Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Dept. Can’t Classify Product as Zarda Scented Tobacco After Repeatedly Approving It As Chewing Tobacco: CESTAT *  Mere Uploading Of GST Order On Portal Is Not “Valid” Service: Tripura HC *  CGST Can Proceed Even If SGST Closed Similar Case Earlier: Delhi HC *  SC upholds 28% GST on online gaming with retrospective effect. *  West Bengal Govt cuts E-way Bill Threshold limit to Rs. 50,000 for intra-state goods movement. *  Criminal Prosecution Under Central Excise Act Can’t Continue After CESTAT Sets Aside Duty Demand on Merits: Punjab & Haryana High Court. *  Madras High Court Quashes GST Assessment Orders for Denial of Personal Hearing; Remands Matter Subject to 10% Deposit *  Ex Parte GST Order: Madras High Court Directs Immediate Removal of Bank/ITC Attachment Upon 25% Deposit *  J.K. Cement Receives GST Demand Order of Rs 8,02,113/- from Ahmedabad Tax Authority *  Delhi Police EOW Busts Alleged Rs. 128 Crore GST Fake Invoice Network. *  REPLY TO SCN CAN’T BE TREATED AS “EMPTY FORMALITY”: ORISSA HIGH COURT QUASHES GST DEMAND OF RS. 57.30 LAKH *  Challenge to CGST Provisions restricting ITC to Bonafide Purchasers : Allahabad HC issues notice *  CBIC Notifies Revised Customs Tariff Values for Edible Oils, Gold, Silver, Brass Scrap and Areca Nuts *  Delhi HC Orders Removal of GST Attachment After Statutory 1 Year Period Expired *  GSTAT Extends Relaxed Appeal Filing Guidelines till December 31, 2026 *  AO fails to Provide Import - Export Data from DGFT to Taxpayer for Reconciliation *  Gold, Silver Imports To Get Costlier As Govt Raises Customs Duty To 10%  *  GSTAT Enables Pre-Payment Access to Document Upload and Checklist for GST Appeal Filing *  GST Portal Restrictions Can’t Override Statute: Gujarat HC Allows Cross-State Transfer Of CGST ITC After Amalgamation *  Centre Revises HS Codes for Large Diameter Steel Pipes Used in Oil & Gas Pipelines *  Customs Duty Liability Arises On Warehouse Clearance Date: Supreme Court *  Government lifts export ban on de-oiled rice bran *  CESTAT Grants 12% Interest on Pre-Deposit for Investigation from Date of Deposit till Refund and Denies Interest on Interest. *  Government Overhauls GST Classification Framework for Non-Alcoholic Beverages; Fruit Juice Drinks, Milk-Based Beverages and Caffeinated Drinks to Attract Revised 5% and 40% GST Rates from May 1, 2026 *  India’s gross GST collections hit a record Rs 2.42 lakh crore in April, up 8.7% *  Customs clearance stalled, revenue hit over MRP dispute *  Shipping Corporation explores Middle East routes as Hormuz tensions disrupt cargo movement *  India, Kenya signs MoU for exchange of pre-arrival customs information *  No demand of Taxes under Reverse Charge if Tax Already Discharged by Service Provider under forward charge *  The India-New Zealand Free Trade Agreement, signed "once-in-a-generation" deal that eliminates tariffs on 100% of Indian exports to New Zealand
Subject News *  Consignment Sales Can’t Be Reclassified as Inter-State Sales Based on Pre-Agreement Evidence: CESTAT *  Exporter Can’t Be Denied Advance Authorization Benefit Due To ICEGATE Technical Glitch: Delhi High Court *  No GST Demand For Mere Wrong Set-Off Of IGST Credit Under CGST And SGST Heads: Kerala HC. *  Cenvat Credit Can’t Be Denied on Input Services Having Nexus With Manufacturing Activities: CESTAT *  Pending Proceedings Can’t Survive Without Saving Clause: Calcutta High Court Quashes GST Demand of Rs. 6.28 Crore After Omission of Rule 96(10) *  Madras HC Quashes GST Demands on TASMAC (Tamil Nadu State Marketing Corporation) Bar Licence Fee *  GST Proceedings Cannot Survive Omitted Rule Without Saving Clause: Calcutta HC *  Provisional Release Can’t Be Denied Solely On Dept. Suspicion Of Misclassification And Undervaluation Of Imported Goods: CESTAT *  Businesses Should Not Be Kept Outside GST Regime Without Due Process: Gauhati High Court *  Punjab & Haryana HC Directs Reconsideration of Contractors’ Claim for Additional GST Payment After Tax Rate Hike From 12% to 18% *  S. 108 Statements Can’t Be Sole Basis Without Following Section 138B Procedure: CESTAT *  Bombay High Court Frames Key Questions on Mandatory Distribution of ITC U/s 20 CGST Act *  Filing of Annexure-B for Refund Applications involving Accumulated ITC using the offline utility in GST portal: GSTN *  No Service Tax on Parent Company’s Un-Invoiced Cost Allocations Without Actual Service or Consideration: CESTAT  *  Calcutta High Court Upholds GST Classification of Polypropylene Leno Bags as Plastic Products *  DRC-01 Summary Can’t Replace Mandatory SCN: Gauhati High Court *  GSTAT Issues Major Bench Allocation Framework; All Appeals to First Go Before Division Bench *  ITC Blocking Without Reasoned Order Violates Rule 86A; Punjab & Haryana HC Directs Release of Credit *  Allahabad HC Refuses Bail to CGST Superintendent In Rs. 70 Lakh Bribery Case *  S.130 Can’t Be Invoked Without Prior Tax Determination U/s 73/74: Allahabad High Court Quashes GST Confiscation Proceedings *  SC grants Bail to Rs 54cr GST case  *  Karnataka HC Sets Aside Duplicate GST Orders, Orders Fresh Hearing on GSTIN Cancellation *  DRC-01 Summary Can’t Replace Mandatory SCN: Gauhati High Court *  Transfer Of Unutilized ITC After Amalgamation - Supreme Court Issues Notice *  PUNJAB & HARYANA HC QUASHES GST CANCELLATION NOTICE FOR FAILURE TO PROVIDE CBIC ENQUIRY REPORT *  LICENSE FEE, TECHNICAL ASSISTANCE CHARGES NOT INCLUDIBLE IN CUSTOMS VALUE UNLESS THEY ARE A CONDITION OF SALE: CESTAT *  DELHI HC ORDERS REMOVAL OF GST ATTACHMENT AFTER STATUTORY 1 YEAR PERIOD EXPIRED *  CUSTOMS BROKER CAN’T BE FAULTED JUST BECAUSE EXPORTER’S GST REGISTRATION WAS PREVIOUSLY CANCELLED: CESTAT   *  Supreme Court Dismisses Review Plea Against Delhi HC Ruling Holding Real Operator Behind Fake GST Firms Liable As ‘Taxable Person  *  GST Appeal Can’t Be Rejected Merely Because DRC-07 Was Not Uploaded On Portal: Bombay High Court  

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