Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 13, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
PMLA
Service Tax
Central Excise
Articles
News
Notifications
Highlights / Catch Notes
GST
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Classification of supply - healthcare services - supply of medicines and other procedures during treatment in patients admitted to hospital - Principal supply i.e. healthcare service is predominant element of composite supply and other supplies such as room, medicines, implants, consumables and incidental or ancillary to predominant supply. These goods supplied to inpatients, component of composite supply, where principal supply i.e. healthcare services falling under SAC 999311, exempted from GST - AAR
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Exemption form GST - health care services or not - supply of services by treatment of patients suffering from substance use disorder (SUD) as out-patient alongwith medicines - it is observed that applicant is involved to treat out door patients only and medicines are being provided by applicant only as per requirement of patient - substance use disorder is out of ambit of health care services and supply of services by treatment of patients suffering from SUD as out-patient don't fall under the definition of health care services so not exempt - AAR
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Classification of goods - raw unmanufactured tobacco - Process amounting to manufacture or not? - Mixing of scent (mixture of various perfumes and not jarda scent) - As evident that the raw material undergoes a set of processes and emerges as a distinct product which makes it marketable/consumable for the chewing needs. Therefore, the product supplied by the applicant is “Manufactured Tobacco product for Chewing”. - AAR
Income Tax
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Estimation of commission income - Providing Accommodation entries - Unexplained deposits/loans - when a person is engaged in the clandestine activities of providing accommodation entries he only charges commission whereas the cash belongs to the person who is taking the accommodation entry - Order of CIT(A) deleting the additions, beyond the commission charged by the assessee on providing accommodation entries, sustained - AT
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Penalty u/s 271B - Delay in filing the tax audit report - delay occurred due to the Accountant leaving the job abruptly and it took time for the new Accountant to finalize the accounts - For other years, the assessee was regular in filing the TAR - this is the only year where there is a delay in getting the books of accounts audited u/s 44AB - In the case on hand the tax audit report was filed on 08.03.2018, the return was field on 09.03.2018 and the assessment was completed on 30.12.2019 on which date the tax audit report was very much before the Assessing Officer. Further the assessment was completed accepting the loss returned by the assessee. - No penalty - AT
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Disallowance u/s 14A - profits from shares where held as stock in trade and not as investments - The sum and substance of ratio laid down by the Hon’ble Supreme Court and the Hon’ble High Courts are that in case of banking companies were shares & securities are held as stock in trade, dividend income is considered as business income, and consequently, provisions of Sec. 14A of the Act, cannot be applied. - AT
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Penalty u/s 271B - non filing / delayed filing of audit report - bonafide reasons - delay due to expiry of digital signature and due to technical glitch in the system - the explanation filed by the assessee can be accepted as a reasonable cause for his failure to file Audit Report with in time and it is not a fit case for imposing penalty u/s 271B of the Act - No penalty - AT
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Penalty u/s 272A(1)(d) - non compliance to notices u/s 142(1) - The provisions of Section 272A(1)(d) is of deterrent in nature and not for earning revenue. The remedy available with the Assessing Officer lies in framing of best judgment assessment under the provisions of Section 144 of the Act, as he did and not to impose multiple penalties under section 272A(1)(d) of the Act again and again - Levy of penalty restricted to Rs. 10,000/- - AT
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Depreciation u/s 32 on boundary wall and other structures - Purpose of the boundary wall is to provide protection and security to the building and other assets of the company, which are undoubtedly business assets. - If the construction of boundary wall is complete during the current year, the same is eligible to be added to the block of assets and subject to the requirement of law, it is qualified for claiming depreciation. - AT
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Addition u/s 68 - cash deposits during the demonetization period in SBNs - Proof of the source being the cash sales with necessary corroborative evidences - after demonetization, the demonetized notes could not have been accepted as valid tender - CIT(A) deleted the additions - The AO has not pointed out any specific adversity but made a generalize addition without considering the factual aspects and primary evidences. The A.O has failed to make further enquiries on the information filed and the assessee has discharged the initial burden placed by submitting the information and details. - Order of CIT(A) sustained - AT
Customs
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Disposal of Sale / Auction proceeds - Settlement of various claims whereas the demand under the customs act is in Dispute and pending - It is stated that even considering such claims sufficient amount is available which would secure the interest of the revenue, subject matter of the present proceedings. Thus, prima facie it appears that there is sufficient amount available to satisfy not only the dues of the crew, Port Trust, but also the duty demand in question. - HC
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Restriction on the import of dogs into the Country for commercial breeding or other commercial activities - Validity of Notification No.3/2015- 2020 - Any State policy has to be based on scientific and empirical data to authenticate and justify it. - As far as import of alien diseases is concerned, there are effective measures for quarantine and testing of the animals prior to permitting entry into India. Thus, this can be no reason to justify the ban. - The impugned Notifications have no legs to stand. - Concerted Department directed to formulate a breeding policy and rules for regulation of breeding in the State of Tamil Nadu for which eight (8) weeks is granted. - HC
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Valuation of imported goods - edible oil - inclusion of value of barge charges incurred by them between the anchorage port and the port of unloading - A harmonious reading of the amendment carried out to Rule 10 would clarify that during the period under dispute, the Department had no provision to get the barge charges included in the total value for payment of Customs Duty - Demand set aside - AT
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Revocation of Customs Broker License - handling consignments for multiple untraceable exporters - The facts of the present case are similar, except that the copy of the communication sent by DGARM was made available to the appellant. Other documents were not made available to the appellant. - Allegation against the CB not proved - the order revoking the Customs Broker License for violation of Regulations 10 (n) of the 2018 Regulations set aside. - AT
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Revocation of Customs Broker License - risky exporters involved in IGST refund frauds - reliane placed on reports of the jurisdictional officer - it is not the responsibility of the customs broker to physically go and verify the existence of each exporter at every location, let alone keep track as to whether the exporters shifted their place of business. - the exporters had taken ineligible ITC, which even if correct cannot be a factor for revoking the customs broker license of the appellant. - AT
Service Tax
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Levy of Service tax - Reverse charge mechanism (RCM) - services received by three foreign companies which are being merged with the appellant company - the payments effected for the services received from another service provider abroad by the three foreign companies/overseas business entities which are proposed to merged with the appellant, is not amenable to charging service tax under section 66A of the Finance Act, 1994. - Demand set aside - AT
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Wrongful collection of service tax from clients - Case of Revenue is that Appellant even after claiming that they were exempted from the payment of Service Tax, they were actually collecting amounts from their clients - Extended Period of Limitation - Matter restored back for fresh consideration - AT
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Demand of service tax - vague SCN - Without going into further merits of the arguments on various counts, on the sole ground that the Department has failed to issue the Show Cause Notice with specific allegation specifying the sub-clause of Section 65(19), respectfully following the above cited case law, it is held that the present Appeal towards the confirmed demand is required to be allowed. - AT
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Refund - Doctrine of unjust enrichment - It is on record that the amounts were deducted from their bills and the client had forced the Appellant to make the remittance to the Government. In such a case, when it is clear that no amount was recovered from the client and this amount has been remitted by way of GAR-7 Challans, there is no possibility of any unjust enrichment accruing to the Appellant, if refund claim is sanctioned. - AT
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Levy of Service Tax - club and association services - Companies and cooperative societies, prior to July 1, 2012, which were registered under respective Acts, would be constituted under those Acts - Thus, prior to July 1, 2012 which were registered under Acts, would be constituted under those Acts. Incorporated clubs or associations, therefore, prior to July 1, 2012 were not included in the service tax net. After July 1, 2012, also the situation does not change for the reason that Explanation 3 uses the same expression. - AT
Central Excise
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Validity of Show Cause Notice (SCN) - CENVAT Credit - bagasse - Thus, bagasse is not a manufactured product and Rule 6 of the Cenvat Credit Rules, even after 2015 amendment is not applicable to bagasse nor to electricity generated from bagasse coupled with the fact that the Circular dated 25.04.2016 issued by the respondents pursuant to the 2015 amendment to Rule 6 having not only been quashed, but the same having been rescinded by the respondents by issuance of the Circular dated 07.07.2022 and consequently, the respondents did not have jurisdiction or authority of law to issue the impugned show cause notice and Statement of Demand, which deserve to be quashed. - HC
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Extended period of limitation - Allegation of suppression of facts - The Appellant could be holding bonafide belief that they are eligible to utilize Cenvat credit for only clearances. Further as there are Tribunal decisions in their favour during the period under dispute, the issue would be that of interpretation only. Taking all these facts into account, it is felt that the Department cannot allege any suppression on part of the Appellant. - AT
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Reversal of CENVAT Credit - demand equal to 10%/5% of value of exempted goods - Rule 6 of the Cenvat Credit Rules is not enacted to extract illegal amount from the assessee. The main objective of the Rule 6 is to ensure that the assessee should not avail the Cenvat Credit in respect of input or input services which are used in or in relation to the manufacture of the exempted goods or for exempted services. If this is the objective then at the most amount which is to be recovered shall not be in any case more than Cenvat Credit attributed to the input or input services used in the exempted goods - AT
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Classification of goods - eligibility of the Re-processed granules, manufactured by the appellants for exemption - it is evident beyond the scope of any doubt that the imported plastics granules were nothing but waste and scrap of goods falling under chapter 39 - the imported goods have to be considered as waste &scrap of goods falling under chapter 39 and entitled to above exemption - AT
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Clandestine Removal - Retraction of statements - Statements of various persons stand recorded. No doubt the outcome of cross examination has to be given due importance but keeping in view the overall facts and circumstances of the case including the fact of seizure of cash and snuff at the time of visit of officers, and the fact of deposit of duty, has to be taken into consideration which lead only to one and one fact of clandestine removal of the appellant’s final product. - AT
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Refund of accumulated Cenvat Credit - Export of goods - there is no dispute that the appellant had exported the goods without payment of duty, further, there is no dispute that the appellants have not availed the drawback or rebate of duty, hence the refund of credit shall be allowed, as the amount cannot be adjustable against clearance of home consumption or for export on payment of duty. - AT
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CENVAT Credit - inputs - If the claim made by the appellant, which, as claimed by them, is supported by the sufficient evidence, then it has to be looked into by the learned Commissioner and cannot be brushed aside merely being an afterthought. Therefore this also has to be looked into by the learned Commissioner. - AT
Case Laws:
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GST
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2023 (6) TMI 489
Jurisdiction - Seeking release of goods along with conveyance - exercise of powers under Section 129 and thereafter switching over to Section 130 and issuing notice thereunder without availing the petitioner the benefits of release of the goods under Section 129 - HELD THAT:- In the facts and circumstances of the case, by way of interim relief, it is directed that the goods of the petitioner as well as vehicle bearing registration No. NL-01-AG 2782, shall be released provided the petitioner complies with the following conditions, (i) Either of the petitioners shall deposit with the competent authority of the respondents, total amount of penalty of Rs.1,94,031/-, the tax is not assessed by the authorities. (ii) Towards fine in lieu of confiscation of goods, either of the petitioners shall furnish Bank Guarantee of which is Rs. 14,31,519/-. (iii) Either of the petitioners shall further deposit the amount of Rs.1,94,031/- towards fine in lieu of confiscation of conveyance. Upon compliance of the aforesaid conditions, the goods and the vehicle both shall be released by the authorities. Non compliance of any of the aforesaid conditions, shall render the interim relief granted herein above, liable to be vacated.
