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2017-VIL-1029-CESTAT-CHE-CE  | CESTAT CENTRAL EXCISE

Central Excise – admissibility of Cenvat credit on capital goods directly sent to the job worker - Rule 4 (5) (a) of CCR, 2004 – HELD – no doubt there is beneficial provision available which allows for input or input services to be received directly by the job worker and credit thereof to be taken by the manufacturer of the final product / provider of output service. However, the law does not allow for taking such credit when the capital goods are similarly received directly at the job worker's end. Appellant has elucidated a permission given by the department under Rule 4 (5) (a) of the Rules to contend that such pe... [Read more]

Central Excise – admissibility of Cenvat credit on capital goods directly sent to the job worker - Rule 4 (5) (a) of CCR, 2004 – HELD – no doubt there is beneficial provision available which allows for input or input services to be received directly by the job worker and credit thereof to be taken by the manufacturer of the final product / provider of output service. However, the law does not allow for taking such credit when the capital goods are similarly received directly at the job worker's end. Appellant has elucidated a permission given by the department under Rule 4 (5) (a) of the Rules to contend that such permission would also entitle them to take credit on the capital goods received by the job worker / sister unit - this contention is misconceived - The permission accorded under Rule 4 (5) (a) or for that matter, the permission to operate under Notification No.214/86-CE is only to facilitate movement of capital goods to the job worker for manufacture of intermediate / final products. These permissions are attendant with certain conditions and procedures that are required to be followed, but in no way do they sanctify the availment of cenvat credit in respect of capital goods received directly at the job worker's end. In any case, no permission can go beyond the boundaries of the statute – the order of recovery of cenvat credit along with interest thereon is upheld - Penalty is set aside and appeal is partly allowed [Read less]

2017-VIL-1028-CESTAT-CHE-CU  | CESTAT Case CUSTOMS

Customs - Rule 10 (2) of Customs Valuation Rules, 2007 – includability of cost of transport when the same is ascertainable – demand of differential duty – mis-declaration - redemption fine - HELD – There is broad agreement on the aspect of quantum of freight cost that will require to be added. It is a fact that as per the Customs Valuation Rules as in force during the material period, even when the cost of transportation of imported goods was ascertainable, for the purpose of adding freight element to form part of the assessable value only 20% of the FOB value would be adopted in respect of goods imported by air -... [Read more]

Customs - Rule 10 (2) of Customs Valuation Rules, 2007 – includability of cost of transport when the same is ascertainable – demand of differential duty – mis-declaration - redemption fine - HELD – There is broad agreement on the aspect of quantum of freight cost that will require to be added. It is a fact that as per the Customs Valuation Rules as in force during the material period, even when the cost of transportation of imported goods was ascertainable, for the purpose of adding freight element to form part of the assessable value only 20% of the FOB value would be adopted in respect of goods imported by air - for the limited purpose of re-determining the revised differential duty liability after limiting the freight cost to 20% of the FOB value, the matter is being remanded to the original authority – quantum of redemption fine and penalty, levied on account of mis-declaration, is reduced – appeal is partly allowed [Read less]

2017-VIL-1025-CESTAT-BLR-ST  | CESTAT SERVICE TAX

Service Tax - Validity of rejection of CENVAT credit availed on by the appellant on Management Consultancy Service on the ground that the project for which consultancy was received was fully abandoned without its implementation – HELD - the CENVAT credit once rightly availed is indefeasible and subsequent development of abandoning of plant will not make the appellant liable to reverse the CENVAT credit which was rightly availed by the appellant - if the credit is rightly availed and utilised, then subsequent development after taking of the credit cannot vitiate the credit already availed - the impugned order is set aside... [Read more]

Service Tax - Validity of rejection of CENVAT credit availed on by the appellant on Management Consultancy Service on the ground that the project for which consultancy was received was fully abandoned without its implementation – HELD - the CENVAT credit once rightly availed is indefeasible and subsequent development of abandoning of plant will not make the appellant liable to reverse the CENVAT credit which was rightly availed by the appellant - if the credit is rightly availed and utilised, then subsequent development after taking of the credit cannot vitiate the credit already availed - the impugned order is set aside and appeal is allowed [Read less]

