This weekly round-up analytically summarizes the key stories of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) reported at taxscan.in, from October 04, 2024 to October 12, 2024.
The Customs, Excise and Service Tax Appellate Tribunal, New Delhi ( CESTAT ) recently set aside the confiscation of 3 out of 10 gold bars seized at Indira Gandhi International Airport upon the Department’s inability to prove their alleged foreign origin.
In light of such observation, CESTAT held that there was no infirmity on the behalf of the investigation agencies in invoking Section 123 of the Customs Act, 1962 in respect of seven gold bars bearing foreign markings out of the ten bars seized. Resultantly, in light of the Department’s inability to prove the alleged foreign origin of the remaining three gold bars, the same were exonerated from such suspicion, CESTAT proceeded to award a reduced penalty to the Appellant while directing the Department to release the three gold bars within 15 days of the current order.
In a recent case, the Mumbai bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) observed that mere omission not amounts to Mis Declaration and held that Penalty under Customs Act, 1962 is not imposable.
The single member bench of Rajeev Tandon, Member ( Technical ) held that there is no merit in the claim of the department that certain goods were not declared. The mis-declaration, if any , as the department does not challenge the transaction value at best is a mere omission and no more than a technical offence, and the case of the importer that the value of all imported goods were duly invoiced strongly supports the premise. Thus, there is no case for the department to subject the appellant to any penal consequences. It is further noted from records that quantity of the components corresponding to the empty cartridge said to be not declared were duly specified in the packing list, and so also for the black toner powder contained cardboard cartons.
In a recent ruling, the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) in Kolkata quashed the Revenue’s attempt to reclassify a consignment of imported goods and upheld that the imported items were correctly classified as “bed sheets.”
However, after reviewing the evidence and prior rulings, the bench of Mr R Muralidhar and Mr Rajeev Tandon disagreed with the Revenue’s stance. The tribunal noted that although the goods lacked complete stitching or hemming, their size and intended use clearly indicated that they were bed sheets, not mere fabric. They referenced a common parlance test, stating that the goods would be understood by consumers as bed sheets in the market, which was further supported by statements from the assessee- company’s proprietor. Additionally, the tribunal found that the test reports were inconclusive and did not definitively classify the goods as woven fabrics. In its judgment, the tribunal ruled that Note 7(b) of Section XI, which allows certain textile products to be classified as “made up” if they only require separation by cutting or dividing threads, applied to the imported goods. Based on this, the tribunal upheld the classification of the goods under CTH 6304, as originally declared by the importer. The tribunal rejected the Revenue’s attempt to reclassify the goods under CTH 5407, dismissing the appeal and confirming that no penalty or redemption fine was due from the respondent.
In a recent ruling, the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) in Kolkata upheld a 10% redemption fine and a 5% penalty in a case involving the import of old and worn clothing without a valid specific license. The case is an appeal by the assessee/ appellant M/s S. S. Traders, who imported used and fumigated clothing that was assessed and subjected to confiscation due to licensing issues.
The tribunal, comprising Mr. R. Muralidhar (Judicial Member) and Mr. Rajeev Tandon (Technical Member), ruled that the decision of the appellate authority was sound and aligned with previous precedents. As a result, they dismissed the appeal filed by the Revenue and confirmed the reduced fines and penalties, declaring them sufficient to meet the ends of justice.
Recently in a ruling, the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) held that fees paid to foreign affiliates for management services and trademark licensing are not to be included in the transaction value of imported goods. The case arose when the assessee/appellant, M/s. Schenck Process India Private Limited, engaged in the design, manufacturing, and sale of industrial systems, challenged a decision by the Commissioner of Central Excise and Central Tax. The department had argued that the Management and License Fees paid by the company to its parent entity, Schenck Process GmbH in Germany, should be added to the assessable value of the goods imported from related entities.
In its ruling, CESTAT referred to several previous judgments that dealt with similar issues, including cases where royalties and management fees were found to be unrelated to imported goods. The tribunal observed that fees related to downstream manufacturing or service arrangements, as in this case, are not includable in the transaction value of imported goods. In result, CESTAT set aside the order of the Commissioner of Central Excise (Appeals) and ruled in favor of the assessee.
