify the mistake - HELD THAT:- The power to rectify an order is confined only to remove the error apparent on the fact of record. Therefore, a rectification proceeding under Section 74 of the Finance Act, 1994 cannot be considered to be an appellate proceeding before the Appellate Authority under Section 86 of the Finance Act, 1994 although, proceeding initiated proceeding under Section 74 of the Finance Act, 1994 may also result in reversal of the decision sought to be rectified.
There is no merits in the submissions of the petitioner that the case of the petitioner has to be settled in terms of Section 124(1)(a) of Chapter V of Finance Act, 2019 contrary under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
Considering the fact that the petitioner was given a temporary relief by this Court while passing order dated 17.03.2020, the petitioner cannot be denied the benefit of Sabka Vishwas - (Legacy Dispute Resolution) Scheme, 2019 if the petitioner has complied with the said order by depositing Rs. 1,66,83,286/- within a period of two weeks as was ordered.
The petitioner shall pay an amount of Rs. 33,36,656/- within a period of 30 days from the date of receipt of a copy of this order, provided the petitioner has paid a sum of Rs. 1,66,83,286/- as was ordered on 17.03.2020 - petitioner shall also pay the interest at 12% p.a. on the delayed payment of (Rs. 1,66,83,286/- and Rs. 33,36,656/-) Rs. 2,00,19,942/- from the date of expiry of 30 days from the receipt of Form SVLDRS-3 - In case, the petitioner had failed to pay the amount of Rs. 1,66,83,286/- as ordered on 17.03.2020 and fails to pay the amounts as ordered now, the benefit of Sabka Vishwas - (Legacy Dispute Resolution) Scheme, 2019 shall not be extended to the petitioner.
Petition disposed off.
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2024 (3) TMI 924
Bifurcation of composite service - whether the appellant have arbitrarily bifurcated the receipt of payments from M/s. JK Paper Limited under two separate service category i.e. Manpower Recruitment or Supply Agency Service and GTA service? - Extended period of limitation - HELD THAT:- It is matter of record that appellant has entered into two separate agreements with M/s. JK Paper Limited on two different dates. This fact has been admitted by the department also. In such a situation, it cannot be alleged by the department that the appellant have arbitrarily bifurcated the value of services rendered by him under two types of invoices/ bills. The invoices which have been raised by the appellant are as per the legally valid work contracts/ agreements and it is accepted legal principle that for the purpose of levy of service tax, the individual contract need to be taken into account. Therefore, merely on the assumption that the appellant have entered into separate contracts intentionally to evade service tax is prima-facie, not acceptable.
Extended period of limitation - HELD THAT:- The appellant has regularly been filing their ST-3 returns wherein all the details of services provided by them have been mentioned. The service recipient has also been filing ST-3 returns and therefore, it cannot be alleged that there is any element of fraud, collusion, mis-declaration or suppression of facts with intent to evade service tax - there is no suppression of facts, fraud or misstatement with intent to evade payment of service tax and therefore, it was wrong on the part of the department to confirm demand of service tax under extended time period of Section 73(1) of the Finance Act, 1994.
The impugned order-in-appeal is without any merits - appeal allowed.
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2024 (3) TMI 923
Refund of CENVAT credit - Form-A does not match with the amount of CENVAT credit availed in the ST-3 returns for the relevant period - failure to debit the refund claim from its CENVAT credit account at the time of filing of refund claims as required under condition 2(h) of the Notification dated 18.06.2012 - reversal of credit in GSTR-3B filed for the month of December 2017 and March 2018 - HELD THAT:- The period in dispute in this appeal is from July 2016 to June 2017. The appointed date under the 2017 Act is 01.07.2017. Immediately after filing of the last ST-3 return, the appellant claimed CENVAT credit lying in its books of account on 30.06.2017 through Trans-1 filed on 11.08.2017 in the Delhi GST registration and, thereafter, transferred the CENVAT credit to its Bangalore Unit in terms of the proviso to section 140(8) of the 2017 Act for the reason that Bangalore Unit had the same PAN and was included in the centralized registration of the appellant in the Service Tax Regime.