2017-VIL-1026-CESTAT-DEL-ST  | CESTAT SERVICE TAX

Service Tax – Business Consultant service to foreign based client – Demand under reverse charge basis - liability of service tax in respect of certain expenses shown in foreign exchange in their balance-sheet – HELD - appellant-assesses entered into an agreement and in pursuance of such agreement, they have to collect various details regarding policies, plans and priorities relating to Gujarat forestry sector. They are also required to collect documents, data and information relating to laws, orders, guidelines of such sector. Based on all the collected data and information, they were required to review and analyze t... [Read more]

Service Tax – Business Consultant service to foreign based client – Demand under reverse charge basis - liability of service tax in respect of certain expenses shown in foreign exchange in their balance-sheet – HELD - appellant-assesses entered into an agreement and in pursuance of such agreement, they have to collect various details regarding policies, plans and priorities relating to Gujarat forestry sector. They are also required to collect documents, data and information relating to laws, orders, guidelines of such sector. Based on all the collected data and information, they were required to review and analyze the current status of social development in Gujarat to identify constraints and potential of GFDB. It is clear that though the data information and other analysis is collected and done by the appellant-assesses in India, the same is in terms of an agreement with a foreign based company. The foreign based client paid consideration inconvertible foreign exchange. The nature of service being such, the same is for consumption and benefit of the foreign client. Service tax being consumption / destination based tax, the services rendered by the appellant-assesses are, in fact, to be considered as export - the assesses are not liable to service tax on this service – further, there is no categorical finding as to how the expenditure incurred in foreign exchange can be considered as a payment towards specific category of taxable service and thereafter can be subjected to tax at the hands of the appellant on reverse charge basis - tax, if any, paid on reverse charge basis would have been eligible to the appellant-assesses as a credit for discharging further service tax liability. In such scenario, there is no justification to invoke the extended period for demand - assesses appeal is allowed and revenue appeal is dismissed [Read less]

2017-VIL-623-MAD  | High Court VAT

Tamil Nadu VAT Act, 2006 - Section 19(1) – admissibility of input tax credit on purchases of REP licence and DEPB licence – HELD - the respondent while issuing the notice, would accept that DEPB licences are considered as goods but denies the relief to the petitioner on the sole ground that the goods do not fall under the First Schedule. If that is so, how the respondent should treat the transaction especially, when the petitioner has taken a stand that the facts in the case of Sha Kantilal Jayantilal, were entirely different - another important aspect, which the respondent has failed to take into consideration is the ... [Read more]

Tamil Nadu VAT Act, 2006 - Section 19(1) – admissibility of input tax credit on purchases of REP licence and DEPB licence – HELD - the respondent while issuing the notice, would accept that DEPB licences are considered as goods but denies the relief to the petitioner on the sole ground that the goods do not fall under the First Schedule. If that is so, how the respondent should treat the transaction especially, when the petitioner has taken a stand that the facts in the case of Sha Kantilal Jayantilal, were entirely different - another important aspect, which the respondent has failed to take into consideration is the advance ruling given by the authority under Section 48A of the Act. The said ruling is binding on the assessing officer. The assessing officer cannot get over the advance ruling unless and until, on facts, the respondent is able to establish that the said ruling will not apply to the facts of the present case - Though the said clarification would not be binding on the respondent, yet it should be of persuasive value, since it was clarified that if the dealers resold DEPB licence, they have to pay tax and it is further clarified that in that event, they are eligible to input tax credit to the extent of DEPB licence resold by them - the assessing officer should re-consider the matter afresh taking note of the factual issues - the impugned orders are quashed and writ petitions are allowed [Read less]

2017-VIL-1027-CESTAT-AHM-ST  | CESTAT SERVICE TAX

Service Tax – denial of Cenvat Credit sought on the premise that invoices are not in the name of appellant but is in the name of Head Office and ‘Repairs and Maintenance Service’ availed by them are in the nature of ‘maintenance of staff quarters/office premises’, have no nexus with Output Service – HELD - it is not disputed that the consultancy Service is not received by the appellant and Service Tax has not been paid. As the appellant paid Service Tax and received the said services in their office and the same has been used for providing output service. In that circumstance, Cenvat Credit on consultancy Servi... [Read more]