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2023 (6) TMI 488
Classification of supply - composite supply or not - healthcare services - supply of medicines and other procedures during treatment in patients admitted to hospital - supply of medicines and other procedures to inpatients admitted to hospital for treatment is a composite supply where principal supply is health care services falling under SAC 999311 - exemption as per entry at SI. No 74 of Notification No. 12/2017 - Central Tax dated 28-6-2017. HELD THAT:- There is no dispute that treatment of cancer Patients by the applicant is supply Sec. 7(1) of CGST Act, 2017 and falls under the ambit of GST health care services falling under SAC 999311 - The applicant supply of medicines and other procedures to inpatients admitted to hospital during treatment. Thus, applicant is involved in supply of service as well supply of goods i.e medicine along with taxable as well as exempt supply. Whether the supply made by applicant is exempt under entry 74(a) of notification no. 12/2017-CGST Rate dated 28-06-2017? - whether this is composite supply or not? - HELD THAT:- The treatment of cancer inpatient in hospital is healthcare service and which is exempt under Notification no 12/2017 dated 28.06.2017 - As per Section 2(30) of CGST Act, 2017, defines Composite supply as supply consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. Healthcare service is exempt from GST Tax Whereas supply of medicines and other services i.e room charges etc. are taxable. Whether the supply by applicant is composite or not? - HELD THAT:- C.B.I C has clarified vide Circular No. 27/01/2018-GST, dated 4-1-2018 that room rent in hospital is exempted. Further clarifications vide circular No. 32/06/2018-GST, (F.No. 354/17/2018 TRU Dt. 12.02.2018) issued based on the approval of 25th GST Council Meeting held on 18.01.2018, it was clarified that Food supplied to the in-patients as advised by the doctor/nutritionists is a part of composite supply of healthcare and not separately taxable. Other supplies of food by a hospital to patients (not admitted) or their attendants or visitors are taxable. In view of the clarification circulars on room rent and food supply by hospital to in-patients, we held that same principle should be applicable in case of dispensing of medicine to in- patient. It is observed that the said supplies amounted to composite supply and eligible for exemption under category health care services . Nature of the various services in a bundle of services will help in determining whether the services are bundled in the ordinary course of business. If the nature of services is such that one of the services is the main service and other services combined with such service are incidental or ancillary services which help in better utility of main service then the various elements of the service are said to be naturally bundled in the ordinary course of business. The supply to the in-patients by the hospitals, as advised by the doctor may be a part of composite supply of healthcare and not separately taxable, supplies made in course of providing treatment to patients admitted in hospital undoubtedly naturally bundled in ordinary course of business. Principal supply i.e. healthcare service is predominant element of composite supply and other supplies such as room, medicines, implants, consumables and incidental or ancillary to predominant supply. These goods supplied to inpatients, component of composite supply, where principal supply i.e. healthcare services falling under SAC 999311, exempted as per entry at SI. No. 74 of Notification No. 12/2017-C.T. (Rate). Considering definition of health care services as narrated in Notification no. 12/2017-CGST Rate dated 28-06-2017 as amended, it is held that These goods supplied to inpatients, component of composite supply, where principal supply i.e. healthcare services falling under SAC 9993 11, exempted as per entry at SI. No. 74 of Notification No. 12/2017-C.T. (Rate).
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2023 (6) TMI 487
Exemption form GST - Composite supply or not - health care services or not - supply of services by treatment of patients suffering from SUD as out-patient - Applicability of entry 74(a) of notification no. 12/2017-CGST Rate dated 28-06-2017 - HELD THAT:- There is no dispute that treatment of SUD Patients by the applicant is supply Sec. 7(1) of CGST Act, 2017 and falls under the ambit of GST - The patients are being examined by applicant through its Single Specialty Psychiatrist under Allopathy System of Medicine by Dr Rmet Sonia Dsouza (MBBS, MD), who gives medicines to outdoor patients of applicant Thus, it is observed that applicant is involved to treat out door patients only and medicines are being provided by applicant only as per requirement of patient Thus, applicant is involved in supply of service as well supply of goods i.e medicine. Whether the supply made by applicant is exempt under entry 74(a) of notification no 12/2017-CGST Rate dated 28 06 2017? - whether this is composite supply or not? - HELD THAT:- As per Section 2(30) of CGST Act, 2017, defines Composite supply as supply consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. Healthcare service is exempt from GST Tax. Whereas supply of medicines is taxable - the supply to the in-patients by the hospitals, as advised by the doctor may be a part of composite supply of healthcare and not separately taxable, but Here in this case it is observed that medicines are providing by applicant to outdoor patient. Applicant claimed that these medicines are not available in market thus the medicine supplied by them is a composite supply - there are nothing supporting that establish that the medicine form part of counselling services provided by physiatrist. Thus, it is observed that the supplies being made by applicant are not composite supply. Services for the prevention and treatment of substance misuse and substance use disorders have traditionally been delivered separately from other mental health and general health care services, because substance misuse has traditionally been seen as a social or criminal problem, prevention services are not typically considered a responsibility of health care systems. Further people needing care for substance use disorders have had access to only a limited range of treatment options that were generally not covered by insurance. Well-supported scientific evidence shows that the substance uses disorder treatment and mental health services from mainstream health care have traditional separation. Thus considering definition of health care services as narrated in Notification no. 12/2017-CGST Rate dated 28-06-2017 as amended, and above discussion we held that substance use disorder is out of ambit of health care services and supply of services by treatment of patients suffering from SUD as out-patient don't fall under the definition of health care services so not exempt under entry 74(a) of notification no. 12/2017-CGST Rate dated 28-06-2017.
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2023 (6) TMI 486
Classification of goods - raw unmanufactured tobacco - Process amounting to manufacture or not - mixing of scent (mixture of various perfumes and not jarda scent) in raw unmanufactured tobacco dust by the Applicant after procuring the same from various traders, and its subsequent sale to customers on B to B and B to C basis, after ensuring packing from third party - change in character of unmanufactured tobacco to manufactured tobacco or not. HELD THAT:- On reading of GST Tariff Sub Heading CTH 24012090, it is evident that the cutting process prescribed in this note is along with the remarks 'but not tobacco ready for smoking'. This explanation of HSN clearly brings out the classification in the Customs tariff at 240120, which covers tobacco products for further manufacture and not for consumption as such as in the case of the applicant. From the explanation given by ICAR-CTRI Central Tobacco Research Institute and Explanatory General notes to chapter 24, it is seen that only tobacco which is cured at farm level for before supply to market would fall under this classification as 'Unmanufactured tobacco'. The perfuming that the applicant claims is by mixing scent does not get covered under this. As seen in the Explanatory General notes to chapter 24, only natural fermentation is covered. Therefore, the product of the applicant does not fall under CTH 24012090.' 'Chewing tobacco' can be both 'unmanufactured' and 'Manufactured'. The question is whether the product of the applicant is 'unmanufactured' or 'manufactured'. The process undertaken by the applicant is not equivalent to that of winnowing crushing, and separating through seiving and the better part are used for chewing tobacco 'as 'unmanufactured tobacco for chewing' but is similar to the process undertaken in manufacture of 'Chewing tobacco' as acknowledge by the ICAR-CTRI in as much as the raw tobacco is processed by mixing of tobacco dust with scent(mixture of various perfumes and not jarda scent). 'Customs Tariff which gives the classification for determination of rates of goods as per notification No. 01/2017-C.T. (Rale) do not define what is 'Manufactured tobacco' and 'Unmanufactured tobacco' and hence we need to look into the interpretation of judiciary. Hon'ble High Court of Madras in the case of BELL MARK TOBACCO COMPANY, PUDUKOTTAH AND OTHERS VERSUS THE GOVERNMENT OF MADRAS [ 1960 (7) TMI 60 - MADRAS HIGH COURT] , while answering the issues raised before them, observed (what is to be considered as 'unmanufactured chewing tobacco' and 'Manufactured chewing tobacco' when the same is not defined in the Act . Taking the cumulative effect of the various processes to which the assessee subjected the tobacco before he sold it, it is clear that what was eventually sold by the assessee was a manufactured product, manufactured from the tobacco that the assessee had purchased. Soaking in Jaggery water is not the only process to be considered. The addition of flavouring essences and shredding of the tobacco should establish that what the assessee sold was a product substantially different from what he had purchased. Once again, we have to point out that the fact that this assessee purchased the tobacco as chewing tobacco did not determine the question, whether the sale of the products manufactured by him from out of that tobacco falls within the scope of Section 5 (vii) or not. The Apex Court in the THE STATE OF MADRAS VERSUS BELL MARK TOBACCO CO. [ 1966 (10) TMI 106 - SUPREME COURT] has completely agreed with the above view of the High Court that the cumulative effect of the various process to which tobacco was subjected before it was sold, amounted to a manufacturing process. Thus, it is evident that the raw material undergoes a set of processes and emerges as a distinct product which makes it marketable/consumable for the chewing needs. Therefore, the product supplied by the applicant is Manufactured Tobacco product for Chewing . Once it is held that the product is 'Manufactured Chewing tobacco', the classification of the product is under CTH 2403 9910 which specifies 'Chewing Tobacco' under the head 2403- Other Manufactured tobacco and manufactured tobacco substitutes.
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Income Tax
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2023 (6) TMI 485
Validity of reopening of assessment - notice u/s 148A(b) to non existing entity - HELD THAT:- Notice issued in the name of non-existing entity and which has already been amalgamated on 16th September, 2019 with retrospective effect from 1st April, 2018. It appears from record that against the very same non-existing entity, a notice under Section 148 of the Act was quashed by this court by the order [ 2022 (3) TMI 1532 - CALCUTTA HIGH COURT] and in spite of quashing of such notice by this court on earlier occasion, again the assessing officer has issued the impugned notice dated 27th May, 2022 against the very same non-existing entity. Such conduct reflect, total non-application of mind by the AO, and rather it is contumacious also and in total disregard and defiance of earlier of the order of this court. Thus quashing the aforesaid impugned notice u/s 148A(b) of the Act and all subsequent proceedings and allowing this writ petition by imposing personal cost of Rs.20,000/- upon Assessing Officer,Bitan Roy, Ward No .V(1), Kolkata which is to be realised from his salary and to be paid to the petitioner.
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2023 (6) TMI 484
Estimation of commission income - Providing Accommodation entries - Unexplained deposits/loans - assessee has failed to establish the genuineness and creditworthiness of the bank credit entries - CIT(A) observed that since the assessee is an entry provider the only addition that could be made is the commission charged by the assessee on providing accommodation entries and accordingly sustained partly - HELD THAT:- The undisputed fact and categorical finding of the AO show that the assessee is an entry provider. In our considered opinion when a person is engaged in the clandestine activities of providing accommodation entries he only charges commission whereas the cash belongs to the person who is taking the accommodation entry, therefore, there is no error or infirmity in the findings of CIT(A) in sustaining the addition on account of commission earned on providing accommodation entries.
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2023 (6) TMI 483
Penalty u/s 271B - Delay in filing the tax audit report - delay occurred due to the Accountant leaving the job abruptly and it took time for the new Accountant to finalize the accounts - As per assessee he is regular in filing its tax audit report meeting the due dates this year i.e. AY 2017-18 is the exceptional year where tax audit report could not be furnished on/before due date due to uncontrollable circumstances - HELD THAT:- The assessee submitted that the delay occurred due to the Accountant leaving the job abruptly in the month of February, 2017 and the assessee could appoint new Accountant after a gap of three months and, therefore, the delay occurred due to the Accountant leaving the job abruptly and it took time for the new Accountant to finalize the accounts. We observe that there is no dispute on this fact - delay is not willful and it was occurred only due to the Accountant leaving the job. We also further observed that this is the only year where there is a delay in getting the books of accounts audited u/s 44AB of the Act. On perusal of the acknowledgements and tax audit reports for preceding previous year and also for subsequent years i.e. AY 2015-16 and 2016-17, AY 2018-19 and 2019-20, we find that the assessee has been filing the tax audit report in time. Therefore, we hold that there is a reasonable cause in not getting the books of accounts audited u/s 44AB within the due date specified for the assessment year under consideration. In the case on hand the tax audit report was filed on 08.03.2018, the return was field on 09.03.2018 and the assessment was completed on 30.12.2019 on which date the tax audit report was very much before the Assessing Officer. Further the assessment was completed accepting the loss returned by the assessee. Thus, as relying on P. SENTHIL KUMAR [ 2019 (1) TMI 222 - MADRAS HIGH COURT we hold that the assessee is prevented with reasonable cause in getting the books of accounts audited u/s 44AB of the Act within the due date specified - Decided in favour of assesee.