The contention of the department is that the CENVAT credit has been wrongly reversed by the Bangalore Unit as it is a distinct person in the GST regime and the same was required to be reversed by the Delhi unit - This view taken by the department ignores the factual position that CENVAT credit pertains to pre-GST regime when the Bangalore Unit was included in the centralized registration of the Delhi unit. Thus, as the Bangalore Unit was part of centralized registration in the service tax regime, the appellant correctly transferred the CENVAT credit as CGST input to its Bangalore Unit in terms of section 140(8) of the 2017 Act.
The refund claim has also been rejected for the reason that the total CENVAT credit claimed as refund in Form-A does not match with the CENVAT credit availed in the ST-3 return filed for all the four quarters covering the period in dispute from July 2016 to June 2017 - This mismatch has occurred on account of the fact that Swachh Bharat Cess paid by the appellant at the time of filing of return was not reported in the ST-3 returns, since there was no column for mentioning it in the ST-3 returns. The appellant has correctly also filed a refund claim for Swachh Bharat Cess amounting to Rs. 56,42,239/- in terms of Notification No. 3/2016 dated 03.02.2016. The appellant is, therefore, also entitled to claim refund of Rs. 56,42,239/-.
It is not possible to sustain the order dated 16.03.2020 passed by the Commissioner (Appeals). It is, accordingly, set aside. The appellant would be entitled to refund of the amount of CENVAT credit with interest at the prescribed rate - Appeal allowed.
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2024 (3) TMI 922
Levy of service tax - Business Auxiliary service - services rendered by the foreign based agents to the appellant - commission towards sales promotion commission on export sales to their foreign agents situated located outside India - N/N. 9/2009-ST dated 03.03.2009 and N/N. 15/2009-Service Tax dated 20.05.2009 - invocation of Extended period of Limitation - HELD THAT:- Since the services have been availed by the appellant from outside India within Special Economic Zone and therefore, barring brief period of two months for the majority of period the services availed by them from foreign based agent for the promotion of the sales was falling under the exempted category as the services received by them were in the Special Economic Zone unit.
There are force in the argument of the learned Advocate that the substantive benefit of the service tax exemption provided under Section 26 of the Special Economic Zone Act and Rule 31 of the Special Economic Zone Rules cannot be denied only on procedure requirement under Notification No. 9/2009 dated 03.03.2009 as amended by Notification No. 15/2009 dated 20.05.2009.
The services received by the appellant from their foreign based agents who were engaged in promotion of sales abroad though chargeable to Service Tax under category of Business Auxiliary Service under reverse charge mechanism basis by virtue of exemption Notification No. 9/2009-ST dated 03.03.2009 as amended by Notification No. 15 of 2009-ST dated 20.05.2009 and by general exemption for Special Economic Zone units provided under Section 26 of the Special Economic Zone Act, 2005, the services received from abroad shall remain exempted and therefore, the demand raised against the appellant is without any merit.
Extended period of limitation - SCN issued by the department invoking extended time proviso under Section 73(1) of Finance Act, 1994 as the show cause notice was issued on 19.09.2014 for the period April 2009 to March 2011 - HELD THAT:- All the transactions of foreign exchange payment were reflected in their books of account and the by taking necessary permission from the Reserve Bank of India. In view of this the elements for invoking extended time period such as fraud, collusion, misstatement and suppression of facts with an intent to evade duty are absent in this case and therefore the demand is time barred and same also deserved to be dropped on the grounds of limitation.
The impugned order in appeal is without any merit and therefore, the same is set aside - appeal allowed.
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2024 (3) TMI 921
Calculation of interest - it is alleged that calculation of interest was not done, when it was due and when it was paid - also alleged that interest calculated in a clubbed manner - HELD THAT:- It is not disputed by the Revenue that in 2006, the appellant took registration themselves and started paying Service Tax on their activity. Moreover, the appellant was entitled for abatement of 50% of the Service Tax payable by them in terms of Notification No. 20/2004-S.T. dated 10.09.2004 and the appellant has not claimed abatement in terms of the said Notification, which shows that the appellant was bona fide in not discharging Service Tax initially and thus started paying Service Tax later on. Whatever amount was collected by the appellant from M/s. Tata Motors Ltd. has already been deposited with the Department. In the circumstances, no penalty is imposable on the appellant.