Service Tax – denial of Cenvat Credit sought on the premise that invoices are not in the name of appellant but is in the name of Head Office and ‘Repairs and Maintenance Service’ availed by them are in the nature of ‘maintenance of staff quarters/office premises’, have no nexus with Output Service – HELD - it is not disputed that the consultancy Service is not received by the appellant and Service Tax has not been paid. As the appellant paid Service Tax and received the said services in their office and the same has been used for providing output service. In that circumstance, Cenvat Credit on consultancy Service cannot be denied to the appellant - As the appellant is a port and they need expertise staff to run their activity in a remote area. Therefore, specialized staff is required and the appellant is duty bound to provide the residential facility to the staff at that remote area - maintenance of staff quarters and office premises at remote area is essential requirement for supply of output service. Therefore, the appellant is entitled for Cenvat Credit for ‘Repair and Maintenance service’ of staff quarters and office premises - the appellant is correctly availed Cenvat Credit on the services in question - the impugned order is set aside and appeal is allowed [Read less]

2017-VIL-622-GUJ-CE  | High Court CENTRAL EXCISE

Central Excise - demand without considering the petitioners' applications for being allowed to pay the duty on actual production – HELD - under sub-section (4) of section 3A, the manufacturer could apply to the Commissioner and request that the duty may be levied on actual production instead of annual production capacity - when the petitioners applied to the Commissioner to enable them to pay the duty on actual production and not on ACP, prospectively, the Commissioner had to decide such applications and ordinarily, there is no reason why such applications had to be rejected. The Commissioner erred in not deciding such a... [Read more]

Central Excise - demand without considering the petitioners' applications for being allowed to pay the duty on actual production – HELD - under sub-section (4) of section 3A, the manufacturer could apply to the Commissioner and request that the duty may be levied on actual production instead of annual production capacity - when the petitioners applied to the Commissioner to enable them to pay the duty on actual production and not on ACP, prospectively, the Commissioner had to decide such applications and ordinarily, there is no reason why such applications had to be rejected. The Commissioner erred in not deciding such applications as well as in concluding that the petitioners and other manufactures did not have any such option. Order of the Commissioner therefore, must be set aside - the impugned orders are quashed and set aside – assessee petition is allowed [Read less]

2017-VIL-1021-CESTAT-DEL-CE  | CESTAT CENTRAL EXCISE

Central Excise - denial of cenvat credit and imposition of penalty for alleged irregular credit – HELD - there is no material available on record to support the argument that the appellant procured the non-duty paid material from the market for manufacturing the goods. Further the investigation has not unearthed any evidence to substantiate the allegation that appellant has not received the goods covered by the invoices of based on which the Cenvat Credits have been availed. Thus, the finding of the adjudicating authority is merely on the basis of assumptions and presumptions - the records and documents placed on record ... [Read more]

Central Excise - denial of cenvat credit and imposition of penalty for alleged irregular credit – HELD - there is no material available on record to support the argument that the appellant procured the non-duty paid material from the market for manufacturing the goods. Further the investigation has not unearthed any evidence to substantiate the allegation that appellant has not received the goods covered by the invoices of based on which the Cenvat Credits have been availed. Thus, the finding of the adjudicating authority is merely on the basis of assumptions and presumptions - the records and documents placed on record by the appellant cannot be brushed aside, merely on the basis of statement of the third party, i.e. transporter which are un-corroborative in nature. In any event, if the adjudication authority is of the opinion that the appellant had availed the alleged irregular credit for more profitability, which would be reflected from their accounts. The Commissioner of Central Excise has reason to belief that the cenvat credit availed and utilized is not within the normal limits, having regard to the nature of excisable goods manufactured, he could have directed to examine the accounts and records, as provided under the Central Excise statue - the impugned order cannot be sustained and the same is set aside. The appeal filed by the appellant is allowed [Read less]

2017-VIL-1022-CESTAT-CHE-CE  | CESTAT CENTRAL EXCISE

Central Excise – EOU unit - duty liability on neem cake and neem oil obtained from extracted kernel in the premises of the job worker - The said items have been cleared by the appellant from the premises of job worker as a non-excisable product - Revenue ground that the appellants failed to discharge their obligation in terms of LOP granted to them and failed to pay applicable duty on the neem oil and neem cake cleared to domestic market – HELD – the appellants have discharged neem kernel for further processing and extraction of neem oil and neem cake which they have sold to their customers from the premises of the j... [Read more]

