PJ/Case Laws/2010-11/31
CASE LAWS
Prepared By:
CA Pradeep Jain,
Sukhvinder Kaur,LLB[FYIC],
Siddharth Rutiya and
Mayank Palgauta
Excise Section
Case: Precimac Products& Anr v/s CCE, Ahmedabad
Citation: 2010 (102) RLTONLINE 48 (CESTAT-AHMD)
Issue: - Whether the private records like statement of proprietor and the diary are sustainable in order to establish the clandestine removal made by assessee?
Brief Facts: - Appellant No. 1 is engaged in the manufacture of locking assembly and clutch. They were claiming SSI exemption and were not registered under Central Excise. Charge of clandestine removal was made against them and another unit M/s National Machine Tools & Equipments. The proprietor of the said another unit was father of appellant no.1. It was alleged that clearances were made by appellant no. 1 to another unit on the ground with an intention to remain within the exemption limit. The said allegation was based on the diary recovered from appellant no. 1 and on the statement made by the proprietor of appellant no. 1. The demand was confirmed by the Original Authority and upheld in appeal by the Commissioner (Appeal). Therefore, the appellants are before the Tribunal.
Appellant’s Contentions: - Appellant contended that the whole case of the Revenue is based on a diary recovered during search which contained details of dispatch of finished goods manufactured by the appellant and materials sent for job work. The admission made by Shri N.K. Prajapati about the correctness of diary cannot be considered as sufficient for the purpose of demanding duty in view of the fact that M/s. National Machine Tools & Equipments had a full-fledged factory for the manufacture of goods; the buyers whose statements were recorded had clearly stated that they had placed orders on M/s. National Machine Tools & Equipments and they had received the goods under the invoice of M/s. National Machine Tools & Equipments. It was also submitted that the fact that one of the buyers had stated that he was dealing with Shri N.K. Prajapati, proprietor of the appellant would not help the Revenue’s case in view of the fact that in the statement of Shri D.D. Mishra on behalf of a purchaser, the telephone number given was non existent and further he had also stated that he had joined the company later than the period covered by the show cause notice. In any case both the buyers had clearly stated that they had received the goods from M/s. National Machine Tools & Equipments only. Further it is also submitted that the payments were also made to M/s. National Machine Tools & Equipments only. Further it is also submitted that there were no financial transactions between the two companies and there was no financial flow back. Reliance was placed on the following cases:
1. CCE Vs. Fertichem [2005 (191) ELT 571 (T)]
2. M.M. Dyeing & Finishing Vs. CCE [2001 (47) RLT 567 (CEGAT-Del]
3. Someshwara Cements & Chem Ltd. Vs. CCE [2005 (191) ELT 1062 (T)]
4. Doaba Alloys Casting (P) Ltd. Vs. CCE [2005 (70) RLT 880 (CESTAT-Mum.)]
Respondent’s Contentions: - Revenue submitted that there was a clear admission by Shri Deepak Prajapati stating that the goods were cleared in the name of his father’s firm to remain within the existed limit. Further it also submitted that the diary gave all the details and in view of the clear cut admission by the proprietor and the recovery of the diary and the statements of buyers, Revenue has been able to establish a case against the appellants.
Reasoning of Judgment: - The Tribunal held that with regard to the statement made by Shri Deepak Prajapati, the proprietor of appellant no. 1, his father, the proprietor of M/s. National Machine Tools & Equipments had never admitted the fact of clandestine removal. It was not the case of the department that M/s. National Machine Tools & Equipments was incapable of manufacturing the goods.
The Tribunal held that statements of two purchasers out of 18 were recorded who had not stated that they used to place an order to the appellant firm but the goods were supplied from the M/s. National Machine Tools & Equipments. On the contrary they had supported the appellant firm. Revenue did not find any incriminating documents showing that the goods were manufactured by the appellant. The appellant had produced transportation bills to the respondent showing that the goods were transported from the premises of M/s. National Machine Tools & Equipments. This has not been contradicted. The appellant had produced Chartered Accountant’s Certificate showing that the firm had not a single financial transaction with M/s. National Machine Tools & Equipments. The appellant had produced Chartered Accountant’s Certificate showing that one of the raw materials - main input - required for to manufacture of the disputed goods was seamless pipes which were never purchased by the appellant firm.
