CESTAT Annual Digest [Part – 35]

]This analyzes all the CESTAT stories published in the year 2023 at taxscan. in The Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that rejection of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR) scheme because of unreasonable errors is not valid. A Single member bench comprising Ms.

Binu Tamta, Member (Judicial) viewed that the object with which the scheme has been introduced and the intention of the Government to make it a grand success, it is necessary that the relief sought by the appellant deserves to be allowed and penalty imposed on them needs to be set aside. The Circular issued by the department is binding on them. The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that Liquified Petroleum Gas (LPG) stored in ‘bullet’ storage facility not Storage and Warehousing Services under Sectio The Two-Member Bench comprising M Ajit Kumar, Technical Member and P Dinesha, Judicial Member observed that “None of these activities are seen to be provided by the appellant to the customers, further unlike in a warehouse, the goods (LPG) stored in the ‘bullet’ storage facility installed at the customers premises is not under the control of the appellant and the whole responsibility of the stored LPG is with the customer.

Hence, they are not covered under the category of Storage and Warehousing Services as defined under Section 65(102) of the Finance Act, 1994. ” The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that mens rea is not an ingredient of Section 114 Customs Act and imposed a penalty of Rs 50,000 on Custom House Agent (CHA) on aiding export of Red Sanders wood pillars and tops. A Two-Member Bench comprising Vasa Seshagiri Rao, Technical Member and Sulekha Beevi CS, Judicial Member held that “Mere contravention of the provisions of the Customs Act and the regulations thereunder justifies the imposition of penalty under Section 114 of the Customs Act.

” “We hold that the appellant has acted or omitted to do an act, resulting in rendering the exported goods liable for confiscation, thus attracting the provisions of Section 114 (i) of the Customs Act, 1962. So, penalty is imposable for his acts of omission or commission, may be deliberate or negligent. His conduct aided and facilitated the illegal attempted export of Red Sanders wood pillars and tops.

However, considering the totality of the circumstances obtaining in this case, the penalty upheld at Rs. 1,00,000/- (Rupees One Lakh only) is reduced to Rs. 50,000/- (Rupees Fifty Thousand only)” the Bench observed.

The Chennai bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that mere observation that payments cannot be verified cannot be a ground to deny the claim of customs duty refund. A Coram comprising Ms Hemambika R Priya, Member(Technical) set aside the impugned order, and remand the matter to the original authority to examine the refund claim in the light of the fact that the claim with all the relevant documents in original had been filed with the department on 23. 08.

2004 by the appellant. Further held that “Mere observation that the payments cannot be verified, cannot be a ground to deny the claim. ” The Chennai bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the order directing to credit the Excise refund to the consumer welfare fund is not just an incidence of duty borne by the A two-member bench comprising Ms Sulekha Beevi C S, Member (Judicial) and Mr Vasa Seshagiri Rao, Member (Technical) observed that the incidence of duty has been borne by the appellant, thereby the order passed by the authorities below directing to credit the sanctioned refund to Consumer Welfare Fund is not just and proper.

The Tribunal modified the impugned order to the extent of sanctioning the refund of Rs. 3,01,002/- and held that the appellant is eligible to receive a refund of this amount. The appeal was allowed.

In a recent ruling, the Kolkata bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that Cenvat Credit taken on capital goods is valid as it has been availed for providing output service. A two-member bench comprising Shri Ashok Jindal, Member(Judicial) and Shri K Anpazhakan, Member(Technical) observed that as per Rule 3 of Cenvat Credit Rules, 2004, the cenvat credit is available on input, input services used for providing output service. The capital goods on which cenvat credit has been availed have been used for providing output service, the CESTAT held that the appellant has rightly taken the cenvat credit on the said capital goods.

The Tribunal set aside the impugned order. The Allahabad bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that no service tax is demandable when the goods used for providing services are shown separately in invoices on which Sales Tax/Value Added Tax (VAT) is paid. A two-member bench observed that Mr P K Choudhary, Member (Judicial) and Mr Sanjiv Srivastava, Member (Technical) observed that Appellants have paid Rs.

