Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  The GSTN has issued an Advisory dated 21.04.2026 about the introduction of an Offline Tool for the Invoice Management System (IMS)  *  CBIC extends due dates for filing of FORM GSTR 3B  for the month of April 2026 *  Interest cannot be imposed in adjudication order, if not demanded/quantified in show cause notice : Allahabad HC *  Wheelchairs with toileting facility eligible for exemption: CESTAT affirms customs duty exemption to importer *  Industries urge GST council to allow inverted duty refunds on input services *  Tamil Nadu GST dept introduced virtual hearing facility for GST appeals under under section 107 of the TNGST act: detailed guidelines  *  CIC urges authorities to implement GST evasion complaint tracking system *  Even if the assessee opts "NO" for personal hearing in form DRC-06 ,The mandatory requirement under section 75(4) to grant opportunity of hearing cannot be waived:Gujarat High Court  *  Glufosinate imports curbs imposed by govt *  Government extends Re-import period for exported cut & polished diamonds *  CIC flags lack of tracking system for tax evasion complaints,urges GST authorities to improve transparency *  No Custodial Interrogation needed in GST fraud case based on documentary evidence already in Department's Possession : Chattisgarh HC *  Orders under section cannot be sustained if passed without considering the taxpayer's objections and without granting a personal hearing:Gujarat High Court *  Mere cancellation of supplier's registration cannot,by itself,justify denial of ITC or cancellation of the recipient's registration:Bombay High Court *  High Court sets aside GST notice citing factual errors and natural justice violations *  Provisional Bank Attachment under Section. 110 of Customs Act Unsustainable Beyond Statutory period without Extension order: Bombay HC orders to defreeze accounts *  Post Clearance MRP Alteration by Distributor Does not attract Differential Customs Duty: CESTAT *  DGFT Expands scope of 'Screws' classification under RoDTEP Scheme  *  E-way bills surze to all time high of 140.6 million in March *  GST Exemption Allowed on Pure Labour Services for Standalone Houses: AAR  *  GST Payable Only on Margin in Second-Hand Car Sales, Subject to Strict Conditions and No ITC Claim: AAR *  DGFT rolls out procedure for allocation of calcined coke *  GST portal update : Pre-deposit amount now editable in Appeals *  J&K HC declared TMT scrap a 'Specified Good' eligibile for GST refunds under Support Scheme  *  Pigmy agents are employees of banks; no GST can be levied on commission  paid to them : Karnataka HC *  DGFT Revises HS Code Description for Screws Under RoDTEP *  GST Registration Cancellation Invalid Without Proper Service of Notice: Allahabad High Court. *  Bengaluru CGST | GST Backlog Appeals Deadline Fixed at June 30, 2026 *  No Time Bar on Refund of Service Tax for Services Not Rendered: CESTAT  Remands Indiabulls Case for Unjust Enrichment Check. *  Supreme Court Holds Renewable Energy Incentive Must Benefit Generators, Not Be Adjusted in Tariff