The Tribunal held that in view of the above evidence, the statement of proprietor and the diary is not sustainable. It was held that clandestine removal or removal in another name cannot be sustained based on private records without corroborating evidence. The cases relied upon by the appellant were held to be applicable to the appellant’s case.
Further, it was held that the decision of the Tribunal in the case of Prabhat Industries Vs. CCE, Valsad [2005 (70) RLT 880 (CESTAT-Mum.)] was also relevant.
In the end, the Tribunal held that the evidences collected by the Revenue are not sufficient to establish the case against the appellant No.1. Impugned order set aside.
Decision: - Appeals allowed.
Comments: - This is very good decision and Tribunal has held in number of cases that mere production of Statement of proprietor or diary is not sufficient to prove the clandestine removal made by assessee. For establishment of the same, the Revenue is liable to prove or present the proof from records of assessee.
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Case: CCE,
Citation: 2010 (102) RLTONLINE 87 (CESTAT-BAN)
Issue: - Whether the assessee can avail Cenvat credit on the common inputs used for manufacture of dutiable final product as well as in manufacture of exempted job work goods.
Brief Facts: - Respondents are manufacturers of copper wire and are also undertaking job work on the copper rods for manufacture of enameled wires under Notification No. 214/86-CE dated 25.3.1986. For the month of April, 2006, respondent had availed cenvat credit on inputs which were used in the job work process as well as on the inputs used in the manufacture of their own products. Revenue contended that respondent were required to reverse the credit availed by them on such inputs on the ground that the goods were cleared by the respondents on completion of job work basis were cleared by claiming benefit of exemption under Notification No. 214/86-CE. Thus, show cause notice was issued.
The Adjudicating Authority following the decision of the Larger Bench in the case of Sterlite Industries India Ltd v/s CCE, Pune [2005 (68) RLT 25 (CESTAT-LB)], dropped the demand.
Hence, Revenue is before the Tribunal.
Appellant’s Contentions: - Revenue contended that respondent was a job worker availing the benefit of Notification No. 214/86-CE while clearing the goods to the principal manufacturer. He was not clearing goods under Rule 4 (5) of the CCR, 2004 to the supplier of raw materials. The clearance of goods under Rule 4 (5) and under Notification No. 214/86-CE dt. 25.3.1986 cannot be equated. The credit availed on the said raw materials when used in the manufacture of finished goods on job work basis is not expressly provided for in the Cenvat Credit Rules, 2004. The said job worked goods are also not cleared on payment of duty.
Revenue contended that Notification No. 214/86-CE issued under Section 5A of Central Excise Act, 1944, exempts the goods manufactured in a factory on job work basis subject to conditions stipulated therein. The goods manufactured by respondent in his factory on job work basis were therefore “exempted goods” only. Therefore the transactions of the respondent so far as job worked goods are concerned are under Notification No. 214/86 and not under Rule 4 (5) of Cenvat Credit Rules, 2004. The ratio of decisions relied upon by the respondent and the Adjudicating Authority are squarely applicable to movement of goods made by the job worker under erstwhile Rule 57F (4) of Central Excise Rules, 1944 and present Rule 4 (5) of Cenvat Credit Rules, 2004.
Revenue further contended that the term ‘exempted’ has a definite connotation which is attributed to the notification issued by the Central Govt. Notification No. 214/86-CE dated 25.3.1986 issued by the Central Govt., under Section A of Central Excise Act, 1944, exempts the goods manufactured by the job worker in his factory and cleared to the supplier of raw materials.
Reasoning of Judgment: - The Tribunal held that both the Lower Authorities had concurrently held in favour of the respondent by relying upon the Larger Bench decision in the case of Sterlite Industries (I) Ltd. The Tribunal held that relying upon the decision of the Larger Bench, various Tribunals have held that inputs obtained by job worker himself and after availing Cenvat credit used for the manufacture of goods for the purpose of final products cleared by him and also for job worker, credit is eligible. The Tribunal relied upon the following judgments:
1) CCE,
2) CCE, Vadodara Vs. J.H. Kharawala (P) Ltd., 2009 (235) ELT 332 (Tri.-Ahmd.)