1,59,419/- towards their liability of service tax under reverse charge mechanism (RCM). Since the demand for service tax against the Appellant for the cost of the goods supplied during repair/service does not appear to be sustainable. The CESTAT set aside the demand, interest and the penalties imposed.

Further, the Demand for service tax on the Appellant company is set aside along with Penalties imposed under section 78 A upon the directors Shri Devendra Pal Singh and Shri P. C. Suman who were the two directors of the appellant company.

The Ahmedabad bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the (CBEC) clarification issued shall have a retrospective effect and set aside the demand of excise tax on Chlorinated Paraffin in liquid form. A two-member bench comprising Mr Ramesh Nair, Member (Judicial) and Mr C L Mahar, Member (Technical) observed that it is a settled law that any clarification about any Act will always have a retrospective effect for the reason that there is no change in the law but the existing law has been interpreted and clarified, therefore, the geneses of law remained intact. Further held that any clarification issued shall have a retrospective effect right from the enactment of the relevant law, therefore the clarification issued by the board has a retrospective effect and accordingly, the purposed classification of goods under Tariff Item No.

2712 20 10 in respect of Chlorinated Paraffin in liquid form does not apply. The Chennai Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the amount deducted by foreign banks towards banking charges is not taxable under banking and other financial services. A two-member bench comprising Shri P.

Dinesha, Member (Judicial) and Shri M. Ajit Kumar, Member (Technical) observed that the appellants have submitted the documents for realization of export sale proceeds to their bank namely SBI, which in turn has used the services of the foreign bank for collection of export sale proceeds. The foreign banks who have rendered their services have deducted their charges while remitting the export sale proceeds to SBI.

In light of various judicial pronouncements, the CESTAT set aside the impugned order and allowed the appeal. Shri S. Durairaj appeared for the appellant and Shri N.

Satyanarayanan appeared for Revenue. In a significant case, the Allahabad bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that an order denying credit in supplementary invoices evidencing payment of service tax for a period before amendments made in the Cenvat credit rule is not valid. A two-member bench comprising Mr P K Choudhary, Member (Judicial) and Mr Sanjiv Srivastava, Member (Technical) viewed that “ In one case, the assessee could not claim CENVAT credit till such time it was served with an invoice, while in another case, it claimed credit only after it had paid service tax based on reverse charge.

Going by these peculiar circumstances, arising in the instant case, we are of the view, that the delay involved cannot be categorised as an inordinate period of delay, as was sought to be conveyed by the Revenue, via its averments made in the appeal. ” Further observed that the impugned order denying the credit on the supplementary invoices evidencing the payment of service tax for the period before amendments made in the CENVAT Credit Rule, 2004 by way of insertion of Rule 9 (1) (bb) with effect from 01. 04.

2011 is not valid. The Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal,(CESTAT) has held that an agreement will not become a franchise merely because of a right conferred on a party to sell or manufacture goods or provide services or undertake a process. A two-member bench comprising Mr Ramesh Nair, Member (Judicial) and Mr C L Mahar, Member (Technical) observed that” merely because by an agreement a right is confirmed on the party to the sale of goods or service undertaken was not ipso-facto bringing the agreement within the ambit of the franchisee.

What is essentially required is to establish that as per the agreement, the rights have not been conferred on the franchisee which amount to representational rights. “ It was evident that the appellant is not given any representational right to its distributors to sell or manufacture goods or provide service or undertake any process identified with the franchisor and the agreement is purely for marketing of product and therefore same cannot be termed as an agreement between the franchisor and franchisee. The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), allowed customs duty exemption and observed that the Test Report of any random sample of Coking Coal sent by the Customs Department cannot be relied.

Allowing the appeal, a Two-Member Bench comprising Raju, Technical Member and Somesh Arora, Judicial Member noted that “In the instant case also process of sampling is relevant to arrive at correct findings, we hold that the department has not been able to justify the process of sampling or the delay of more than 11 months in receipt of the report and that too by not indicating actual date of test. The belated communication by CRCL too is without any authoritative supporting material. ” The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that Cenvat Credit is available on books of accounts on transfer of ownership and therefore Rule 10 of the Cenvat Credit Rules, 2004 (CCR) is applicable.