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Bench remanded the Service Tax Demand on the Non-Employed Directors to Check Correctness of Reconciliation.
The CESTAT Bench comprising Ramesh Nair (Judicial Member) and Raju (Technical Member) carefully considered the submissions made by both sides and observed that the remuneration paid to the Director in the form of salary is not liable to service tax, which is an issue which is already covered by the decision of Ratnamani Metals and Tubes Ltd (Supra). So the bench concluded that in case of whole time Director Mrs. T R Amin remuneration paid to her is not liable to service tax, hence the service tax related to the remuneration paid to Mrs. T R Amin has been set aside by the court.
The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ), Ahmedabad Bench ruled that the handling charges are not to be included in the Assessable Value of the Excisable Goods.
The CESTAT Bench comprising Ramesh Nair (Judicial Member ) and Raju ( Technical Member ) observed after considering various Supreme Court and CESTAT Judgements whose facts are similar to that of the present case,ruled that the handling charges should not be included in the assessable value of the excisable goods as stated in the previous judgements. The judgment of Mira Industries (Supra) was primarily considered by the court. The court stated that the demand in this respect was not sustainable, and therefore, the impugned orders were modified to that extent, allowing the appeal in those terms.
The Chennai Bench of Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) ruled Ashok Leyland eligible for CENVAT credit on Goods Transport Agencies and Mediclaim insurance for the period prior to 01/04/2011.
Therefore, the tribunal set aside the disallowance of CENVAT credits for GTA services and Mediclaim insurance premiums. The tribunal ruled that the appellant was entitled to consequential relief under the law. The appellant’s appeal was allowed.
In the significant case of Kajaria Ceramics Limited, the Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) held that amount deposited by way of Handling Charges are not leviable to service tax as the same are includible in the assessable value for the purpose of determining the VAT or CST.
In light of the judgement, the two member bench of Binu Tamta, Member (Judicial) and Hemambika R. Priya, Member (Technical) held that the amount deposited by way of handling charges in the present case are not leviable to service tax as the same are includible in the assessable value for the purpose of determining the VAT or CST. While allowing the appeal, the CESTAT set aside the impugned order. Bimal Jain, Advocate appeared for the appellant and S.K. Meena, Authorised Representative appeared for the respondent.
The Bangalore Bench of Customs Excise & Service Tax Appellate Tribunal ( CESTAT ) set aside a service demand order, ruling that compensation for the short lifting of electricity was not service under Section 66E(e) of the Finance Act, 1994.
The two-member bench comprising P.A. Augustian ( Judicial Member ) and Pullela Nageswara Rao ( Technical Member ) observed that the adjudication authority had no valid grounds to impose service tax on the compensation received by the appellant for short lifting of electricity. Since this compensation was not related to any obligation to tolerate an act, it does not qualify as a service under Section 66E(e) of the Finance Act, 1994. The tribunal set aside the impugned order and the appellant’s appeal was allowed.
The Bangalore Bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) directed the Original Adjudicating Authority to thoroughly re-examine the classification of services received from overseas legal consultancy firms by the Mahindra & Mahindra.
The tribunal found that this aspect required further examination to determine whether the appellant was indeed liable to pay service tax for the services received in 2006-07 under the Reverse Charge Mechanism. Further, the tribunal found that both the adjudicating authority and the Commissioner (Appeals) had failed to properly consider the appellant’s plea regarding the timing of the inclusion of legal consultancy services in the service tax net. Therefore, the tribunal set aside the impugned order and remanded the case to the original adjudicating authority. The authority was instructed to conduct a de novo hearing, specifically to clarify the exact nature of services received by the appellant and to determine the appropriate classification of these services to apply service tax.
The Chennai Bench of Customs Excise & Service Tax Appellate Tribunal ( CESTAT ) set aside the excise order, ruling that recovery of Central Value Added Tax ( CENVAT ) credit and interest for capital goods under Rule 3(5b) invoking Rule 14 of the CENVAT Credit Rules, 2004 was not allowable for the period before March 2013.