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2023 (6) TMI 482
TDS u/s 194A - Disallowance of interest expenses u/s 40(a)(ia) - effect of 2nd Proviso to Section 40(a)(ia) - assessee has debited interest which included interest paid to Non-Banking Finance Company without deducting TDS - as per case of the assessee if the amount paid by payer have been included by the payee in its return of income filed u/s 139 and has paid the tax due on the income declared in such return, to the extent recipient from such assessee is included the sum in his return of income and filed the same, no disallowance under Section 40(a)(ia) can be made in view of the 2nd Proviso to Section 40(a)(ia) r.w.s. First Proviso to Section 201(1) - HELD THAT:- Whether the 2nd Proviso to Section 40(a)(ia) of the Act is having retrospective effect from 01.04.2005 has also already dealt with by the Ld. CIT(A) with an affirmative view supported by the judgment passed by the Hon ble Delhi High Court in case of Dr. Jaydeep Sharma [ 2014 (11) TMI 720 - ITAT DELHI] - Thus, the order passed by the Ld. CIT(A) is found to be just and proper without any ambiguity so as to warrant interference. The same is, therefore, upheld. Decided against revenue.
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2023 (6) TMI 481
Reopening of assessement u/s 147 - whether or not any notice u/s. 143(2) of the Act was issued by the A.O prior to framing of the assessment? - HELD THAT:- Framing of the assessment dehors issuance of a notice u/s. 143(2) of the Act is required to be verified and cannot be summarily accepted on the very face of it; coupled with the fact that though the assessee had vide his submission specifically assailed the jurisdiction assumed by the A.O for framing the impugned assessment without issuing any notice u/s. 143(2) before the CIT(Appeals), which, however, was not adjudicated by him, we are of the considered view that the matter in all fairness requires to be restored to the file of the CIT(Appeals) who shall re-adjudicate the same. In case the contention of the AR that the A.O had framed the assessment u/s. 143(3) r.w.s. 147 dated 26.12.2016 without issuing of notice u/s. 143(2)is found to be in order, then the assessment order therein passed shall stand quashed. Ground of appeal is allowed for statistical purposes.
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2023 (6) TMI 480
Disallowance u/s 14A - profits from shares where held as stock in trade and not as investments - disallowance of expenditure towards exempted income - HELD THAT:- We find that the issue is squarely covered in favour of the assessee by the decision of ITAT, Chennai Benches in the assessee s own case for AY 2013-14 [ 2020 (3) TMI 713 - ITAT CHENNAI] where the Tribunal by following the decision in the case of South Indian Bank Ltd [ 2021 (9) TMI 566 - SUPREME COURT] held that shares securities held by the bank or guarantor and income received for such shares securities must be considered as business income, and consequently, provisions of Sec. 14A of the Act, would not be attracted to such income. In the case of M/s.Canara Bank [ 2023 (1) TMI 243 - KARNATAKA HIGH COURT] had considered an identical issue and by following the decision in the case of South Indian Bank Ltd.[ 2021 (9) TMI 566 - SUPREME COURT] held that provisions of Sec. 14A of the Act, are not applicable in case of banking companies, where dividend income has to be considered as business income. In the case of PCIT v. Punjab National Bank [ 2022 (6) TMI 85 - DELHI HIGH COURT] had also considered an identical issue and by considering the decision in the case of Maxopp Investment Ltd. [ 2018 (3) TMI 805 - SUPREME COURT] held that provisions of Sec. 14A of the Act, will not apply on profits from shares where held as stock in trade and not as investments. The sum and substance of ratio laid down by the Hon ble Supreme Court and the Hon ble High Courts are that in case of banking companies were shares securities are held as stock in trade, dividend income is considered as business income, and consequently, provisions of Sec. 14A of the Act, cannot be applied. We direct the AO to delete additions made towards disallowance of proportionate expenses relatable to exempt income for all assessment years.
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2023 (6) TMI 479
Penalty u/s 271B - non filing / delayed filing of audit report - bonafide reasons - delay due to expiry of digital signature and due to technical glitch in the system - assessee has been regularly filing audit report for years previous to A.Y.2017-18 and also for the future assessment years - HELD THAT:- In the present case, the non filing Tax Audit Report before the due date has been a technical glitch and admittedly, the assessee filed the Audit Report u/s 44AB. During the course of assessment proceedings and the assessment was framed by the Assessing Officer after considering the Audit Report and statement of account. In our view the explanation filed by the assessee can be accepted as a reasonable cause for his failure to file Audit Report with in time and it is not a fit case for imposing penalty u/s 271B of the Act. Accordingly, the penalty levied under section 271B of the Act is deleted. Penalty u/s 272A(1)(d) - non compliance to notices u/s 142(1) - As argued notices were not being received by the assessee personally - HELD THAT:- Penalty under section 272A(1)(d) may not be imposed for each and every default to the notices issued under section 142(1) which remained non complied on the part of the assessee. The provisions of Section 272A(1)(d) is of deterrent in nature and not for earning revenue. The remedy available with the Assessing Officer lies in framing of best judgment assessment under the provisions of Section 144 of the Act, as he did and not to impose multiple penalties under section 272A(1)(d) of the Act again and again. We therefore restrict the penalty levied under section 272A(1)(d) of the Act to one default as against multiple defaults of non compliance with these notices under section 142(1) of the Act. Accordingly, penalty imposed is restricted to Rs. 10,000/-.
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2023 (6) TMI 478
Depreciation u/s 32 on boundary wall and other structures - HELD THAT:- Purpose of the boundary wall is to provide protection and security to the building and other assets of the company, which are undoubtedly business assets. From the notes to financial statements in respect of the fixed assets we notice that there was an addition to the tune of Rs. 19.10 crores in respect of which the depreciation at Rs. 1.97 crores was claimed. Further it is shown in the notes on financials, as one of the significant accounting policies, that the tangible fixed assets are carried at the cost of acquisition or construction less accumulated depreciation, and the cost of tangible fixed assets includes the acquisition and installation of respective assets. It is not the case of Revenue that on the ground of non-carrying out of any business activity, the depreciation on the fixed assets was denied. Since the purpose of boundary wall is to protect the business assets like building and other fixed assets and the moment it is complete it starts serving its purpose, it cannot therefore, be said that such an asset cannot be added to the block of assets when once the installation/construction of such asset is complete. We are of the considered opinion that if the construction of boundary wall is complete during the current year, the same is eligible to be added to the block of assets and subject to the requirement of law, it is qualified for claiming depreciation. We, therefore, hold that the disallowance of depreciation cannot be sustained. Accordingly, we direct the deletion of the same Cost of acquisition of the property in respect of which long term capital gains were claimed - CIT-A held that the assessee is not entitled to claim the indexed cost of acquisition in respect of which the assessee had no right, title or interest. Learned CIT(A) accordingly, upheld the findings of the learned Assessing Officer - HELD THAT:- According to the assessee, on survey, in respect of 4 acres of land which they intended to sell, it was found that there exists only Ac. 3.33 guntas and under a compromise, the assessee got only Ac. 1.332 which the assessee sold. While computing the capital gains on the sale of this Ac. 1.332, the assessee claimed the indexed cost of acquisition in respect of all the 4 acres. According to Section 48 of the Act, while computing the capital gains on the transfer of any capital asset, the cost of acquisition of the asset and the cost of any improvement thereof shall be deducted from the full value of consideration received on such transfer of capital asset. Here, in the case on hand, such capital asset transferred is not entire 4 acres, but only Ac. 1.332. Whatever that was not sold by the assessee cannot be considered to be the asset that was transferred for consideration and, therefore, for computing the capital gains the asset in respect of which sale consideration received alone has to be considered. No infirmity in the findings of the authorities below on this aspect.
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2023 (6) TMI 477
Addition u/s 68 - cash deposits during the demonetization period in SBNs - Proof of the source being the cash sales with necessary corroborative evidences - after demonetization, the demonetized notes could not have been accepted as valid tender - CIT(A) deleted the additions - HELD THAT:- CIT(A) has considered the details of sales, the stock register and the turnover is consistently maintained. Assessee has submitted the details of cash sales/receipts and party wise details of sales above Rs. 2 lakhs and when a query was raised to Ld.AR on submissions of details were the cash sales are below Rs. 2 Lakhs. The Ld.AR mentioned that the assessee has submitted details of sales below Rs. 2 lakhs and highlighted rule 114B of the I T Rules r.w.s 139(a)(5)(c) of the Act and there was no KYC required. AR demonstrated the sample Tax Invoice below Rs. 2 lakhs in the demonetization period and the invoice contains, name and address etc. Further there is no significant increase in the cash sales out of total sales, whereas for F.Y. 2016-17 it is @ 31.27% and in comparison to F.Y. 2015-16 @ 31.44%, the Ld.AR referred to the cash flow statement, cash book and demonstrated the details of deposits made out of the cash sales and the assessee has been consistently maintaining the stock of Rs. 68.07 crs for the F.Y 2015-16 and for F.Y 2016-17 it was maintained at Rs. 65.38crs and the cash sales are part of the stocks maintained which is not disputed. Further the addition has been made only on the basis that after demonetization, the demonetized notes could not have been accepted as valid tender. Since the cash sales proceeds/receipts received from the customers are reflected in the Audited Profit Loss account as income and if the cash deposits are added under section 68 of the Act that will amount to double taxation once as sales and again as unexplained cash credit which is against the principles of taxation. The AO has not pointed out any specific adversity but made a generalize addition without considering the factual aspects and primary evidences. The A.O has failed to make further enquiries on the information filed and the assessee has discharged the initial burden placed by submitting the information and details. We find the CIT(A) has dealt on the facts, provisions of law, notes and judicial decisions. Decided against revenue.
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Customs
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2023 (6) TMI 476
Disposal of Sale / Auction proceeds - Settlement of various claims whereas the demand under the customs act is in Dispute and pending - Failure to re-export the vessel OSV BEAS DOLPHIN - breach of terms and conditions of the re-export bond executed - HELD THAT:- It would be appropriate that the Revenue moves an application in the pending admiralty proceedings so that it can recover the duty demand against the petitioner. It also needs to be observed that the amounts lying deposited and available in the admiralty proceedings from sale of the said vessel, is certainly a situation of sufficient security being available to the revenue so as to recover the duty demand - It may also be observed that as fairly submitted by Mr. Pratap (petitioner), there would not be any opposition to such claim of the revenue from the petitioner. Mr. Pratap also submits that the owners of the vessel may also not contest the proceedings as the sale itself was not contested by the owners of the vessel. The total claim of the crew is stated to be Rs. 1.35 crores. The duty dues as demanded by the respondents from the petitioner subject matter of this proceedings is an amount of Rs. 4,49,35,190/-, whereas the amount realized from the sale of the vessel is about Rs. 8.75 crores - there is also a claim of the Port Trust in the tune of Rs. 1.85 crores. It is stated that even considering such claims sufficient amount is available which would secure the interest of the revenue, subject matter of the present proceedings. Thus, prima facie it appears that there is sufficient amount available to satisfy not only the dues of the crew, Port Trust, but also the duty demand in question. This petition disposed off with liberty to the petitioner to revive the present proceedings or to file a fresh petition as may be appropriate, in the event needs so arises.
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2023 (6) TMI 475
Restriction on the import of dogs into the Country for commercial breeding or other commercial activities - Validity of Notification No.3/2015- 2020 dated 25.04.2016 - seeking direction to Secretary, Department of Commerce and Industry and Director General of Foreign Trade (DGFT) not to prevent dog lovers from lawfully importing dogs into India for dog shows, as pets and for breeding - HELD THAT:- The Central Government has been statutorily endowed with the power of delegation of its authority under the Act, barring power under sections 3, 5, 15, 16 and 19, to the DG, or any other officer as may be specified in the order of delegation. While Section 3 of the Act deals with the powers of the Central Government to make provision relating to import and export, Section 5 states that it is the Central Government that, from time to time, will formulate foreign policy. Thus, the Foreign Trade Policy as well as Orders/Notifications dealing with matters of import and export will have to be traceable to the Central Government only. However, it is the DGFT that would implement such decision by Notification and publication in the Gazette. This act of the DGFT is to authenticate the decision of the Central Government. In the present case, the decision to issue the impugned Notification has emanated from the Central Government and thus, in my considered view there is no infirmity in R1 having issued the impugned Notification. This issue is also decided adverse to the petitioners. Any State policy has to be based on scientific and empirical data to authenticate and justify it. The absolute ban now imposed is on the basis that import of dogs for commercial breeding will bring foreign diseases to India as well as contaminate native gene pool. As far as import of alien diseases is concerned, there are effective measures for quarantine and testing of the animals prior to permitting entry into India. Thus, this can be no reason to justify the ban. The impugned Notifications have no legs to stand. The cases relied upon by the respondents would come to their assistance if only there had been some/any material produced by them to establish the proper and scientific study made prior to issuance of the Notification. However, the background material referred to in Office Memorandum dated 15.03.2016, being the alleged deliberations of the Ministry of Environment, Forest Climate Change, Animal Welfare Board of India and Ministry of Women Child Development, on the basis of which the impugned ban has been imposed, are stated to have been destroyed. A direction to R3, being the Secretary to Government, Animal Husbandry, Dairying, Fisheries and Fishermen Welfare Department to formulate a breeding policy and rules for regulation of breeding in the State of Tamil Nadu for which eight (8) weeks is granted - List on 05.08.2023 to report compliance.