A Two-Member Bench comprising Anil Choudhary, Judicial Member and A K Jyotishi, Technical Member observed that “Ee find that the Respondent is the successor owner of the factory of Vivin Laboratories, with its assets and liabilities (which is nil on date of transfer), due to change of ownership on account of sale. We also hold, Rule 3 of is not applicable in the facts of the present case, as Rule 3 applies in case of ‘removal’ of capital goods. Here there is no removal, as the capital goods remained in the same factory/premises, and there is only change of ownership.

” “We hold that the respondent-assessee is entitled to take transfer of Cenvat Credit available in the books of the transferor – Vivin Labs, as per Rule 10 of Cenvat Credit Rules” the Bench concluded. The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), confirmed service tax demand on restaurant service and observed that burden lies on the assessee to prove that his case falls under the Exemption Notification. A Two-Member Bench comprising Binu Tamta, Judicial Member and PV Subba Rao, Technical Member observed that “Unless and until, the appellant is able to produce any cogent and substantive evidence in support of his statement that he does not have the AC facility in the restaurant, he is not eligible to claim the benefit of the exemption notification.

The burden lies on the appellant to prove his case that he falls under the exemption Notification as there is no AC facility in his restaurant, which he has failed to do. ” The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that legally provided scheme of assessment of goods to be followed while clearing goods even for export. A Two-Member Bench comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member observed that “In this case, there is no denying the fact that appellant has been collecting mould charges from the buyers of his product and therefore we hold that the amount of mould charges collected by the appellant forms an additional consideration flowing through the appellant and therefore the same need to be included in the assessable value of excisable goods.

The legally provided scheme of assessment of the goods needs to be followed while clearing the goods even if they are meant for export. ” The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed service tax demand and held that providing transit mixers for transportation of Ready Mix Concrete classifiable under goods transport agency services. A Two-Member Bench comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member observed that “The purpose of transportation of RMC the consignment note was issued therefore the criteria prescribed to classify the activity under goods transport agency service is clearly satisfied.

Therefore, on the basis of the factof the present case, we have no doubted in our mind that the activity of the appellant is clearly falls under the definition of goods transport agency service. In such case there is no tax liability on the service provider as the service recipient is required to discharge the Service Tax on reverse charge mechanism in terms of Rule 2(d) of Service Tax Rules, 1994. ” The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed the central excise duty demand and noted that statutory records prove the receipt and the consumption of goods.

A Two-Member Bench comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member observed that “In the present matter the goods were found to be duly shown as received and entered in the factory of the respondent. The statutory records of the respondent concern show the receipt and consumption of the goods. We therefore find Learned adjudicating authority has rightly allowed credit to the respondent.

” Dismissing the appeal by Revenue, the Bench further noted that documentary evidence should prevail over the oral statement made by persons and particularly when the same were admittedly retracted. We also find that when the investigating authority visited the factory premises of the respondent, they did not take any stock of the raw materials. In the absence of any evidence of non-accountal of raw material or shortage of quantity of raw material, the allegation of non-receipt of inputs is without any basis hence not sustainable.

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai bench has held that prompt payment of service tax and interest by an assessee before the issuance of a Show Cause Notice (SCN) relieves them from facing penalties. In conclusion, the two-member bench comprising Mr. P.

Dinesha (Judicial Member) and Mr. M. Ajit Kumar (Technical Member) upheld the demand for the normal period alone and thus upheld the principle that prompt payment of service tax and interest before the issuance of SCN can absolve an assessee from penalties.

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed differential duty demand on PPC Cement thereby noting that demanding the differential duty without challenging original assessment of bills of entry is not sustainable. A Two-Member Bench comprising R Muralidhar, Judicial Member and Rajeev Tandon, Technical Member observed that “We observe that MRP on the same item is decided in consideration of a number of factors besides landing cost and duty element. In the instant case the goods were imported through different ports.