A single bench led by Ajit Kumar ( Technical Member ) observed that unless goods were fully or partially written off as specified in Rule 3(5B), the reversal of credit was not required. The tribunal noted that before the amendment on 01/03/2013, there was no legal provision for recovering CENVAT credit under Rule 3(5B) for the disputed period. The tribunal referred to Ericsson India Pvt Ltd., confirming that recovery provisions under Rule 3(5B) did not exist before March 2013. The tribunal agreed with the appellant’s arguments. Therefore, the tribunal set aside the impugned order for the recovery of CENVAT credit and interest.
The Chennai Bench of Customs Excise & Service Tax Appellate Tribunal (CESTAT) ruled that CENVAT credit can be claimed for Goods Transport Agency (GTA) services in cases of Free on Road (FOR) destination sales citing the buyer’s premises as the “place of removal.”
A single bench led by Ajit Kumar (Technical Member) observed that the main issue revolved around defining the “place of removal” for CENVAT credit on GTA services. After examining several judgments, the tribunal noted that the Board’s Circular dated 08.06.2018 had addressed the issue, clarifying that in cases of FOR destination sales where the ownership and risk remained with the seller until the goods were accepted by the buyer, the seller’s premises should be considered the place of removal. The tribunal observed that the purchase orders and insurance documents clearly showed that the ownership of the goods remained with the appellant until they were delivered to the buyer in this case. This supported the appellant’s claim that the buyer’s premises should be considered the “place of removal.” The tribunal criticized the adjudicating authority’s reliance on the Ultratech Cement ruling without examining the specific factual context. Thus, the tribunal set aside the impugned order and the appellant was granted consequential relief as per the law.
The Banglore Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) in a recent case has held that the activity of sharing CAT score by IIM with the non-IIM institution does not fall under the service category of ‘Mailing List Compilation and Mailing Service’ and no service tax is payable.
The two member bench of P.A. Augustian (Judicial Member) and Pullela Nageswara Rao, Member (Technical) has observed that the appellant, IIM does not compile any information for the non-IIM institutions, the appellant only shares the CAT score obtained by the candidate in the examination conducted by them and only shares this information available with them and they do not compile any information from any other source. While allowing the appeal, the tribunal held that the activity of sharing CAT score by IIM with the non-IIM institution does not fall under the service category of ‘Mailing List Compilation and Mailing Service’ and no service tax is payable.
In a recent ruling, the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) of Banglore ordered a reassessment of the Rs. 95 lakh duty imposed on a Ferrari Italia 458 reimported into India after undergoing repairs in Dubai. The tribunal’s decision comes after allegations that the appellant misused the Carnet de Passage ( CDP ), a document that allows duty-free temporary export and reimport of vehicles for touring purposes.
After examining the case facts, the bench of Dr DM Misra and Mrs R Bhagya Devi observed that the appellant failed to declare the repairs when seeking reimport clearance, thus confirming the duty liability on the repair costs. However, the tribunal noted that the confiscation of the vehicle and the fines imposed were unjustified, ruling in favor of the appellant. Thus, the tribunal set aside both the Rs. 20 lakh fine and the Rs. 10 lakh penalty but directed the Commissioner to reconsider the appellant’s liability for only basic customs duty, as per the exemption cited. In result, the appeal was allowed.
The Hyderabad bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) quashed the penalty of Rs. 1.01 lakh due to the lack of proof of smuggling foreign gold.
The bench observed that it was unclear how the department claimed the confiscated gold as a foreign-origin gold bar when the seizure was that of a bangle or kada. The bench further observed that when the appellant provided a proper justification for a lawful purchase of 999-purity gold from an authenticated source, the department should have confirmed the accuracy of the gold acquired. The bench, comprising of A K Jyotishi (Member Technical), ordered to set aside the impugned order and remanded the matter back to the Original Authority for re-adjudication. The Original Authority is directed to reconsider all the evidence, including the two invoices the appellants claim to have already submitted during the investigation.
In a recent case, the New Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) held that the panchnama should not be treated as a certificate and sets aside penalty under Central Excise Act, 1944.
The two member bench of Justice Dilip Gupta, President and Hemambika R. Priya, Member (Technical) observed that it is not possible to accept the contention advanced by the learned authorized representative appearing for the department that panchnama itself should be treated as a certificate or that the adjudicating authority was justified in itself examining whether the conditions set out in section 36B (4) of the Central Excise Act had been satisfied.