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2023 (6) TMI 474
Valuation of imported goods - edible oil - inclusion of value of barge charges incurred by them between the anchorage port and the port of unloading - HELD THAT:- A harmonious reading of the amendment carried out to Rule 10 would clarify that during the period under dispute i.e. August 1996 to March 2001, the Department had no provision to get the barge charges included in the total value for payment of Customs Duty - Accordingly, the Appeal is allowed along with consequential relief, if any. The Larger Bench of this Tribunal in the case of COMMISSIONER OF CUSTOMS VERSUS M/S GRASIM INDUSTRIES LTD [ 2013 (10) TMI 246 - CESTAT AHMEDABAD ] has gone into the aspect as to whether the amendment carried out has retrospective effect or not and has held that Personal penalty imposed on the Senior Executive - HELD THAT:- Since the basic issue is held in favour of the Appellant and their Appeals have been allowed, the Appeal filed by the third Appellant is allowed by setting aside the personal penalty imposed to him.
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2023 (6) TMI 473
Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - collusion of Customs Brokers with risky exporters in the execution of frauds - handling consignments for multiple untraceable exporters - Regulation 10 (n) of the Customs Broker Licensing Regulations, 2018 - HELD THAT:- In Perfect Cargo Logistics [ 2022 (4) TMI 1005 - CESTAT NEW DELHI ], the Tribunal observed This conclusion that the exporters did not exist is based on a communication said to have been received from DGARM, which both the inquiry officer and the Commissioner took as conclusive proof not only of the fact that the exporters did not exist but also, by implication, conclusive proof that the appellant had not conducted the verification as required under Regulation 10(n). The facts of the present case are similar, except that the copy of the communication sent by DGARM was made available to the appellant. Other documents were not made available to the appellant. The appellant has contended that all the documents, as required by the Circular, were supplied by the appellant but a perverse finding has been recorded by the Commissioner that the provisions of Regulation 10 (n) of the 2018 Regulations has not been complied with merely because of the facts stated in the communication dated 17.08.2020 sent by DGARM. Appeal allowed.
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2023 (6) TMI 472
Revocation of Customs Broker License - forfeiture of security deposit - penalty - risky exporters involved in IGST refund frauds - reliane placed on reports of the jurisdictional officer - violation of regulation 10 (n) of the Customs Broker Licensing Regulation 2018 - HELD THAT:- The entire allegation against the appellant is based on the two reports of the jurisdictional officer that the exporters were found to be non-existing at the registered premises and that the Input Tax Credit, ITC was not admissible to the exporters. The aforesaid two reports accept that the two exporters had obtained GST registration in July 2017 and had been filing the returns. It also mentions that they have fraudulently obtained ITC. For fault of the exporters, the appellant cannot be blamed unless there is evidence to establish that the appellant had colluded with the exporters but evidence has not been placed. These two issues were examined at length by a Division Bench of the Tribunal in COMMISSIONER OF CUSTOMS, NEW DELHI (AIRPORT AND GENERAL) COMMISSIONERATE VERSUS M/S CRM LOGISTICS PRIVATE LIMITED (VICE-VERSA) [ 2021 (12) TMI 253 - CESTAT NEW DELHI ] where it was held that The Customs Broker cannot be faulted for trusting the certificates issued by a government officer. It is a different matter if documents were not authentic and were either forged by the Customs Broker or the Customs Broker had reason to believe that the documents submitted to him were forged. After referring to the various documents submitted by the appellant, the Tribunal held that it is not the responsibility of the customs broker to physically go and verify the existence of each exporter at every location, let alone keep track as to whether the exporters shifted their place of business. The Tribunal held that even if the exporter changed his address, action cannot be taken against the customs broker - The show cause notice has relied upon the two relied upon documents and the report of the officer is that the exporters had taken ineligible ITC, which even if correct cannot be a factor for revoking the customs broker license of the appellant. The customs broker is also not required to physically verify the addresses of the exporters. Appeal allowed.
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PMLA
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2023 (6) TMI 471
Seeking for a direction to the respondents/authorities to permit him to travel to Seychelles on condition to return to Indiaserious economic offences involving huge public money - violation of fundamental right to travel - HELD THAT:- This court finds that this is virtually, a second round of litigation. On the earlier occasion, the petitioner had challenged the same LOC, which was in his way to proceed abroad, which was curtailed and failed in his attempt before this court as well as the Apex Court, he has come up before this court with a slightly modified relief of seeking permission to travel abroad on the assurance that he would come back to India to cooperate with the investigation agencies. Practically, the same LOC is preventing him to perform his travel even as of now and the relief sought for in this petition is nothing but the same old wine in a new bottle, of course with a different label. The idea of issuing LOC is only to ensure that big offenders do not go scot free by flying away to other countries and protract or dilute the smooth investigation of criminal cases/serious economic offences involving public money pending against them by taking shelter under the cumbersome process to bring them back into the circle of investigation. Indisputably, the petitioner is facing charges of serious economic offences involving huge public money and money laundering, warranting investigation by various investigation agencies. In some of the cases pending against the petitioner, trial has commenced, it appears and many cases are under investigation. Further, the petitioner is a foreign national. Though he claims to have strong roots in Chennai/India, he has not come out with any permanent local address also to strengthen his claim. It is the case of the respondents that the further investigation is on a crucial stage requiring the presence of the petitioner in the absence of which, the investigation process may get prolonged and diluted and therefore, under the guise of personal liberty to travel, he cannot be permitted de hors the existence of the LOC, especially, when there is no extradition treaty between India and Seychelles. Whether declaring the LOC as ultra vires or directing the respondents to permit the petitioner to perform a short journey despite pendency of the LOC, whatever may be the relief sought for, the object of the petitioner, particularly, a foreign national, who is facing serious economic offences, a modern threat to the development of the country, is to be away from India. Considering the gravity of the offence and involvement of huge public money, this court is not inclined to entertain the camouflaging relief sought for by the petitioner - Petition dismissed.
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Service Tax
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2023 (6) TMI 470
Invocation of Extended period of Limitation - quantum of duty confirmed - penalty imposed - Business Auxiliary Service - non-payment of service tax - HELD THAT:- The appellants have deposited the applicable service tax and in case of Lakshay International, 25% of the penalty was also deposited - the authorities below have accepted the contention of the appellants regarding the non-applicability of service tax to the appellants before 18.04.2006. While the appellant s claim that the extended period is not invokable as the issue involves interpretation of law, the claim of the Revenue is that the appellants having not registered themselves; having not paid applicable service tax have suppressed material facts before the Department. The appellants are not contesting the applicability of service tax to them. However, they dispute the invocation of extended period; quantum of duty confirmed and penalty imposed. Under these circumstances and in view of the facts of the case, it is found that the extended period is rightly invoked relying on M/S VIDARBHA CRICKET ASSOCIATION VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2014 (1) TMI 204 - CESTAT MUMBAI (LB)] and SHREE GURUKRUPA CONSTRUCTION COMPANY VERSUS COMMISSIONER OF CENTRAL EXCISE ST, RAJKOT [ 2019 (8) TMI 323 - CESTAT AHMEDABAD] - Coming to the quantification of the duty, it is found that the appellants have produced Chartered Accountant certificates regarding the commissions paid to overseas agents for the period before and after 18.04.2006 - the lower authorities have simply relied on the figures proposed in the show cause notice and have not discussed at all the Chartered Accountant certificates. They have not also contradicted the said certificates. The certificates given by Experts in the respective fields cannot be ignored without cogent reasons. Therefore, the duty has been correctly paid by the appellants. The appellants have taken the plea that in the case of G.D. Tools and Forgings, applicable service tax has been paid along with interest before the issuance of show cause notice; in case of Lakshay International, service tax along with interest and in addition25% of the penalty has been paid. Therefore, the appellants have made out a case under the provisions of Section 73and Section 80 of the Finance Act, 1994. Accordingly, there are no penalties can be sustained on the appellants. Coming to the plea of the appellants that they would be eligible for CENVAT credit of the service tax paid by them, we find that as submitted by the learned Authorized Representative, the issue is not before us in the present proceedings. Therefore, we refrain from offering any findings on the same. Duty demand is restricted to the amount already deposited by the appellants along with interest - All penalties are, however, set aside - appeal allowed in part.
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2023 (6) TMI 469
Refund of service tax - providing services which were no more taxable as per exemption Notification No.25/2012-ST dated 20.06.2012 - rejection on the ground that refund was hit by doctrine of unjust enrichment - HELD THAT:- ST-3 return was filed by the appellant on 30.04.2013. At column A 11.2, appellant claimed the said exemption through the said return. Appellant has also claimed exemption from service tax for an amount of Rs.43,26,000/-, in column B1.9 and in Part-C, appellant has claimed Rs.5,34,693/- to have been paid in advance under subrule (1A) of the said Rule 6. Therefore it is required to be examined whether there is any material on record to establish that Revenue had raised any objection to the said claim made by the appellant through the said ST-3 return. There are no counter from Revenue either through filing cross objections or through filing synopsis by the Authorised Representative or any submissions of the Authorised Representative stating that the said ST-3 return was not accepted by Revenue. The said amount of Rs.5,34,693/- was paid as advance under sub-rule (1A) of Rule 6 of Service Tax Rules and therefore by applying the precedent decision of this Tribunal in the case of Accounts Hub Pvt. Ltd. [ 2023 (3) TMI 1369 - CESTAT MUMBAI] it is held that the appellant was eligible for the said refund. Since the amount sought for refund was advance paid as per the said sub-rule, the question of unjust enrichment does not arise - Appeal allowed.
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2023 (6) TMI 468
Levy of Service tax - Reverse charge mechanism - services received by three foreign companies which are being merged with the appellant company - HELD THAT:- Section 66A was inserted through an amendment to the Service Tax legislation i.e., Finance Act, 1994 brought through the Finance Act, 2006 w.e.f. 18.04.2006. However, consequent to the introduction of Negative List in service tax legislation, the said legal provision under section 66A was withdrawn through amendment in Finance Act, 2012 brought w.e.f. 01.07.2012. Thus during the disputed period the said legal provision of section 66A was having force of law. On harmonious reading of the sub-section (1) and sub-section (2) of section 66A, it is found that the legal provision has been carved out to enable for application of the Chapter V Service Tax provisions for the purpose of charging service tax on taxable services received from outside India in certain circumstances described therein with few exceptions as provided therein under the first proviso to subsection (1) and under sub-section (2) to Section 66A. Accordingly, it is found that when a taxable service is provided by a service provider having a fixed establishment or permanent address or usual place of residence in a foreign country and such service is being received by a person having place of his business or fixed establishment or permanent address or usual place of residence, in India, then by treating that the service recipient had himself providing such service, the applicable service tax is payable - in sub-section (2) to Section 66A another exception has been made for the situation that where a service recipient is having a permanent establishment in India and is also carrying on business in a foreign country through another permanent establishment in that country, then these two business entities shall be treated as separate persons for the purpose of Section 66A. Accordingly any foreign branch or foreign agency or overseas permanent establishment of the service recipient in India is also excluded from the charge of service tax under the provisions of Section 66A. Applying these legal provisions to the present case, it is evident that the three foreign companies/overseas business entities having their establishments out of India viz., Star Asia Region FZ LLC, incorporated in Dubai; Star Asian Movies Limited and Star Television Entertainment Ltd., incorporated in British Virgin Islands, even after their merger with the appellant company in India till their closure of their business abroad, could be treated as a branch or agency of the appellant and for service tax purposes they are separate persons from the appellant. Thus it is found that the payments effected for the services received from another service provider abroad by the three foreign companies/overseas business entities which are proposed to merged with the appellant, is not amenable to charging service tax under section 66A of the Finance Act, 1994. Accordingly, the order of the Commissioner of CGST Central Excise, Mumbai Central, Mumbai confirming the adjudged demands is not legally sustainable. In view of the detailed findings rendered in the order of the Coordinate Bench in STAR INDIA PVT LIMITED VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI II [ 2022 (9) TMI 167 - CESTAT MUMBAI ], it is found that the impugned order of the Commissioner holding that the services have been received by the appellant in as much as the three foreign companies have merged into the appellant with effect from 01.04.2009, and that the services being listed in Rule 3(iii) of Taxation of Services (Provided from Outside India and Received in India) Rules, 2006, thus such services are taxable when received by a recipient located in India for use in business or commerce, is not legally sustainable. The impugned order of Commissioner of CGST Central Excise, Mumbai Central, Mumbai confirming the adjudged demands are liable to be set aside as being not sustainable in law and therefore the appeals filed by the appellants deserve to be allowed. The impugned order passed by the Commissioner of CGST Central Excise, Mumbai Central, Mumbai Zone is set aside - appeal allowed.