Further, the appellant has disputed certain calculation of interest, which the appellant is ready to pay. For the purpose of calculation of interest, the matter is required to be remanded to the adjudicating authority. Therefore, the matter is remanded back to the adjudicating authority only for the purpose of calculation of interest.
The appeal is disposed of by way of remand.
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2024 (3) TMI 920
Levy of service tax - commercial or industrial construction service - construction of laying solid, construction of trenches and construction connecting such trenches at road crossings - period from 2004-05 to 2007-08 or not - HELD THAT:- It is not disputed by the Revenue that these services have been provided by the appellant along with materials. Therefore, the merit classification of the above services is “works contract service”, as held by the Hon’ble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS M/S LARSEN & TOUBRO LTD. AND OTHERS [2015 (8) TMI 749 - SUPREME COURT] wherein the Hon’ble Apex Court observed Works contract were not chargeable to service tax prior to 1.6.2007.
Therefore as no demand has been raised against the appellant under the category of “works contract service” during the said period, no Service Tax is payable by the appellant under ‘commercial or industrial construction service’ - Moreover, the Show Cause Notice in this case has also been issued by invoking the extended period of limitation, which came to be issued on 20.04.2010 for the period 2004-05 to 2007-08.
The impugned order set aside - appeal allowed.
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2024 (3) TMI 919
Levy of Service Tax - Consulting Engineer Service - execution of work of construction of Residential Complexes in the state of Bihar - denial of CENVAT Credit on architectural Service - input service or not - HELD THAT:- The Executing Agency has not been assigned the work of actual construction, which has been done by the contractors. The role of the Appellant as an Executing Agency is to ensure that the works are executed as per drawings and specifications. They have to provide their expertise and experience for smooth completion of the projects. Accordingly, the Appellant has not rendered 'Construction of Complex Service'. The service rendered by the Appellant is rightly classifiable as 'Consulting Engineer Service' and the Appellant has rightly paid service tax on the 8.5% agency fees received, under this category. Accordingly, the demand of service tax along with interest and penalty confirmed in the impugned order under the category of 'Construction of Complex service' is not sustainable and hence we set aside the same.
The impugned order has confirmed the Service Tax of Rs.3,63,321/- on the differential value of Rs.29,31,401/- during the period 2005-06 to 2008-09 - the calculation has been done unilaterally by the adjudicating authority without giving an opportunity to the appellant to explain the actual difference. Accordingly, it is found that it is required to remand it back to the adjudicating authority to arrive at the differential value after giving an opportunity to the appellant to explain the difference. Hence, the matter is remanded back to the adjudicating authority only for the limited purpose of arriving at the differential value of taxable service of Rs.29,31,401/- worked out by the Department as above.
CENVAT Credit availed and utilized by the Appellant on Architectural Consultancy services - HELD THAT:- This is an essential input service required for rendering of the 'Consulting Engineer service rendered by the Appellant. As per the MOU signed on 18.01.2008, it is the responsibility of the Appellant to ensure that the works are executed as per drawings and specifications. The Appellant cannot fulfill this responsibility without the input service of architecture received from the Architects. Thus, there is no merit in the findings in the impugned order that ‘architectural Service’ is not covered within the definition of ‘input service’. Accordingly, the 'Architecture ' service received by the Appellant is an 'input service' in terms of Rule 2 of CENVAT Credit Rules,2004 and the Appellant has rightly availed and utilized the credit on such input service. Hence, the denial of CENVAT Credit availed and utilized by the Appellant on 'Architecture service' is not sustainable. Accordingly, the impugned order demanding reversal of this credit along with interest and penalty set aside.
The appeal is partly allowed and partly remanded.
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2024 (3) TMI 918
CENVAT Credit - common cenvat credit account for manufacture of dutiable goods as well as a provider of output services - non-maintenance of separate records - penalty - HELD THAT:- The assessee is a manufacturer of dutiable goods as well as a provider of output services and in the Cenvat Credit Rules, there is no provision to maintain a separate account for input/input services used for manufacturing activity and the separate account to be made for input or input services used for providing output services. There is a common cenvat credit account, which was used for payment of other duty or service tax.