Central Excise – EOU unit - duty liability on neem cake and neem oil obtained from extracted kernel in the premises of the job worker - The said items have been cleared by the appellant from the premises of job worker as a non-excisable product - Revenue ground that the appellants failed to discharge their obligation in terms of LOP granted to them and failed to pay applicable duty on the neem oil and neem cake cleared to domestic market – HELD – the appellants have discharged neem kernel for further processing and extraction of neem oil and neem cake which they have sold to their customers from the premises of the job worker - The appellants responsibility for due disposal of all the products emerging in the course of manufacture and are identified and permitted by the LOP granted for duty free manufacture, is not in dispute. The appellant’s arrangement of having a job worker for the part of the process will not take away their responsibility as mandated by the LOP as well as Foreign Trade Policy. The categorization of neem oil or neem cake is not directly relevant to the dispute as these products are not waste or scrap. These are recognized as products for manufacture by the EOU in the LOP - As per the conditions of the Foreign Trade Policy if the EOU is engaging the job worker, the resultant products are to be brought to the EOU for further disposal. In the present case, the same has not been done - the appellants have used the facility of job worker to extract two of the products for which permission is granted to them as EOU. However, for these two products, the due process and conditionalities of EOU have not been adhered to. This is a clear violation of LOP conditions and Foreign Trade Policy - the appellants are liable to duty as confirmed in terms of Section 3 (1) of CEA, 1944 – The argument that all facts are taken from the records of the appellants by itself will not take away the sustainability of the demands for longer period - confirmation of duty on longer period and penalties as imposed are upheld – assessee appeal is dismissed [Read less]

2017-VIL-1017-CESTAT-CHD-CU  | CESTAT Case CUSTOMS

Customs - whether after initial assessment and clearance, the subsequent taking out of the aircrafts, out of India and bringing them back into India would amount to export and import respectively under Customs Act, 1962 – HELD - Once an entity has been imported and assessed to duty and cleared for Home Consumption, they cease to be imported goods. The subsequent change of ownership of such goods will not render them again liable for duty - the aircrafts are not liable to confiscation under Section 111 or Section 113 of the Customs Act and also not liable to pay import duty as and when they are brought back into India aft... [Read more]

Customs - whether after initial assessment and clearance, the subsequent taking out of the aircrafts, out of India and bringing them back into India would amount to export and import respectively under Customs Act, 1962 – HELD - Once an entity has been imported and assessed to duty and cleared for Home Consumption, they cease to be imported goods. The subsequent change of ownership of such goods will not render them again liable for duty - the aircrafts are not liable to confiscation under Section 111 or Section 113 of the Customs Act and also not liable to pay import duty as and when they are brought back into India after making trips abroad and duty cannot be demanded on these aircrafts - considering the fact that the Department itself has dropped similar proceedings in relation to five other aircrafts, which were imported initially and subsequently gone out of India under sale and purchase agreements and came back under the lease agreement, the order of ld. Commissioner is not sustainable and the same is set aside - the appeal is allowed [Read less]

2017-VIL-621-KER  | High Court VAT

Central Sales Tax Act - Export Sale - demand of differential tax on the ground that the petitioner did not produce documents to show that he had realised the proceeds of the export sale in foreign currency – HELD - there is no provision under the Act or Rules which mandates that the petitioner should produce a document showing realisation of export proceeds as a condition for claiming the exemption that is available for transactions which are in the nature of sale transaction in the course of export. The exemption under the CST Act is available to an assessee if he demonstrates that the sale transaction occasioned a move... [Read more]

Central Sales Tax Act - Export Sale - demand of differential tax on the ground that the petitioner did not produce documents to show that he had realised the proceeds of the export sale in foreign currency – HELD - there is no provision under the Act or Rules which mandates that the petitioner should produce a document showing realisation of export proceeds as a condition for claiming the exemption that is available for transactions which are in the nature of sale transaction in the course of export. The exemption under the CST Act is available to an assessee if he demonstrates that the sale transaction occasioned a movement of the goods from within the country to a place outside the country. The documents produced by the petitioner clearly indicate that the goods, which were the subject matter of the sale transaction with a foreign buyer, had left the shores of India for a foreign destination as shown in the documents. In the absence of anything to suggest that the goods did not cross the customs frontiers of India, the respondents cannot take a stand that the transaction in question was not an export sale transaction for the purposes of exempting the transaction from the levy of CST under the CST Act – further, the non-receipt of sale consideration cannot be a ground for the taxing authority under the CST Act to levy tax on turnover - the orders impugned is quashed and set aside – writ petition is allowed [Read less]