The Delhi Bench of Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that the assessee is entitled to avail the SSI exemption benefit as their factory is located in a rural area and the benefit cannot be denied for the reason that they have been manufacturing the goods bearing the brand name which belong to Nootan Polymers.
The two members bench of Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) has observed that Exemption notification neither provided that the specified goods must be the same or similar to the goods for which the brand name or trade name is registered. Further held that the appellant is entitled to avail the SSI exemption benefit under the provisions of Para-4(c) as their factory is located in a rural area and the benefit cannot be denied.
In a recent case, the Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) allowed immunity from penalty under section 108(1) of the Companies Act 2013 Act as declaration filed by appellant under VCES stands allowed.
A two member bench of Binu Tamta, Member (Judicial) and Hemambika R. Priya, Member (Judicial) held that the declaration filed by the appellant under VCES stands allowed. Hence, the impugned order is set aside. The appeal is, allowed accordingly.
The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that service tax on letting out shops and other premises for shops, canteen, and banks is applicable on Krishi Utpadan Mandi Samiti.
The two member bench of Binu Tamta (Judicial Member) and Hemambika R. Priya (Technical Member) has observed that as per Notification No.33/2012-ST dated 20.06.2012 the appellant is claiming exemption it is mandatory to follow the conditions for evaluating the threshold limit by arriving at the “aggregate value” of one or more taxable services provided by the service provider from one or more of the premises and not separately for each premises or each services. The tribunal held that Clause (viii) of Notification No.33/2012-ST dated 20.06.2012 in clear terms sets out that the “aggregate value” of the taxable services rendered by the service provider from one or more premises shall not exceed Rs.10 lakhs in the preceding financial year. It is not permissible to pick and choose from the notification what is beneficial and discard what is against the party. The Notification has to be considered in entirety and the party claiming the benefit therein has also to satisfy the conditions enumerated therein.
The Chandigarh Bench of Customs Excise & Service Tax Appellate Tribunal ( CESTAT ) ruled that glue mixtures in laminated sheet manufacturing are classified as “Prepared Glues and Other Adhesives” under the Central Excise Tariff, 1985.
The tribunal cited a relevant extract from the case of Samrat Plywood Ltd. where it was held that mixtures of Melamine Formaldehyde and Phenol-Formaldehyde used as adhesives were classifiable under Chapter 35.06 as “Prepared Glues and Other Prepared Adhesives,” and therefore, the company was eligible for exemption under Notification 50/2003-CE. In light of the above observation, the tribunal set aside the impugned orders against the appellant. The appellant’s appeal was allowed with consequential relief as per law.
The Chandigarh Bench of Customs Excise & Service Tax Appellate Tribunal ( CESTAT ) upheld the Adjudicating Authority’s decision of redemption fine ( RF ), and penalty ( PP ) reduction ranging from 10-5% for unlicensed import of used clothes citing in line with principles of fairness
The two-member bench comprising R. Muralidhar ( Judicial Member ) and Rajeev Tandon ( Technical Member ) referred to a similar case, Venus Traders vs. Commissioner of Customs ( Import ), Mumbai. In this case, the confiscation under Section 111(d) for lack of a specific import license was upheld but RF was reduced to 10% and the penalty to 5%, citing justice considerations. The tribunal observed that the respondent did not file any appeal against the confirmed duties, RF, and PP which shows the respondent agreed with the AA’s decision. Following the Venus Traders case observation, the tribunal also held that the Appellate Authority’s decision to reduce the RF and PP to 10% and 5% was consistent with earlier rulings and in line with principles of fairness.
The Chandigarh Bench of Customs Excise & Service Tax Appellate Tribunal ( CESTAT ) ruled that clearing & forwarding agents, bungalow rent, and maintenance in tire manufacturing are input services and it was entitled to Central Value Added Tax ( CENVAT ) Credit.
The tribunal referred to various judicial precedents supporting the treatment of C&F services as input services used in the distribution of finished goods. For Brokerage Charges and Maintenance & Repairs of Computers and Air Conditioners, the tribunal accepted that these services were covered under the “input services” definition of CCR, 2004 based on judicial precedents. The tribunal found that the appellant had disclosed all relevant information in their returns, negating any intention to suppress facts. Thus, the extended period of limitation was not applicable. Therefore, the tribunal set aside the Commissioner’s order and allowed the appellant’s appeal with consequential relief as per the law.