Subject News *   Delhi HC Quashes Order, Says Reminder Cannot Validate Improperly Served GST SCN *  KARNATAKA HIGH COURT REMANDS GST SHORTFALL MATTER DUE TO ABSENCE OF PERSONAL HEARING   *  CESTAT cancels confiscation and penalties on imported computer cabinet cases: Custom duty restricted to 111 surplus units *  Deposit of tax during search or investigation cannot be treated as 'Voluntary Payment' : Bombay High Court *  Section 76 of the CGST cannot be invoked where the tax has already been duly deposited, even if through another registration of the same entity: Madras High Court *  Sec 74 allows use of material regardless of source; illegality or flaws in section 67 search do not vitiate valid adjudication: HC *  Inter-State transfer of ITC on Amalgamation permissible as given under section 18(3) read with rule 41 of the CGST rules, 2017: Gujarat High Court *  HC: No GST on commisson paid to Pigmy Agents *  IGST refund denial on illegible bill of lading invalid absent chance to furnish docs; merit reconsideration in appeals directed: HC *  ITC is not admissible on GST paid on leasehold rights of land used fpr setting up an air seperation plant: AAAR,Tamil Nadu *  GST: No penalty under Section 74 after voluntary ITC reversal due to non-existent supplier : High Court *  TN AAAR denies GST ITC on Land Lease under Sec. 17(5)(d) for setting up plant and machinery *  GST proceedings quashed as notices sent to old address, despite updated address in registration *  Importer Can’t Be Penalised for Alleged IGCR Procedural Lapses Without Evidence of Departmental Error: CESTAT *  Structured Healthcare Training Not ‘Charitable Activity’, 18% GST Payable: AAR  *  CESTAT As The Appellate Authority For Central Sales Tax Disputes: A Paradigm Shift Under Finance Act, 2023 *   Rs. 25K Cost Imposed On SGST Joint Commissioner for Attaching Bank  Accounts Without Forming Mandatory “Opinion”: Bombay HC *   Ex-Parte GST Order Without Hearing Violates Natural Justice: Karnataka  High Court Quashes Adjudication and Bank Attachment.  *   Retrospective GST Cancellation Can’t Invalidate Genuine Transactions:  Jaipur Commissioner (Appeals) Quashes Rs. 95,670 ITC Demand. *   GST Pre-Deposit Non-Compliance: Allahabad High Court Allows Appeal  Subject to Rs. 30 Lakh Balance Deposit, Recognises Offline Filing. *  Documentary Nature of Evidence: Allahabad High Court Grants Bail in Rs. 32.66 Crore Fake ITC Fraud Case *  Supreme Court Flags Systemic Bias in Army’s Permanent Commission Process for Women Officers *  Re-Determination of Land Compensation Can Be Based on Appellate Court Awards, Clarifies Scope of S. 28-A: Supreme Court. *  Supreme Court Imposes Rs. 5 Lakh Costs On Rent Authority Officer For Acting Beyond Jurisdiction. *  DGGI Meerut | Court Denies Bail to Accused in Claiming Fake ITC And Export Refunds *  Denial of GST Rate Revision Benefit to Contractor Violates Article 14: Rajasthan HC *  GST Registration Cancellation for Non-Filing of Returns: Gauhati High Court Directs Restoration on Compliance. *   Supreme Court Quashes FEMA Adjudication Orders, Revives Proceedings at  Show Cause Stage. *   Higher Rank, Harsher Punishment Justified: Supreme Court Restores Dismissal  of Bank Manager in Misappropriation Case. *   Limitation for Export Refund to Be Counted from Foreign Exchange Realisation,  Not From Export Invoices Issuance: CESTAT  