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2023 (6) TMI 467
Refund of Service Tax paid, erroneously under mistake of law - main thrust of the adjudicating authority while rejecting the refund claim was that the agreement between the parties was for export of goods and not for export of service, and therefore they are not eligible/entitled for refund of Service Tax paid by them - no evidence of export of service - HELD THAT:- Learned Commissioner failed to touch this issue and did not give any finding whether the agreement was for export of goods or for services which according to me goes to the root of the issue involved herein. Therefore, without going into other submissions, the matter remanded back to the learned Commissioner (Appeals) for deciding the appeal afresh after giving proper reasoning for upholding/rejecting the finding of the adjudicating authority. The appeal is allowed by way of remand to Commissioner (Appeals) for deciding the same afresh within a period of three months from the date of receipt of copy of this order after giving sufficient opportunity of hearing to both the sides.
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2023 (6) TMI 466
Levy of Service tax - Classification of services - Business Exhibition Service or not - providing services to Govt of Andhra Pradesh under a program called Integrated Mobile Publicity in Assembly Constituencies (IMPACT) - time limitation - HELD THAT:- After going through the facts of the case, it emerges that in July 2009 CAG Audit has taken a view that service would fall under the category of Public Relation Services . Keeping faith on this interpretation of the CAG, the Service Tax Department has raised the demand for more than Rs 4 crores wide their letter dated 15.07.2009. They have also raised the issue vide letter dated 01.07.2009 based on the CAG Audit and called for all the documents to be submitted. Appellants have replied on 02.07.2009 making their stand clear. The Show- Cause Notice fails to clarify as to what took them more than 1.5 years to issue the Show-Cause notice on 04.03.2011. In the Show-Cause Notice there is absolutely no mention of any earlier demand raised by the Department on 15.07.2009. The Show-Cause notice also does not specify as to what made the Department change its mind from classifying the service as Advertisement Services when CAG Audit has pointed out that the service would fall under the category of Public Relations Management Services . On an identical issue in the case of another party CST, DELHI VERSUS M/S WALIA CO. [ 2017 (3) TMI 936 - CESTAT NEW DELHI] who was also awarded the contract by Govt of A.P. in respect of the same program, the Department has proceeded against them at Delhi on the ground that they were rendering the service of Public Relations Management service which in fact has been confirmed by the Delhi Tribunal. Time Limitation - HELD THAT:- From the factual matrix cited, it is clear that the matter of classification of the service is purely a matter of interpretation. In such a case demand for extended period does not sustain. The confirmed demand for the extended period is liable to be set aside. The appeal is allowed to this extent.
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2023 (6) TMI 465
Refund of Service tax paid by mistake - GTA service - period involved in the present appeal overlaps with the period for which the demand has been confirmed - HELD THAT:- It is seen that there was an earlier demand for various services including GTA service for the period 1.10.2009 to 30.9.2010. The amount involved for this period from January 2010 to December 2010 is Rs. 54,736/-. The learned counsel has not been able to demarcate the amount for which the earlier order does not apply - There are no merit in the appeal filed by the appellant. After taking note of the submissions made by both sides and noting that the period involved in the present appeal overlaps with the period for which the demand has been confirmed, it is held that the appellant is not eligible for refund. The impugned order is sustained. The appeal is dismissed.
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2023 (6) TMI 464
Wrongful collection of service tax from clients - Case of Revenue is that Appellant even after claiming that they were exempted from the payment of Service Tax, they were actually collecting amounts from their clients - Extended Period of Limitation - HELD THAT:- From the findings of the Adjudicating Authority, it is seen that the Appellant has not brought in proper documentary evidence towards their claim that the quantified amount of Rs. 1,32,17,617/- is not correct. Further, when the Appellant claims that they have paid Rs. 27,91,144/- on 15.10.2008, there is no finding in the Order-in-Original as to why this amount has not been considered while passing the Order. It is deemed fit to remand the matter to the Adjudicating Authority. The Appellant is required to submit the complete details of invoice-wise statement for the period under dispute along with copies of the invoices to substantiate their claims towards requantification. The amounts paid by them under various challans should be submitted to the Adjudicating Authority. These figures should certified by Chartered Accountant clearly indicating the total turnover as per Profit Loss Account and turnover shown in ST-3 returns, amount collected by them on account of Service Tax etc. Even the matter of GAR Challan dated 15.10.2008 for Rs. 27,11,144/- claimed by the Appellant which was not being considered as paid, to be verified and allowed if found to be correct. The Adjudicating Authority will follow the principles of natural justice and allow all these documents to be placed before him and he will pass a considered decision after getting these facts verified. Since the matter pertains to the year 2004-05 to 2008-09 Adjudicating Authority is directed to complete the proceedings within 4 months of date of receipt of this communication. Appeal allowed by way of remand.
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2023 (6) TMI 463
Levy of Service Tax - Business Auxiliary Services - vague SCN - it is alleged that SCN has failed to correctly specify the clause under which the Appellant services will fall - HELD THAT:- On perusal of the Show Cause Notice it is seen that the entire portion of Section 65(19) pertaining to Business Auxiliary Services has been extracted at Para 2 of the Show Cause Notice without any reference whatsoever as to under which clause of the Section 65(19) the services referred by the Appellant would fall. On this issue it is seen that Tribunals have been consistently holding that it is essential for the Show Cause Notice issuing authority to clearly indicate the sub-clause under which the service tax in question would fall. The Tribunals have been consistently holding that the Show Cause Notice should clearly indicate the sub-clause of Section 65(19) under which the alleged services rendered. If the demand is made merely stating that the services rendered falls under Business Auxiliary Services without mentioning the specific clause, the demands cannot be legally sustained - reliance can be placed in COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE, GOA VERSUS SHRI. SWAPNIL ASNODKAR [ 2018 (1) TMI 266 - CESTAT MUMBAI] and UNITED TELECOMS LTD. VERSUS COMMISSIONER OF SERVICE TAX, HYDERABAD [ 2010 (10) TMI 730 - CESTAT, BANGALORE] . Extended period of Limitation - HELD THAT:- It would also be relevant to note the decision of Hon ble Supreme Court in the case of COLLECTOR OF CENTRAL EXCISE VERSUS H.M.M. LIMITED [ 1995 (1) TMI 70 - SUPREME COURT] . In this case, the demand was made by invoking the proviso to Section 11A(1) of Central Excise Act 1944 by demanding the Excise Duty for the extended period - From the above judgment, it gets clarified that even when extended period is invoked in terms of Section 11A(1), the Department should clearly specify as to under which of the sub-clause the Show Cause Notice is being issued. The ratio of this case law to clarify that whenever any allegation is made, the same is required to be made with specific sub-clause of main clause. Without going into further merits of the arguments on various counts, on the sole ground that the Department has failed to issue the Show Cause Notice with specific allegation specifying the sub-clause of Section 65(19), respectfully following the above cited case law, it is held that the present Appeal towards the confirmed demand of Rs.1,06,74,048/- is required to be allowed. Accordingly, the Appeal is allowed to this extent. Reverse charge mechanism - import of services - HELD THAT:- In the case of INDIAN NATIONAL SHIPOWNERS ASSOCIATION VERSUS UNION OF INDIA [ 2008 (12) TMI 41 - BOMBAY HIGH COURT] , the Hon ble High Court has held it is only after enactment of Section 66A that taxable services received from abroad by a person belonging to India are taxed in the hands of the Indian residents. In such cases, the Indian recipient of the taxable services is deemed to be a service provider. Before enactment of Section 66A, there was no such provision in the Act and therefore, the Respondents had no authority to levy service tax on the members of the Petitioners-association - thus, the confirmed demand of Rs.11,13,764/- pertaining to the demand till 17.04.2006 is set aside and Appeal is allowed to this extent. As the Appellant has already paid the balance of Rs. 1,26,539/- along with interest of Rs. 15,368/- for the subsequent period and issue was under litigation for quite sometime, the penalty imposed is also set aside. Financial settlement services - HELD THAT:- It is seen that the Appellant has paid the same along with interest of Rs. 4,35,830/- in the course of adjudication process. Therefore, taking a lenient view, the penalty of Rs. 9,05,651/- stands reduced to Rs.2,26,425/-. Appeal disposed off.
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2023 (6) TMI 462
Refund of Service Tax - Works Contract activities or commercial construction activities - deduction under various bills and remitted the same to the Service Tax Department - rejection on the ground that refund claim was filed beyond a period of one year - Department has also taken the ground of unjust enrichment at the OIO stage without issuing SCN - HELD THAT:- The Appellant has been made to pay the Service Tax by their client. It is also on record that on similar projects pertaining to 17 other projects executed by them for Government of Andhra Pradesh no Service Tax was paid by them. It is also not in dispute that the Department has not initiated any action to recover any Service Tax in respect of other 17 projects undertaken by the Appellant. Therefore, admittedly, the Department also agrees that these projects are fully exempt from payment of Service Tax. Now coming to the refund claims filed by the Appellant, it is clear that even though no Service Tax was payable the same was paid only on account of the withholding of the same by the client. Therefore, the amount paid by them by way of GAR-7 Challans cannot be considered as Service Tax paid by them. Therefore, when the amount has been paid by mistake (in this case only on the insistence of the client) the same cannot be treated as Service Tax paid. In such cases, Section 11B of Central Excise Act, 1944 will not be applicable as held in the case of COMMISSIONER OF CENTRAL EXCISE (APPEALS), BANGALORE VERSUS KVR CONSTRUCTION [ 2012 (7) TMI 22 - KARNATAKA HIGH COURT] . It is on record that the amounts were deducted from their bills and the client had forced the Appellant to make the remittance to the Government. In such a case, when it is clear that no amount was recovered from the client and this amount has been remitted by way of GAR-7 Challans, there is no possibility of any unjust enrichment accruing to the Appellant, if refund claim is sanctioned. Non-service of SCN - HELD THAT:- It has been held by Hon ble High Court and Hon ble Supreme Court in catena of decisions that by not issuing the SCN the entire proceedings are rendered vitiated. In this case, the Appellant was not put to notice as to on what count the refund claim was sought to be rejected. In such case, the Appellant had attended the Personal Hearing without even being aware as to on what ground he is being granted Personal Hearing. The Learned AR s submission that opportunity given for Personal Hearing is only a lame excuse for the error of non issuance of Show Cause Notice. The Adjudicating Authority has failed to follow the principles of natural justice and even the Commissioner (Appeals) has remained silent on this issue. The impugned Order is liable to be set aside even on this count. Appeal allowed.