That itself is a valid reason for the difference in price. There is no evidence to suggest that the goods so imported through different ports under different MRP were being sold at same price. Hence, the price difference cannot be attributed to suppression of the value by the Appellant.

Accordingly, we hold that the demand is not sustainable. ” “We find that the impugned order passed demanding differential duty without challenging the original assessment of the Bills of entry is not sustainable. Hence, the demand is not sustainable on this count also” the Bench concluded.

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), remanded matter for fresh adjudication on the ground of non-verification of correctness of reversal during normal period of limitation. The Bench further noted that “In principle it is settled that once the assessee reverses the propionate credit along with interest, if there is any delay in reversal, the demand of 10% /6%/5% of the value of exempted goods shall not be sustainable. ” “However, the adjudicating authority has not verified the correctness of reversal during the normal period of limitation.

Therefore, only for the limited purpose of verification of the amount of reversal, during the normal period, assessee’s appeal needs to be remitted back to the Adjudicating authority” the Bench concluded. The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed service tax demand and observed that mere non-payment of duty is not equivalent to collusion or wilful mis-statement or suppression of facts. A Two-Member Bench comprising Ashok Jindal, Judicial Member and K Anpazhakan, Technical Member observed that “We observe that every nonpayment/non-levy of duty does not attract extended period.

There must be a deliberate default on the part of the Appellant to invoke extended period, which is not there in this case. The conclusion that mere non-payment of duties is not equivalent to collusion or wilful mis-statement or suppression of facts is untenable. ” “Accordingly, we hold that the department has not brought in any evidence to substantiate the allegation of suppression of fact with an intention to evade payment of duty.

Accordingly, we hold that the demands confirmed in the impugned order are not sustainable on the ground of limitation also” the Bench noted. The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ordered fresh adjudication in the case of Vodafone Idea’s service tax evasion case and observed that mere label on the payment receipt as ‘security deposits’ is not relevant evidence. A Two-Member Bench comprising P.

Dinesha, Member (Judicial) and M. Ajit Kumar, Member (Technical) observed that “We find that the appellant has not produced any evidence to show that ‘security deposits’ were indeed refunded and not retained by them. Further whether they were refunded in full or partially, whether interest was paid to the customers for the deposit etc.

” “As per Section 73A(2) of the Finance Act, 1994 monies collected as a tax, even if wrongly done, has to be deposited to Government. We find that once again while the appellant is strong on making inferences and assertions, they were weak on submitting factual replies resulting in a decision that is adverse to them, based on charges that are uncontroverted factually” the Bench noted. Hence the Tribunal remanded the matter back to the Original Authority for de novo adjudication.

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), confirmed penalty imposed and noted that contraband gold smuggled from third country of origin is liable to absolute confiscation. The Judicial Member, Ashok Jindal noted that in this case, the person from whom, the gold has been recovered and claimed to be owner of the seized gold and has produced the purchase invoice, which has been confirmed by the seller of the said gold. Therefore, the onus under Section 123 of the Customs Act, 1962, has been discharged.

The Technical Member, Rajeev Tandon observed that “I am of the view that the department has successfully discharged its primary onus at the preliminary stage and with the onus cast onto the appellants under Section 123, not having been discharged in the least, the order assailed warrants no interference and is required to be upheld. Having thus arrived at the irresistible conclusion that contraband gold smuggled from a third country of origin is liable to absolute confiscation and the appellants subjected to imposition of penalty. ” Owing to the difference of opinion the Bench, directed the Registrar to refer the matter to the President for his kind consideration and referring the matter to a third member for the resolution of the conflict and the difference of opinion.

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that the enhancement of value of imported goods without giving proper reasons to reject transaction value cannot be sustained. A Two-Member Bench comprising Sulekha Beevi CS, Judicial Member and Vasa Seshagiri Rao, Technical Member observed that “we are of the considered opinion that the enhancement of value of imported goods without giving proper reasons to reject the transaction value cannot be sustained. ” The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that the benefit of Voluntary Compliance Encouragement Scheme, 2013 (VCES) not to be denied when SCN issued is time barred.