Comments

Print   |    |  Comment

PJ/Case Law/2013-14/1669

Removal of waste cannot be leviable to service tax under cargo handling service andCredit on Tippers under Chapter 87 not admissible.

Case:-ANE INDUSTRIES PVT LTD GAGANDEEP SINGH Vs COMMISSIONER OF CUSTOMS & CENTRAL EXCISE, NAGPUR
 
Citation:-2013-TIOL-1102-CESTAT-MUM
 
Brief facts:-The appellant, M/s. ANE Industries Pvt. Ltd., Chandrapur were undertaking service of site formation and clearance, excavation and earthmoving and demolition services and was registered with the department as such w.e.f. 23/07/2007. Acting on intelligence that the appellant was not discharging service tax liability, investigation was undertaken in August 2010 by conducting search of the premises of the appellant and also by recording statements of concerned officials who dealt with the matter. The investigation revealed that the appellant had undertaken the work of ‘removal of old dump/embankment (OBR) by hiring of equipment such as HEMM, Tippers, Dozers, Drills, Water Sprinklers, including excavators for loading and transportation, dumping, spreading, dozing, water sprinkling and grading at specified places at Gouri 1 and 2 areas of Gouri Mines in Ballarpur area and the appellant was paid a consideration @ 30.80 per cubic meter and the total value of the work was Rs. 16,26,85,600/-. Investigation revealed that the appellant had not filed any statutory ST-3 returns for the services rendered by them and also did not discharge the correct service tax liability. Thereafter, the appellant filed returns in ST-3 for the period October 2006 to September 2009 vide returns dated 26/08/2010 and also enclosed challans for the payment of dues and also challans of the CENVAT cre4dit availed and utilised for the payment of service tax. Investigation also revealed that during the period February, 2009, to June, 2010 the appellant received a consideration of Rs. 52,59,86,270/- including service tax. The value excluding service was Rs. 47,63,88,424/- and service tax liability on the said amount worked out to Rs.4,91,84,214/-. As against the said liability the appellant had paid a sum of Rs. 26,33,745/- through cash and an amount of Rs. 2,26,05,087/- was paid through CENVAT credit leaving a shortfall of Rs.2,39,45,381/-. The verification of the particulars submitted by the appellant indicated the appellant had availed CENVAT credit of excise duty paid on tippers under Chapter 87 of the Central Excise Tariff under the capital goods credit and the said amount was not eligible to be availed as credit under CENVAT Credit Rules 2004 since Chapter 87 stood excluded from the purview of capital goods during the relevant period. On conclusion of the investigation, show cause notice dated 04/10/2011 was issued proposing to demand service tax amounting to Rs. 2,39,45,381/- and proposing to deny CENVAT credit of Rs. 2,26,05,087/- apart from interest and penalties. The notice was adjudicated upon vide the impugned order and the demands were confirmed along with interest and penalties were imposed on the appellant. Hence the appellant is before Tribunal.

Appellant’s Contentions:-The learned counsel for the appellant makes the following submissions. As regards the wrong availment of credit it is his contention that the tippers are actually classifiable under Chapter 84 of the Central Excise Tariff Act and not under Chapter 87 and therefore, they would be eligible for availing CENVAT credit of excise duty paid on tippers. He relies on the decision of this Tribunal in the case of Commissioner of Central Excise, Vadodara vs. Dipco Metal Fabricators Pvt. Ltd. 2006 (196) ELT 23 = (2006-TIOL-251-CESTAT-MUM)in support of this contention. His second submission is that the classification of the service done in the impugned order under “Site Formation and Clearance, Earth Moving and Demolition” service vide Section 65(97) (a) read with Section 65(105)(zzza) is incorrect and the service should be classified as ‘Cargo Handling Service' and he relies on the decision of this Tribunal in the case of Gangadhar Bulk Movers Pvt. Ltd. vs. Commissioner of Central Excise, Nagpur 2012 (27) STR 258 = (2011-TIOL2000-CESTAT-MUM). However, he fairly submits that this point was not agitated before the adjudicating authority when the case was heard by the said authority and, therefore, he prays for allowing application for admission of additional grounds in this regard. Lastly, he submits that bulk of the demands are time-barred. Inasmuch as they have paid a sum of Rs. 1.3. crore in cash, same should be considered as sufficient for hearing of the appeal. However, on instructions from his client, he submits that they are willing to make a deposit of Rs. 35 lakhs in addition to the amount already paid.
 
Respondent’s Contentions:-The representative for revenue submits that he entire case is one of fraudulently availing CENVAT credit and no-filing of statutory returns as required under the law, and, therefore, the extended period of time has been rightly invoked in the show cause notice. As regards the classification of the service, he relies on the instruction issued by the CBEC vide circular No. B1/6/2005-TRU dated 27/07/2005 read with circular NO. 232/2/2006-CX.4 dated 12/11/2007 from where it can be seen that overburden removal, removal of waste prior to extraction of coal/minerals are rightly classifiable under the category of ‘Site Formation and Clearance, Excavation and Earth Moving and Demolition Service' w.e.f. 16/06/2005. In view of the above the alternate classification under Cargo Handling Service raised by the appellant is not sustainable in law. Accordingly, he pleads for putting the appellant to terms.
 