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2023 (6) TMI 461
Levy of Service Tax - administrative charges - According to the appellant it is not required to pay any service tax under the category of real estate agent service, while according to the Department the appellant rendered real estate agent service - HELD THAT:- In the present case, the appellant has merely charged administrative charges/ transfer charges for incorporating in its record the name of the new buyer consequent upon any sale of the property by the earlier buyer. The appellant is not involved in any sale or purchase of real estate per se nor is the appellant involved in introducing the prospective buyer to any seller. The sale-purchase transaction takes place between two independent parties without the involvement of the appellant. In this connection it would be useful to refer to the decision of the Tribunal in M/S BESTECH INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE NEW DELHI. [ 2019 (3) TMI 867 - CESTAT NEW DELHI] wherein the appellant, a real estate developer, had received administrative charges for change in name of the ownership in its records. After referring to the definition of real estate agent , real estate consultant and taxability of any service provided by a real estate agent in relation to a real estate, the Tribunal referred to the earlier decision of the Tribunal in CST, NEW DELHI VERSUS M/S ANSAL PROPERTIES AND INFRASTRUCTURES LTD. [ 2017 (9) TMI 1071 - CESTAT NEW DELHI] wherein the decision of the Tribunal rendered in the appellant s own case M/S. AJAY ENTERPRISES PVT. LTD. VERSUS C.S.T., DELHI [ 2016 (1) TMI 848 - CESTAT NEW DELHI] was distinguished and reliance was placed on the decision of the Tribunal in Ansal Properties and Infrastructure. Since the decision rendered in the own case of the appellant has been considered and distinguished by subsequent Benches of the Tribunal and it has been held that real estate agent service is not provided in such circumstances it has to be held that the appellant has not rendered real estate agent service. It is, therefore, not possible to sustain the order passed by the Commissioner. The order passed by the Commissioner is, accordingly, set aside and the appeal is allowed.
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2023 (6) TMI 460
Levy of Service Tax - club and association services - activity undertaken by the appellant in collecting membership fee from its members - whether service tax can be levied on activities undertaken by a club for its members for membership fee? - period involved in the present appeal is post negative list i.e. post 01.07.2012. HELD THAT:- With effect from July 1, 2012, service has been defined under section 65B (44) of the Finance Act and service tax is leviable on all services as defined except the negative list of services set out in section 66D of the Finance Act - This amendment was explained by the Supreme Court in Union of India and others Vs. Margadarshi Chit Funds Pvt. Ltd. and others [ 2017 (7) TMI 224 - SUPREME COURT ] holding that each individual service on which tax was levied (known as taxable service) was defined. Secondly, the definition of service given now contains a negative list which is contained in Section 66-D of the Act. In other words, it specifically excludes certain transactions from the ambit of service. Thus, those transactions which are specifically excluded are not liable for service tax. Any other kind of service which qualifies the definition of service contained in the Act would be exigible to service tax. The Supreme Court in Calcutta Club Ltd. [ 2019 (10) TMI 160 - SUPREME COURT ] examined the definition of club or association as contained in section 65(25a) of the Finance Act from June 16, 2005 up to July 1, 2012 holding that incorporated clubs or associations or prior to 1st July, 2012 were not included in the service tax net. It would be seen from the judgment of the Supreme Court that club or association was earlier defined under section 65(25a) and 65(25aa) to mean any person or body or persons providing service. The expression body of persons cannot be possibly include persons who are incorporated entities, as such entities have been expressly excluded under sections 65(25a)(i) and 65(25aa)(i) as any body established or constituted by or under any law for the time being in force . Body of persons , therefore, would not include a body constituted under any law for the time being in force. Thus, companies and cooperative societies, prior to July 1, 2012, which were registered under respective Acts, would be constituted under those Acts. Incorporated clubs or associations, therefore, prior to July 1, 2012 which were registered under Acts, would be constituted under those Acts. Incorporated clubs or associations, therefore, prior to July 1, 2012 were not included in the service tax net. After July 1, 2012, also the situation does not change for the reason that Explanation 3 uses the same expression. The confirmation of demand by the Commissioner by order dated 09.01.2017 deserves to be set aside and is set aside - Appeal allowed.
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Central Excise
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2023 (6) TMI 459
CENVAT Credit - inputs and input services used in manufacture of both taxable as well as exempted goods - reversal of proportionate Cenvat credit or pay an amount equal to 6% of the value of the exempted goods - bagasse - agricultural waste or not - HELD THAT:- The issue / question as to whether bagasse is an agricultural waste or a manufactured product so as to attract Rule 6 came up for consideration before the Apex Court in DSCL Sugar s [ 2015 (10) TMI 566 - SUPREME COURT ], wherein it was held that CENVAT credit in respect of electricity was denied only on the premise that Bagasse attracts excise duty and consequently Rule 6 of the CENVAT Credit Rule is applicable. Since this action of the appellant is found to be erroneous, all these appeals of the Revenue also stand dismissed. As can be seen from the aforesaid judgment, the Apex Court clearly held that bagasse was agricultural waste and was not a manufactured product and consequently, the provisions of Rule 6 were not applicable to bagasse; the Apex Court further held that Rule 6 was also not applicable to Electricity generated from bagasse. Under these circumstances, the Demands made by the respondents on the petitioner in relation to the periods up to February, 2015 were dropped on the basis of the said judgment of the Apex Court in DSCL Sugar s case. By Notification bearing No.6 / 2015 CE(NT), various provisions of the said Rules were amended including Rule 6 supra w.e.f. 01.03.2015 - As can be seen from the amendment, Explanation (1) was inserted, which provided that non-excisable goods cleared for consideration shall also be considered to be exempted goods or final products/finished goods for the purpose of explanation of the said Rule 6 referred to supra. In pursuance of the same, the Central Board of Excise and Customs issued Circular No.1027/15/2016-CX dated 25.04.2016 clarifying that consequent to the amendment the aforesaid Rule 6 w.e.f. 01.03.2015, bagasse would be considered as exempted goods. As can be seen from the aforesaid Circular, the respondents have referred to the judgment of the Apex Court in DSCL Sugar s case, as well as the 2015 amendment to Rule 6 of the said Rules of 2004 for the purpose of directing the bagasse, which are non-excisable goods and are cleared for consideration from the factory need to be treated like exempted goods for the purpose of reversal of credit of input and input services in terms of Rule 6 of the said Rules of 2004; in other words, by virtue of the said Circular, the respondents sought to overcome the judgment of the Apex Court in DSCL Sugar s case supra and invoke the 2015 amendment to Rule 6 for the purpose of making the said Rule 6 applicable to bagasse. The Allahabad High Court in Balarampur Chini Mill s case [ 2019 (5) TMI 972 - ALLAHABAD HIGH COURT ] quashed the said Circular as well as the impugned show-cause notice; while doing so, the Allahabad High Court came to the categorical conclusion that despite the 2015 amendment to Rule 6 of the said Rules of 2004, bagasse were not manufactured products, but continued to remain agricultural waste and residue and that the judgment of the Apex Court in DSCL Sugar s case supra, continued to apply and operate and govern bagasse even after the 2015 amendment. The High Court also held that the 2015 amendment was not applicable to bagasse, since it was not a manufactured product/goods and consequently, the said Circular dated 25.04.2016 was illegal and arbitrary and contrary to law and the same was accordingly quashed. Subsequently, the said judgment in Balarampur Chini Mill s case supra was followed by the Division Bench of the Punjab and Haryana High Court in the case of Indian Sucrose Limited Vs. Union of India and Others [ 2020 (3) TMI 1413 - PUNJAB AND HARYANA HIGH COURT ], wherein the quashment of the aforesaid Circular dated 25.04.2016 was noticed and the show-cause notice issued by the respondents-Revenue was set aside. The material on record also discloses that the show cause notice dated 21.10.2016 for the period October-2015 to March-2016 issued by the respondents to the petitioner was dropped and the appeal by the respondents was dismissed by the Appellate Authority on 09.08.2021. Thus, bagasse is not a manufactured product and Rule 6 of the Cenvat Credit Rules, even after 2015 amendment is not applicable to bagasse nor to electricity generated from bagasse coupled with the fact that the Circular dated 25.04.2016 issued by the respondents pursuant to the 2015 amendment to Rule 6 having not only been quashed, but the same having been rescinded by the respondents by issuance of the Circular dated 07.07.2022 and consequently, the respondents did not have jurisdiction or authority of law to issue the impugned show cause notice and Statement of Demand, which deserve to be quashed. Petition allowed.
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2023 (6) TMI 458
100% EOU - Recovery of Customs Duty - imported inputs cleared - indigenous goods cleared to DTA - clearance of raw materials/ inputs to DTA units after obtaining permission from their jurisdictional Central Excise officials - demand on the ground that when such duty free inputs are cleared from EOU to DTA, the Duty is required to be discharged by way of cash payment, by way of debit in the PLA Account whereas the Appellants have utilized the Cenvat credit which is not legal and proper - benefit of N/N. 52/2003-CUS dt. 31.03.2003 and N/N. 22/2003-CE dt. 31.03.2003 - time limitation - interest and penalties. HELD THAT:- As per the decisions in COMMR. OF C. EX. CUS., VISAKHAPATNAM VERSUS MATRIX LABORATORIES LTD. [ 2012 (11) TMI 726 - CESTAT, BANGALORE] and CC CE, HYDERABAD-IV VERSUS M/S. HETERO LABS LTD. [ 2017 (5) TMI 1338 - CESTAT HYDERABAD] , it has been held that the EOU Assessee is eligible to utilize Cenvat credit when they clear inputs/ raw materials to DTA unit. However, from the decision of the Hyderabad Tribunal in the case of M/S DIVIS LABORATORIS LTD HYDERABAD VERSUS COMMISSIONER OF CENTRAL EXCISE, AND CUSTOMS VISAKHAPATNAM [ 2019 (2) TMI 80 - CESTAT HYDERABAD] it was held that if the raw materials/ inputs cleared pertain to procuring the inputs by getting the benefit of Notification No. 52/2003-CUS, the EOU is required to pay the duty only by way of cash and Cenvat credit cannot be utilized since the inputs were imported by claiming Customs Duty exemption. In the present case, the Appellant is required to pay the duty only by way of cash debit (PLA debit). They are not eligible to utilize Cenvat credit for such clearances - since the Appellant has procured the goods indigenously, the clearances can be made by debiting Cenvat credit account. Time Limitation - HELD THAT:- The Appellants have kept the Department informed about their clearances by seeking permission for clearance of imported/ indigenous raw materials/ inputs. Further, they have paid the requisite duty by way of Cenvat debit. It is not the case of the Department that the Appellant has evaded the payment of duty by not paying the same either by way of cash payment (PLA debit) or by way of Cenvat debit. In both the cases, the Appellant blocks his money. Therefore, by utilizing Cenvat credit for such payment which is also part of his liquid assets, the Appellant does not stand to gain any monetary benefit - the Appellant could be holding bonafide belief that they are eligible to utilize Cenvat credit for only clearances. Further as there are Tribunal decisions in their favour during the period under dispute, the issue would be that of interpretation only. Taking all these facts into account, it is felt that the Department cannot allege any suppression on part of the Appellant. Therefore, the demand pertaining to the extended period is liable to be set aside in all the Appeals, wherever the demand has been confirmed for the extended period - The Appellant is required to pay the duty involved for the normal period. Interest and penalties - HELD THAT:- Since the duty was already paid by way of Cenvat credit, there being no revenue loss to the Department, interest and penalties are set aside. Since the Appellant is making good the payment by way of cash, the Appellant would be entitled to get the relief for the Cenvat debits already made by them. For this they will be free to approach the appropriate forum for getting the relief. Appeal disposed off.