A Two-Member Bench comprising Binu Tamta, Judicial Member and PV Subba Rao, Technical Member observed that “The very purpose of introducing the scheme is to motivate the registered assessee who had stopped filing the returns to file returns and pay the taxes. The underlying object is to reduce unnecessary litigation, which is evident from the clarifications made in the Circulars. The VCES Scheme as further clarified in the Circulars needs to be implemented so as to give full play which would not only benefit the assessee but also the revenue.

” The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that the scrap generated during manufacture can be removed without payment of excise duty for job work. A Two-Member Bench comprising SS Garg, Judicial Member and P Anjani Kumar, Technical Member relied on the judgment in Wyeth Laboratories Ltd. Vs.

CCE Bombay and observed that “scrap generated during manufacture can be removed without payment of duty at the option of the assessee for job work and can be used as inputs. ” “The Tribunal in the case of Comet Brass Industries while referring to the judgment of the Wyeth Laboratories Ltd has held that the entire purpose of setting down the disputed issue is defeated of majority decisions are not followed by the field formations and further the Tribunal set aside the order which was based on the minority view expressed in the Larger Bench’s decision in the case of Wyeth Laboratories Ltd” the Bench noted. In a significant case, the Chennai bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that excise duty demand is not valid when duty liability is already paid before issuance of Show Cause Notice (SCN).

A two-member bench comprising Ms Sulekha Beevi C S, Member (Judicial)and Mr Vasa Seshagiri Rao, Member (Technical) observed that the appellant has admitted the liability of Rs. 18,81,515/- and has paid the amount even before the issuance of SCN. Further held that “We are therefore of the considered opinion that the duty demand has to be reduced to this amount.

The appellant had paid it before the SCN and also as there is a violation of the principles of natural justice the penalties are not warranted. ” The impugned order is modified by upholding the duty demand to the tune of Rs. 18,81,515/- and the set-aside balance along with the penalties imposed.

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), confirmed an interest at 6% for delay upto date of sanctioning refund as there was a delay of 253 days in granting refund of customs duty. A Two-Member Bench comprising Vasa Seshagiri Rao, Technical Member and C Sulekha Beevi, Judicial Member observed that “The Commissioner (Appeals) has relied on the cases only to take the view that the appellant is eligible for interest due to delay. This does not mean that an assessee is always eligible for enhanced rate of interest than the notified rate of interest.

We do not find any circumstances in the present case warranting to grant increased rate of interest to the appellant. ” The New Delhi bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT)has held that Cenvat Credit is allowable on fabrication and erection service for installation of Steel Melting of Continuous Castings Machine (SMS) plant which falls under ‘modernization, renovation or repair under the Cenvat Credit Rules, 2004 (CCR). A Single member Ms Hemambika R Priya, Member(Technical) concluded that a harmonious reading of the inclusive part of the definition and the exclusion clause mentioned in clause (a) relating to construction service of the definition of ‘input service’, was apparent that the construction service relating to modernization, renovation and repair of the factory continued to be within the meaning of ‘input service’ and the Service Tax paid on such service is eligible to credit.

The CESTAT viewed that the appellant took credit for the services used in the construction of the civil structure for the new setup of the Steel Melting of Continuous Castings Machine (SMS) and for the provision of fabrication and erection service for the installation of the SMS plant, which is covered under the definition ‘modernization, renovation or repair’. While allowing the appeal, the CESTAT set aside the impugned order. The Bangalore Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed a show cause notice (SCN) as there was no allegation of suppression or misstatement of facts or any other sub- clauses of section 11 A (4) of the Central Excise Act 1944 (CEA).

The Bench concluded that in order to invoke Section 11A(4) and 11A(5) of the Central Excise Act, it is necessary to prove either fraud or collusion or wilful misstatement or suppression of facts or contravention of any of the provisions with intention to evade payment of duty these provisions are rightly applicable in the facts and circumstances of the present case as there is no allegation of suppression or misstatement of facts or any other sub-clauses of section 11 A(4) of the Central Excise Act. © 2020 Taxscan © 2020 Taxscan.