The Kolkata Bench of Customs Excise & Service Tax Appellate Tribunal ( CESTAT ) ruled that an excise duty refund cannot be termed as “Erroneous” if it was sanctioned following prevailing laws and CBEC clarifications.
The two-member bench comprising R. Muralidhar ( Judicial Member ) and Rajeev Tandon ( Technical Member ) observed both side’s arguments and referenced the ruling in RNB Carbides & Ferro Alloys Pvt. Ltd. v. Commr. of Central Excise, Shillong, which held that freight charges were not includible in the assessable value and that refunds sanctioned under previous legal interpretations could not be termed “erroneous” retroactively due to later changes in legal interpretation. The tribunal did not find any evidence of suppression of facts by the appellant as the returns were filed regularly and the refunds were granted monthly by the department. Hence, the extended period of invocation was deemed unjustified. Therefore, the tribunal set aside the orders and allowed the appellant’s appeal with consequential relief as per the law, if applicable.
In a recent case, the Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) set aside the order revoking Customs Broker License as the Show cause notice ( SCN ) failed to State allegations in respect of violation of Customs Brokers Licensing Regulations 2013 ( CBLR Rules ).
A two member bench of Justice Dilip Gupta, President and P. V. Subba Rao, Member ( Technical ) viewed that the impugned order passed by the Commissioner deserves to be set aside for the sole reason that the show cause the 2018 Regulations notice, which is the foundation of the order, is absolutely vague and does not even state the allegations in respect of the four violations.
The Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) set aside Service tax demand as taxable value comes below exemption limit. The Tribunal found that the Commissioner seriously erred in observing that the appellant is liable to service tax on the service portion, which is below the threshold limit of SSI exemption.
A two member bench of Ms. Binu Tamta, Member (Judicial) And Ms. Hemambika R. Priya, Member (Technical) found that the commissioner observed that the appellant has fulfilled the condition of Notification No.12/2003-ST dated 01.07.2003 and, therefore, the value of the material has be excluded and since the taxable value comes below the exemption limit on which also no service tax can be levied. The logical consequence is that the appeal filed by the Department has to be dismissed and the impugned order has to be affirmed. While allowing the appeal, the CESTAT set aside the impugned order which holds that the appellant is liable to service tax on service portion only, which is below the threshold limit needs to be set aside. Ms. J. Kainaat, Advocate appeared for the appellant and Shri Anand Narayan, Authorised Representative appeared for the respondent.
In a recent ruling, the Hyderabad bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) upheld the rejection of time-barred service tax refund claims filed by the appellant.
The CESTAT bench upheld the rejection of the claims, agreeing with the original authority that the refunds were time-barred. The bench noted that even if the service tax was paid by mistake, the statutory time limit for filing a refund claim must be adhered to. The CESTAT bench, comprising A K Jyotishi ( Member Technical ) found no merit in the appeal and dismissed it.
The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) upheld the service tax demand on ‘Technical Testing and Analysis Service’ and ‘Consulting Engineer Service’.
The CESTAT bench, comprising of R. Muralidhar ( Member Judicial ) and K. Anpazhakan ( Member Technical ) upheld the demand for service tax along with interest confirmed in the impugned order under the categories of ‘Technical Testing and Analysis Service’ and ‘Consulting Engineer Service’. However, no penalty was imposed on the appellant with respect to these confirmed demands, as there was no evidence brought on record to establish suppression of facts with the intention to evade payment of tax in respect of these demands.
In a major relief to Honda Motors, the Allahabad Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that the CENVAT Credit, which pertains to input services exclusively used in dutiable goods, is not required to be included in the “total CENVAT Credit” for apportionment between exempted services and dutiable goods.
While allowing the appeal, the tribunal held that to invoke proviso to Section 73(1), the conditions stated therein is required to be fulfilled, it should be proved that the Appellant had, by some positive act, suppressed the fact from the department with an intention to evade irregular Cenvat credit. There is no suppression of facts. The tribunal held that since the demand of Cenvat Credit itself is not sustainable, penalty is not imposable and consequently, no interest is also recoverable. Ushmeet Kaur Monga appeared for the appellant and Sandeep Pandey appeared for the respondent.
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