Reasoning of Judgment:-After considering the submissions and hearing the explanations, as regards the alternate classification sought under the category of Cargo Handling service, this contention has not been raised before the adjudicating authority. Besides, overburden and wastage for removal cannot be considered as cargo. Cargo usually refers to goods or freight carried by a ship or vessel. Thus, prima facie this contention is not convincing. As regards the claim of eligibility to CENVAT credit, from the records and the invoices submitted, it is evident that the excise duty on the said tippers had been discharged under Chapter 87 by the manufacturer of the vehicles. If that be so, the appellant cannot claim and seek to change the classification from Chapter 87 to Chapter 84 based on the tribunal decision in the case of Dipco Metal Fabricators Pvt. Ltd. (supra). We have also perused the decision. In the said decision, the only reason given for classification of the tippers under Chapter 84 is that, similarly placed manufacturers in the Mysore Commissionerate has classified the goods under Chapter 84 and therefore, the items should be classified under Chapter 84. We do not agree with the reasoning given in the said decision, inasmuch as classification of a product cannot be decided by reference to classification elsewhere but in accordance with the description given in the tariff, the section notes, chapter notes and Rules of interpretation. The same issue has come up for consideration before the Bangalore Bench of this Tribunal in the case of Ganta Ramanaiah Naidu vs. Commissioner of Central Excise, Guntur 2010 (18) STR 10 =(2010-TIOL-213-CESTAT-BANG)wherein it was held that CENVAT credit on tippers, which are classified under Chapter 87 of the Central Excise Tariff, and on which excise duty has been discharged under that Chapter, cannot be taken as credit under the category of capital goods under Rule 2(a)(A)(i) of the CENVAT Credit Rules, 2004 as the said Rule permits credit to be taken only in respect of goods falling under Chapter 82,84,85 or 90 of the Central Excise Tariff Act. This decision of the Bangalore Bench of this Tribunal, which has examined the matter on merits, prevails over the decision in the case of Dipco Metal Fabricators Pvt. Ltd. In as much as the appellant has availed CENVAT Credit wrongly the details of which has not been furnished to the department, we are of the prima facie, view that the appellant is not eligible for the CENVAT credit on goods classifiable under Chapter 87 and utilisation of such credit for payment of service tax is not permissible. As regards the invocation of extended period of time, we find that even though the appellant had filed ST-3 returns belatedly after the commencement of investigation, they have not declared the correct amounts of consideration received by them from their service recipients. There is a huge variation in the amount of consideration received by the appellant as declared in the ST-3 returns and as certified by the recipient themselves. While the figures of actual receipt are Rs. 36,80,16,556/- vis-à-vis Rs. 23,83,30,290/- as declared in the ST-3 returns for the period 2008-09 to 2010-11 (upto June 2011). In view of the above position, it appears that he appellants has mis-declared the consideration received for the services rendered. Therefore, prima facie, we are of the view that the appellant has not made out a case for complete waiver of pre-deposit of the dues adjudged. The appellant has not pleaded any financial hardship nor any evidence in this regards have been placed before tribunal. Thus, the balance of convenience lies in favour of Revenue. Accordingly, we direct the appellant to make a pre-deposit of Rs. 2.8 crores within a period of eight weeks which is approximately the amount of ineligible credit availed by the appellant and report compliance on 29th July, 2013. On such compliance, pre-deposit of balance of dues adjudged against the appellant shall stand waived and recovery thereof stayed during the pendency of the appeals. The learned counsel for the appellant is present in the Court and has noted the order given herein above and this constitutes sufficient intimation to the appellant for compliance. In case of default, the appeal is liable to be dismissed without any further notice.
 
Decision:-Part Pre-deposit ordered.

Comment:-The essence of this case is that removal of overburden, waste etc. is classifiable under the category of site formation and not under cargo handling service. Moreover, cenvat credit for capital goods is admissible only with respect to goods of chapter 82, 84, 85 or 90 of the CETA and so the tippers classified under chapter 87 are not eligible for capital goods credit.
 

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com