2017-VIL-614-RAJ-ST  | High Court SERVICE TAX

Service Tax – liability under Work Contract - the show cause notice proposed to recover service tax under the category of ECI services, whereas the impugned order has classified the services under different category, which is not permissible under the law, since the order has travelled beyond the scope of show cause notice - Since the activities undertaken by the assessee involves both supply of goods as well as provision of labour service, the same cannot be classifiable under the erection, commissioning or installation service. Further, since the contracts executed by the assessee were composite in nature, involving bo... [Read more]

Service Tax – liability under Work Contract - the show cause notice proposed to recover service tax under the category of ECI services, whereas the impugned order has classified the services under different category, which is not permissible under the law, since the order has travelled beyond the scope of show cause notice - Since the activities undertaken by the assessee involves both supply of goods as well as provision of labour service, the same cannot be classifiable under the erection, commissioning or installation service. Further, since the contracts executed by the assessee were composite in nature, involving both supply of material as well as provision of labour, the same is not leviable to works contract tax prior to 01.06.2007 – Tribunal order is upheld and revenue appeal is dismissed [Read less]

2017-VIL-1024-CESTAT-CHD-ST  | CESTAT SERVICE TAX

Service Tax - appellant had been charging some amount from the transporters for arranging/providing cargo but in the case of Ex-mill sales, the appellant were arranging for the transport of the finished goods to the buyers – demand under Business Auxiliary Service with the view that certain amount paid by the transporters to the appellant for promoting its business - transporter as client – HELD – The appellant being manufacturer of fabric, have certain regular customer; who authorize them to arrange transportation on their behalf. In such cases, they identify transporters and negotiate the freight with the transport... [Read more]

Service Tax - appellant had been charging some amount from the transporters for arranging/providing cargo but in the case of Ex-mill sales, the appellant were arranging for the transport of the finished goods to the buyers – demand under Business Auxiliary Service with the view that certain amount paid by the transporters to the appellant for promoting its business - transporter as client – HELD – The appellant being manufacturer of fabric, have certain regular customer; who authorize them to arrange transportation on their behalf. In such cases, they identify transporters and negotiate the freight with the transporters on behalf of the buyers. They are representative of the buyers, as the goods are sold in these transactions are on Ex-Mill basis and they do not have any kind of responsibility in regard to transit of goods upto place of delivery - the amounts have been received by appellant in lieu of quantity of business value arranged by them for the transporters. Since the appellant provide volume of business to the transporters, the lower authorities have correctly held that they are promoting business for transporters. As for the contention, that there is no contract between the transporter and the appellant, it is evident that there is clear understanding between the transporters and appellant that the consideration is being paid to them for the volume of business arranged for the transporters. As for the contention, that the BAS should be provided to a client and the transporter is not a client, as the service has been provided by the appellant to transporter who is a service provider therefore the above contention of the appellant is not tenable - the service tax has been correctly charged in the category of BAS - Once the finding of the bonafide belief is given by the adjudicating authority, invocation of extended period of limitation would not be available to the Revenue – matter remanded for re-quantification of the demand without invoking the extended period – appeal is partly allowed [Read less]

2017-VIL-620-DEL  | High Court SGST

GST – petition seeking continuation of exemption under GST Regime to local purchases made by Non-commercial Research Institutions – HELD - Imports by Non-commercial Research Institutions are completely exempt from payment of customs duty as also payment of Integrated tax, however, insofar as local purchases made by Non-commercial Research Institutions are concerned, the exemption from payment of excise duty, stands rescinded vide Notification No.9/2017-Central Excise dated 30th June, 2017. The matter requires elucidation and the Government should respond as to the basis of the said rescission to Non-­commercial Resear... [Read more]

GST – petition seeking continuation of exemption under GST Regime to local purchases made by Non-commercial Research Institutions – HELD - Imports by Non-commercial Research Institutions are completely exempt from payment of customs duty as also payment of Integrated tax, however, insofar as local purchases made by Non-commercial Research Institutions are concerned, the exemption from payment of excise duty, stands rescinded vide Notification No.9/2017-Central Excise dated 30th June, 2017. The matter requires elucidation and the Government should respond as to the basis of the said rescission to Non-­commercial Research Institutions - notice issued to the respondents-Revenue – Matter listed [Read less]

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