In that circumstances, the show-cause notice was not required to be issued as held by this Tribunal in the case of M/S. LARSEN & TOUBRO LIMITED VERSUS COMMISSIONER OF CGST & CX, BHUBANESWAR COMMISSIONERATE [2022 (10) TMI 1077 - CESTAT KOLKATA] wherein this Tribunal has held It has been held in numbers of cases that as far as the inputs or input services are availed on payment of duty and as long as they are capable of being used in the provision of Service Tax and manufacture of excisable goods, credit cannot be denied and that there is no requirement of oneto- one correlation.
Penalty u/r 15 of the Cenvat Credit Rules, 2004 - HELD THAT:- As the demand is not sustainable, therefore, the question of imposition of penalty under Rule 15 of the Cenvat Credit Rules, 2004, does not arise.
Thus, no demand is sustainable against the assessee. Accordingly, assessee’s appeal is allowed.
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2024 (3) TMI 917
Levy of Service tax - activity of construction of railway infrastructure i.e., tracks - benefit of exemption under Notification No. 17/2005-S.T. dated 07.06.2005 and Notification No. 25/2012-S.T. dated 20.06.2012 - HELD THAT:- The said issue has been examined by this Tribunal in the case of M/S HARI CONSTRUCTION & ASSOCIATES PRIVATE LIMITED VERSUS COMMISSIONER OF CGST & EXCISE, PATNA II [2023 (9) TMI 454 - CESTAT KOLKATA] wherein it has been observed The ‘taxable service’ in Finance Act, 1994 excluding ‘railways’ from the ambit of the service did not place any restriction on benefit going to private railways. The statute, 10 ST/86191/2021 too, did not consider it necessary to fall back on the definition of ‘railways’ in another statute for determination of taxability and it is not open to the adjudicating authority to arrogate that privilege in an executive capacity. The intent of exclusion prior to 1st July 2012, and exemption for the period, thereafter, is abundantly clear.
The issue has already been settled by this Tribunal and it has been categorically held that there is no distinction between public railways and private railways. In these circumstances, following the decision of this Tribunal in the case of M/s. Hari Construction & Associates Pvt. Ltd., it is held that the appellant is entitled to the benefit of exemption vide Notification No. 17/2005-S.T. dated 07.06.2005 and Notification No. 25/2012-S.T. dated 20.06.2012, as claimed. Accordingly, no demand of Service Tax is sustainable against the appellant.
The impugned order set aside - appeal allowed.
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2024 (3) TMI 916
Process amounting to manufacture - process undertaken on stators received from job workers i.e. the process of shaping, varnishing and baking - HELD THAT:- Perusal of the pleadings and the records would reveal that the order of assessment and the other materials available with the appellant do not indicate that the nature of the process undertaken at the assessee’s Service Centre in respect of the so-called retrieving old stators from old compressors received by the assessee and mere using of old stators and subjecting the old stators to some process and renewing the same would not be sufficient. Moreover, all these allegations and contentions raised by the learned Senior Standing Counsel for CBIC would amount to be factual in nature. Therefore, in the course of exercising the powers under Section 35G of the Act, this Court cannot interfere with the finding of facts unless there is any strong substantial question of law or perversity made out. On this very ground, there are no merits in the appeals preferred by the appellant.
In the teeth of the aforesaid finding by the Tribunal and that no sufficient material available with the Department to negate the said finding given by the Tribunal, it is difficult to interfere with the said finding of the Tribunal. All these appeals filed by the Department therefore being devoid of merits, deserves to and are accordingly rejected.
Appeal dismissed.
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2024 (3) TMI 915
Refund claim - amount was paid in GST era under Reverse Charge Mechanism towards banking and financial service received for expenses made in foreign currency for facilitation of external commercial borrowings (ECB) - time limitation - HELD THAT:- The party has not only paid duty of extended period in 3 installments i.e. in April 2018, October, 2018 and November 2018 but has also paid interest and penalty there upon seggregating the three. On this issue, it is found at Commissioner (Appeals) has correctly held that payments made were part of the recovery action under the enforcement done by DGCI and therefore duty, interest and penalty were paid for extended period. It is also found that adjudicating authority whose findings have been endorsed in the impugned order, has correctly held that the amount is paid as part of the recovery action. The input credit or refund of the same cannot be allowed.
It is held that in recovery action and when penalties imposed and are discharged and duty paid under extended period, the credit to person who has evaded tax and then paid duty, interest and penalty cannot be allowed - appeal dismissed.
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