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2023 (6) TMI 457
CENVAT Credit - Business Support Service - input service distribution - denial of CENVAT Credit availed by them on the ground that ABMCPL are not an Input Service Distributor to distribute the service tax paid on BSS to their group companies - ABMCPL being a distinct person cannot be said to be an office of the Appellant - Time Limitation - HELD THAT:- The Appellant has provided various services to their group companies to enable them to optimize the benefit of specialization and achieve economies of scale. The Appellant claimed that the services provided by ABMCPL to the group companies fall within the definition of Business Support Service defined under Section 65(104c) of the Finance Act, 1994 - From the definition of Business Support Service, it can be seen that providing operational or administrative assistance in any manner or providing infrastructural support service or managing distribution and logistics service, fall within the ambit of Business Support Service . The ABMCPL has been providing these services to their group companies. As per the definition of BSS mentioned above, the services rendered by ABMCPL to their group companies would rightly fall under the category of Business Support Service - It is observed that ABMCPL has been rightly paying Service Tax under BSS for the services rendered by them to their group companies. The department has also not disputed the payment of service tax by ABMCPL under the category of BSS. The Appellant referred the Board Circular No.102/3/2009-S.T. dated 23.02.2009 and TRU s Letter No. 334/4/2006-TRU, dated 28.02.2006 which clarified the scope of BSS. As per the Board Circular, services which are in the nature of assistance or support provided by the principal to the service recipient would fall under BSS. In the present case, the services rendered by ABMCPL being in the nature of support service provided to the Appellant, qualify as BSS as defined under section 65(104c) of the Finance Act, 1994 - Appellant availed BSS provided by the ABMCPL, wherein ABMCPL carried on these functions on behalf of the Appellant, thus enabling the Appellant to benefit from specialization in their manufacturing activity and achieve economies of scale. The nature of the activities so performed and their close nexus with the business of the Appellant is also clearly visible from the mails exchanged by ABMCPL with the group companies. Further, most of the activities done by ABMCPL are covered under the inclusive portion of the definition of input services viz. advertisement and market research, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, security, legal services etc - Hence the Appellant is entitled to avail the CENVAT Credit of service tax paid on BSS since they have a nexus with the overall business activity of manufacturing final goods and are essential for the day-to-day operations of the Appellant - the services rendered by the ABMCPL is rightly classifiable under the category of Business Support Service and ABMCPL has rightly paid Service Tax under the said category. The service tax paid by ABMCPL has been rightly distributed to their group companies, including Appellant. Time Limitation - HELD THAT:- Appellant stated that the period involved in the Notice is from March 2007 to March 2012 whereas the Show cause Notice was issued on 22.02.2012 and 29.06.2012. Thus, part of the demand in the Notices is beyond the normal period of limitation. It is observed that the availment of CENVAT credit by the Appellant based on the invoices issued by ABMCPL is known to the Department. There is no suppression of facts involved in this case. Accordingly, the notices issued beyond the normal period is hit by limitation. The impugned order is liable to be set aside - Appeal allowed.
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2023 (6) TMI 456
Valuation - Nylon Chips, Pet chips - value determined under Section 4(1)(b) of Central Excise Act, 1944 read with Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - appellant discharged excise duty claiming 9.5% discount from per unit cost of production of nylon chips Pet Chips determined in CAS-4 issued by Cost Accountant towards the weight of moisture contained in the nylon chips PET chips so as to arrive at the value of wet nylon chips cleared to its sister units - revenue neutrality - time limitation. HELD THAT:- For the year 2009-10 2010-11, it is found that there is a specific mention of the discount of 9.5% in the CAS-4 certificate itself and net cost of production of wet chips has been arrived at after arriving at the cost of production of the dry chips and discounting the cost by 9.5% to arrive at the cost of dry chips. The appellant has cleared their goods by taking this cost only for determining the assessable value. No evidence has been adduced by the department that the Nylon polyester chips cleared by the appellant to its sister units was not the wet chips. This fact has also been certified by the Chartered Engineer in its report dated 10.05.2012 that the chips arising after the centrifugal stage in which these are cleared by the appellants has a moisture content of 9-13%. The report of the Chartered Engineer has not been contradicted in the impugned order. It is found that the impugned order has mechanically been passed and the demand has been confirmed for these years 2009-10 2010-11 without any discussion in the impugned order to the CAS-4 certificates for these years and only CAS-4 certificates for the years 2007-08 and 2008-09 have been discussed in the impugned order. Therefore, there was absolutely no reason for the adjudicating authority to confirm demand for the year 2009-10 2010-11. For the years 2007-08 2008-09 we find that the CAS-4 certificates originally prepared by the Cost Accountant did not have any mention whether the cost of production arrived at was for the dry chips or the wet chips. However, the appellant in order to justify their contention that the cost of production determined in the CAS-4 certificates for these years was only for the dry chips, produced another certificate from the Cost Accountant for the years 2007-08 2008-09 which categorically mentioned that the cost shown in the earlier CAS-4 certificates was for the dry chips only and the average moisture content in the wet chips was 9.32% and 9.40 percent respectively for the years 2007-08 2008-09. The certificate issued by KAILASH SANKLECHA ASSOCIATES, COST ACCOUTANTS, clearly states that the certificate has been issued by the Cost Accountant after checking cost records, excise records, production records and other related records of the appellant. It is a settled principle of law that the certificates issued by qualified professionals like Cost Accountants, Chartered Accountants, Chartered Engineers should not be brushed aside merely with the statement that corroborative evidence was not produced. They need to be accepted by the department unless investigation is undertaken in doubtful cases and the data is re-verified by appointing its own cost accountant or producing another material on record. The original Cost Accountant CAS-4 certificates determined cost of the dry chips only and the appellant was entitled to discount the moisture percentage to arrive at the net cost of production. However, it is seen that the discount of 9.5% claimed by the appellant was marginally higher than the wet content of 9.32% or 9.40% arrived at by the Cost Accountant for the years 2007-08 2008-09 respectively. Time Limitation - revenue neutrality - HELD THAT:- As the whole issue was revenue neutral as any additional duty payable by the appellant was available for Cenvat credit to its sister unit, no malafide can be attributed for this small difference. As the demand, if any, for this small difference will be for the years 2007-08 2008-09 only and the show cause notice was issued on 17.03.2012, the demand will be time barred. The impugned order set aside on merit as well as on limitation - appeal allowed.
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2023 (6) TMI 455
Reversal of CENVAT Credit - exempted products Siapton 10L - neither separate account were maintained for duty paid inputs and input services used in the manufacture of dutiable and exempted goods nor 10% amount of value of clearance of such goods was paid - Rule 6(3)(b) of Cenvat Credit Rules, 2004 - HELD THAT:- In the present matter Ld. Commissioner allowed the benefit to the appellant only pertaining to the period September 2004 to March 2008 and dropped the demand as per the above retrospective inserted sub-rule (7) of Rule 6 of Cenvat Credit Rules, 2004 but confirmed the demand for the period April 2008 to June 2009 on the ground that this period is not covered under the retrospective amendment. The case of the department is that since the assessee has availed the Cenvat credit in respect of common input service used in the manufacture of dutiable and exempted goods, the appellant is required to pay 10% of the value of the goods cleared without payment of duty (exempted goods). From the facts it is undisputed that the appellant have been reversing Cenvat credit proportionate to the credit on input service used for exempted goods along with interest, therefore, first the credit though availed at the time of receipt of input service but after reversal thereof along with interest the position is as if credit was not availed. Rule 6 of the Cenvat Credit Rules is not enacted to extract illegal amount from the assessee. The main objective of the Rule 6 is to ensure that the assessee should not avail the Cenvat Credit in respect of input or input services which are used in or in relation to the manufacture of the exempted goods or for exempted services. If this is the objective then at the most amount which is to be recovered shall not be in any case more than Cenvat Credit attributed to the input or input services used in the exempted goods - Moreover this issue has been consistently considered in various judgments wherein it was held that if the assessee reverse the Cenvat credit in respect of common input service used in the manufacture of exempted goods the demand equal to 10%/5% will not sustain. Therefore, there are no merits in the impugned order confirming demand for the period April 2008 to June 2009. In the present case since the Ld. Commissioner has demanded 10% of the value of exempted goods, he has not verified the correctness of actual Cenvat credit attributed to exempted goods as reversed by the assessee. Therefore, only for the purpose of verification of such quantification of reversal, the matter is remanded to the adjudicating authority. Appeal allowed by way of remand.
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2023 (6) TMI 454
Benefit of Exemption under N/N. 67/95- CE dated 16.03.1995 - intermediate goods - Oxygen Gas - captive consumption - final product namely Sulphuric Acid is exempted from Central Excise Duty - period December, 2008 to November, 2013 - whether the oxygen captively consumed in the manufacture of dutiable Copper Cathodes as well as exempted Sulphuric Acid can be denied the benefit of exemption Notification No. 67/95- CE dated 16.03.1995? HELD THAT:- The matter is no longer res- integra . The issue has already been settled by the Hon ble Supreme Court in the case of UNION OF INDIA OTHERS VERSUS M/S. HINDUSTAN ZINC LTD. [ 2014 (5) TMI 253 - SUPREME COURT] . The decision of the Hon ble Supreme Court in the case of Hindustan Zinc has also been followed by this Tribunal in the case of STERLITE INDUSTRIES INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, TIRUNELVELI [ 2015 (11) TMI 1247 - CESTAT CHENNAI] where it was held that the requirements of 57CC were fully met in the way in which the Respondent was maintaining records and inventory and the mischief of recovery of 8% under Rule 57 CC on exempted sulphuric acid is not attracted. The impugned Orders-In-Original are without any merit and is set aside - appeal allowed.
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2023 (6) TMI 453
Classification of goods - goods imported by the appellant for manufacturing of re-processed granules - main bone of contention in this case concerns the eligibility of the Re-processed granules, manufactured by the appellants for exemption under Sl. No. 78 of Notification No. 4/2006-C.E., dated 1-3-2006 - To be classified under chapter heading 3915 or fall under Chapter heading 3906 and 3912? - Extended period of limitation. HELD THAT:- The exemption under notification No. 4/2006 (Sl. No. 78) is available to plastic materials manufactured in factory using waste and scrap of goods falling under Ch. 39, 54 etc. as input. Clearly, benefit of exemption under Notification No. 4/2006 (Sl. No. 78) is available where inputs are waste and scrap of goods falling under Ch. 39, 54 etc. The words of goods is of critical importance. It is not merely waster and scrap but waste and scrap of goods . It is obviously applies to used and discarded goods of Ch. 39, 54 etc. assorted and collected as waste and scrap.In the present matter documents i.e. Certificate of foreign supplier, Test Report of imported goods produced by the appellant clearly show that the goods imported by the appellant are material not of prime grade. Further in the present matter there is no dispute on the use of the imported goods as waste scrap by appellant in factory premises. Thus, it is evident beyond the scope of any doubt that the imported plastics granules were nothing but waste and scrap of goods falling under chapter 39 - the imported goods have to be considered as waste scrap of goods falling under chapter 39 and entitled to above exemption. Hence there are no merit in impugned order. Extended period of limitation - suppression of facts - HELD THAT:- The issue involved is clearly an interpretational issue of exemption notification and the interpretation made by the Revenue could have been made from the claim of notification as declared in their ER-1 return. It is also fact on record that the appellant have cleared the goods by filing bills of entry and the fact that the goods imported is not classified under 3915 was well informed to the Department. Therefore, in the peculiar facts as noted above there is no suppression of fact or malafide intention on part of the appellant, therefore, the invocation of extended period is illegal and incorrect. Accordingly, the demand for the longer period is not sustainable on the ground of time bar also. The impugned order is set aside and the appeal allowed with consequential relief, if any, as per law.
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2023 (6) TMI 452
Clandestine Removal - removal of fully manufactured snuff in the guise of clearance of semi-processed snuff to various Job-workers, from their registered factory premises - entire case of the Revenue is totally based on318 chits recovered from the premises of the Appellant on the day of the Visit of the Officers of DGCEI - retraction of statements - HELD THAT:- There is no independent corroboration to the said statement. The appellant have strongly contested that inasmuch as the said statement was retracted, subsequently, the same cannot be made the basis for arriving at a finding against them. Similarly, the entries made in disputed chits, cannot be held to be adverse to the appellant s case in the absence of any evidence to show that the same reflected clandestine activities. Shri Vimalbhai Mawani, the Appellant s Accounts clerk, prepared these disputed Chits and categorically in his statement dated. 14.06.2006 stated that no raw materials were delivered under the above Chits to any Jobworker. On going through the statements of Shri Navinchnadra Dholakia dated. 14.06.2006 wherein he stated that snuff mentioned in the Chits found from their factory premises were cleared without payment of central excise duty. During the search excess qty. of finished goods viz. snuff also seized by the department from the premises of Appellant and their Job Workers.During the investigation Appellant also paid the duty amount of Rs. 40,00,000 towards their liability. As such, it is seen that there is enough evidence on record to sustain the charge of clandestine removal against the appellant. It is on records that when the officers of revenue searched the premises of the Appellant and recovered the said chits under Panchnama, Shri Vimalbhai Mavani, Accounts Clerk of the Appellant, who have prepared these Chits, stated that these were prepared as per the direction of the Shri Navinchandra Dholakia, Partner of the Appellant and that no goods were delivered under these Chits to their factory. if the contention of the Appellant has to be held true then these chits should have been prepared by the Job-workers returning the semi-finished goods back to the Appellant and copy of the same should have been also available with the said Job-workers. Also no Job-worker has in their statement stated that they had delivered goods to the Appellant as mentioned in the chits. Co-relation with payment made to Job-workers has no basis as the Appellant had regular business dealings with the Job-workers and which included payment being made to them. If the transactions were over the board then the Appellant should have cleared goods to the Job-workers under proper Job-work challans and received back the same from the Job-workers under said challans. However no such challans were there to support the contention of the Appellant that the said Chits reflected semi-finished goods received back from the Job Worker. Admittedly, on sending of goods for Job work and receipt of processed goods from Job-workers, the goods are required to be entered in the statutory records i.e Job Work records, Job Work Challans, raw material accounts, finished goods accounts etc. Non-entry of the same in the statutory documents would admittedly lead to appellant s mala fide that same were meant for clandestine clearance. Though it is well settled law and does not require the support of any decision of the judicial or quasi-judicial courts to observe that the activities of clandestine nature are required to be proved by sufficient, tangible and positive evidence. However, the facts present in each and every case are required to be scrutinized and examined independently - in the present case, the department has not simplicitor relied upon the 381 Chits recovered from the factory premises of Appellant. Statements of various persons stand recorded. No doubt the outcome of cross examination has to be given due importance but keeping in view the overall facts and circumstances of the case including the fact of seizure of cash and snuff at the time of visit of officers, and the fact of deposit of duty, has to be taken into consideration which lead only to one and one fact of clandestine removal of the appellant s final product. There are no merits in the appeals of Appellants. Accordingly, all three appeals are rejected.
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2023 (6) TMI 451
Refund of accumulated Cenvat Credit - Denial on the ground that, appellant should have utilized the balance of its cenvat credit towards the payment of excise duty on goods manufactured and cleared for home consumption or for export on payment of duty or payment of service tax on output service - period post 31-3-2012 and for the earlier period also - HELD THAT:- A plain reading of the Rule 5 would indicate that where any input for input service is used in the manufacture of final product which is cleared for export under Bond or letter of undertaking, the Cenvat credit in respect of the same, so used shall be allowed to be utilized by the manufacturer or provider of output service so used and shall be allowed to be utilized by the manufacturer or provider of output service and if for any reason, such adjustment is not possible, the manufacturer or the provider of output service would be entitled to seek refund of such amount subject to such safeguards, conditions and limitations as may be specified by the Central Government by notification. In terms of Rule 5 of CENVAT Credit Rules, 2004 when a manufacturer is exporting the final product continuously without payment of duty, the CENVAT Credit on inputs-input services would be accumulating to his CENVAT Credit records. Such manufacturer would be entitled to utilize the CENVAT Credit either for payment of excise duty on final products cleared for home consumption or for export on payment of duty or for payment of service tax on output service. If these contingencies are not forthcoming for any reason, then manufacturer/output service provider can seek refund as provided under Rule 5 read with relevant or extant notifications so issued. In the present matter it is not in dispute that entire refund claim in question had been filed under Rule 5 of the rules, which is a beneficial provision for manufacturer who cleared final product or intermediate product for export without payment of duty under bond, etc. The refund of Cenvat credit under Rule5 would be applicable where any inputs are used in the final product which are cleared for export under bond or letter of undertaking, Cenvat credit in respect of the inputs so used shall be allowed to be utilized by the manufacturer towards payment of duty of excise on any final products cleared for home consumption or for export of payment of duty, and whether any reason such adjustment is not possible, manufacturer shall be allowed to refund of such amount. Proviso to Rule 5 imposes a restriction that no refund or credit shall be allowed if the manufacturer avails of drawback claim or claims rebate of duty - In the present case, there is no dispute that the appellant had exported the goods without payment of duty, further, there is no dispute that the appellants have not availed the drawback or rebate of duty, hence the refund of credit shall be allowed, as the amount cannot be adjustable against clearance of home consumption or for export on payment of duty. The Tribunal in the case of JENNTEX ENGG. COMPANY VERSUS COMMISSIONER OF C. EX., COIMBATORE [ 2008 (10) TMI 108 - CESTAT, CHENNAI] , observed that the ground on which refund claim was rejected that the assessee could have exported the goods on payment of duty utilizing credit is a wrong ground and a misdirected one. On a plain reading of Rule 5 of the said Rules, it is clear that the assessee is entitled to claim refund on the accumulated credit where for any reason such adjustment is not possible . Further Tribunal in CCE., MADRAS VERSUS INDIAN STEEL ROLLING MILLS LTD. [ 1996 (3) TMI 266 - CEGAT, MADRAS] , wherein denial of refund of credit accumulated due to exports on the ground that the assessee had also clearances for home consumption was over-ruled on the basis that the relevant notification envisaged granting of refund in such cases once in every quarter and that the appellants therein could not utilize the accumulated credit within a period of 3 months. The appellant will be eligible for refund of accumulated credit under Rule5 of CCR and notifications issued there under subject to the various conditions of that Rule and related notifications being satisfied. Further after 01.04.2012 the refund amount are required to be calculated on the basis of formula prescribed in above rule - While upholding the appellant s contention that they are eligible for refund of accumulated credit under Rule5 ibid, the matter is remanded back to the original authority only to the limited purpose of verifying conditions of Rule and Notification issued there under and calculation of refund amount after 01.04.2012 as per the formula of Rule 5 ibid. Appeal allowed by way of remand.
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2023 (6) TMI 450
CENVAT Credit - inputs - chequered plate, angles, channels and beams - civil construction service - preparation of draft project report - modification of old bullock cart - denial on account of nexus. CENVAT Credit on Construction service - HELD THAT:- The same is already reversed by the appellant alongwith interest in the months of March/April, 2018. From the reading of the impugned order it seems that the learned Commissioner has not gone into the details of the project report submitted by the appellant for sugar plant modernization and bagasse based cogeneration project in support of their submission that the Cenvat credit has been availed on the service of preparation of project report for expansion of existing sugar plant with co-generation plant and the same is admissible. There has to have findings regarding accepting or rejecting the submissions of the appellant after taking recourse to the said project report and more particularly its executive summary - this issue needs to be re-looked into by the learned Commissioner and therefore the same is remanded to the first appellate authority. Bullock carts - HELD THAT:- It is submitted that bullock carts have been shown as capital goods in their balance sheet/books of account but the same was not verified by the learned Commissioner. He tried to explain the books of account to me but since the same has to be verified by the authorities below therefore the same is also remanded to the learned Commissioner (A) to be decided afresh. Cenvat credit availed on HR Steel sheet (chequered plate), MS Angle, channel, non alloy steel bar and MS beam - HELD THAT:- If the claim made by the appellant, which, as claimed by them, is supported by the sufficient evidence, then it has to be looked into by the learned Commissioner and cannot be brushed aside merely being an afterthought. Therefore this also has to be looked into by the learned Commissioner. The appeals are remanded to the learned Commissioner ( Appeals ) to be decided afresh within a period of three months, after giving reasonable opportunity of hearing to the appellants and after looking into the evidence/ case laws produced by the appellants in support of their submissions/claims. The appeals are accordingly allowed by way of remand.
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2023 (6) TMI 449
Valuation - amount of subsidy received by the respondent from the State Government under the Madhya Pradesh Industrial Investment Promotion Assistance Scheme, 2004 is includible in the assessable value of the goods cleared during the period in dispute i.e. from 2012-2013 to 2015-2016 or not - section 4(3)(d) of the Central Excise Act, 1944. HELD THAT:- The reference was made by the Division Bench in M/S HARIT POLYTECH PVT. LTD. VERSUS COMMISSIONER, CENTRAL EXCISE CGST- JAIPUR I, GANPATI PLASTFAB LTD., M/S APEX ALUMINIUM EXTRUSION PVT. LTD., M/S MAHA MAYAY STEELS, M/S. TIRUPATI BALAJI FURNACES PVT. LTD., M/S. TRANS ACNR SOLUTIONS PVT. LTD., M/S. FRYSTAL PET PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS CGST- ALWAR [ 2023 (3) TMI 1120 - CESTAT NEW DELHI] and after referring to the provisions of law and the various decisions referred to by the assessee and the Department, the reference was answered holding that The decision of the Supreme Court in COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II VERSUS M/S. SUPER SYNOTEX (INDIA) LTD. AND OTHERS [ 2014 (3) TMI 42 - SUPREME COURT] would not be applicable to the facts of the present case as that was a case where 25% of the amount collected as sales tax from the customers was paid by the assessee and the remaining 75% of the amount was retained by the assessee, which amount was treated to be the price of the goods. In the promotion policy involved in the present case, the subsidy does not reduce the sales tax that is required to be paid by the assessee as the entire amount of sales tax collected by the assessee from the customer is paid. The subsidy amount, therefore, cannot be included in the transaction value for the purpose of levy of central excise duty under section 4 of the Excise Act. The decision of the Supreme Court in Super Synotex India was considered in the aforesaid order and it was held that it would not be applicable in the facts of the present case. In view of the aforesaid answer to the reference made by the Division Bench, the order of the Commissioner (Appeals) does not suffer from any illegality so as to call for interference - appeal dismissed.
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2023 (6) TMI 448
Recovery of Central Excise duty - shortages of 189.50 MT of Pig Iron - valid reasons for shortages were given or not - HELD THAT:- The shortage was noticed during the course of stock taking by the Anti Evasion wing of Haldia Commissionerate. The Appellant could not offer any valid reason for the shortages. In fact the Appellant has paid the duty and cess along with interest on the shortages. Hence, the demand of duty and cess along with interest on the shortages upheld. Since there was no proper explanation for the shortages, the penalty imposed under section 11 AC of the Central Excise Act,1944 also upheld. Irregular availment and utilization of credit on the Angles, Channels, Beams, Joists etc - HELD THAT:- The said items of iron and steel products were the inputs used in the manufacture of capital goods and the said capital goods were in turn used in the manufacture of their final products. The said goods were also used in the pollution control system. The structure and effluent system are taken together will constitute a unit of pollution control system - As per Rule 2(k) of Cenvat Credit Rules, 2002, Input includes goods used in the manufacture of capital goods which are further used in the factory of the manufacturer. In the present case, the Angles, Channels, Beams, Joists are the inputs used in the manufacture of capital goods namely, pollution control system. The structure and effluent system are taken together constitute a unit of pollution control system. Hence, it can be construed that the Angles, Channels, Beams are used in the manufacture of capital goods and hence they fall within the ambit of inputs eligible for credit - The Appellant are eligible for the credit of Rs.5,82,44,793.93 availed on the Angles, Channels, Beams, Joists used in the manufacture of capital goods. Disallowance of credit taken on welding Electrodes and MIG wires - HELD THAT:- The Appellant stated that the the said goods were used in the manufacture of capital goods and in the repairs and maintenance of plant and machineries and hence they are eligible for the credit. In support of their contention, they relied upon the decision in the case of AMBUJA CEMENTS EASTERN LTD. VERSUS COMMISSIONER OF C. EX., RAIPUR [ 2010 (4) TMI 429 - CHHAITISGARH HIGH COURT] , wherein it has been held that CENVAT credit is available to welding electrodes used in the repair and maintenance of machineries - the Appellant are eligible for the credit of Rs33,63,796.67 on the welding Electrodes and MIG Wires used in repair and maintenance of machineries, as inputs under Rule 2(k) of the CENVAT Credit Rules, 2004. Denial of credit availed on 73.66 M.T of Iron ore Fines on the ground that they were not used in the manufacture of final products - HELD THAT:- The Appellant stated that the fines contained in the Ore procured by them from M/s Tata Metalinks were thicker in size which can be used in their DRI plant to produce sponge iron . It is observed that the receipt and duty paid nature of the iron ore are not in dispute. The Appellant states that the iron ore fines received by them were thicker in size and can be utilised to produce sponge iron . There is no evidence brought on record to disprove this claim. Since, the receipt and duty paid nature of the inputs are not in dispute and no other evidence brought on record to establish that the iron ore fines were not utilised in the manufacture of their final products, it is held that the Appellant are eligible for the credit of Rs 23680.68 availed on the iron ore fines. The demand of Rs. 3,82,278/- confirmed in the impugned order on the shortages of 189.50 MT of Pig Iron. The demand of interest and penalty on this count is also confirmed. The other demands on Angles, Channels, Beams Joists and welding electrodes, MIG Pipes and the demand on Iron Ore fines set aside. Accordingly, the impugned order is modified on the above lines. Appeal disposed off.
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