3) R.M. Polypack Pvt. Ltd. Vs. CCE, Allahabad 2008 (226) ELT 591 (Tri.-Del.)
In the end the Tribunal held that since the issue is now squarely settled by the above cited various decisions, Revenue’s appeal is without merits.
Decision: - Appeal rejected.
Comments: - The audit has raised this issue many times. Even if the credit is taken on small quantity of inputs then also huge demand of reversal on value of exempted goods is being raised. We have come across a decision when credit of Rs. 30,000/- was taken and a demand of Rs. 65 lakhs was raised on SSI unit. Although these decisions as well as decision of Mumbai High Court in case Sterllite Industries have come but the department is still keeping this cases in call book. Even the board has also called opinion from commissioners where they intend to job work to Rule 6(5) of Cenvat credit Rules. By such amendment there will not be any need to reverse the Cenvat credit. But the final decision has not reached so far.
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Case: Personality Limited v/s Commr. Of C. Ex., Bangalore-III
Citation: 2010 (259) ELT 385 (Tri-Bang)
Issue: - Whether the demand of duty is said to be barred by limitation if assessee has not declared in their RT-12/ER-1 returns or by any communication that he has not paid duty on fabrics under Notification No. 15/2002-CE dated 01.03.2002?
Brief Facts: - Appellants are manufactured of ready made garments made of knitted or crocheted textile fabrics. Department alleged that during the period 26.09.2002 to 05.01.2003, appellants had cleared its finished goods wrongly by availing benefit of Notification No. 15/2002-CE, dated 01.03.2002.
Lower Authorities found that exemption extended to articles of apparel made of knitted or crocheted textile fabrics under Notification No. 15/2002-CE dated 01.03.2002 was inter alia subject to condition that knitted or crocheted fabrics used in the production of articles of apparel had suffered appropriate duty and manufacturer had not taken credit of duty paid on inputs. Notification No. 15/2002 had also extended exemption to knitted or crocheted fabrics subject to conditions. It was found that appellants had procured knitted or crocheted fabrics from suppliers, who were availing the benefit of Notification No. 15/2002 and were not paying duty.
The Adjudicating Authority invoked the extended period of limitation on the finding that appellant had not declared in their RT-12/ER-1 returns or by any communication that it had not paid duty on fabrics which information was essentially required by the Department. Reliance was placed on Nizam Sugar factory [1999 (114) ELT 429 (Tri-LB)] wherein it was held that limitation of 5 years under Section 11A (1) was available even when the Department had knowledge about suppression, fraud etc.
Against this order, appellant are in appeal before the Tribunal raising the issue that demand was barred by limitation.
Appellant’s Contentions: - Appellant contended that the Authorities had made enquiries in January 2003 with them with regard to their eligibility to the benefit of Notification and statements were recorded from their Financial Controller & Company Secretary. And the show cause notice was issued in December, 2004. It was contended that Authorities were aware about the facts 2 years earlier to issuance of show cause notice. The Authorities had misinterpreted the statement of their Financial Controller & Company Secretary to give an impression that the suppliers of fabric to the appellant had been enjoying exemption under Notification No. 15/2002.
It was submitted that Revenue had not produced any evidence to show that the impugned articles of apparel during the material period had not suffered duty. It was submitted that Revenue had to prove that the impugned goods were not eligible for the exemption availed for the reason that the inputs had not suffered appropriate duty of excise.
Reliance was placed on Anand Nishikawa Company Ltd v/s CCE [2005 (188) ELT 149 (SC)].
Reasoning of Judgment: - The Tribunal relied upon the judgment of
With regard to invocation of extended period of limitation by the Lower Authorities on the basis of judgment given in Nizam Sugar Factory case, the Tribunal held that the said judgment was vacated by the Apex Court in Nizam Sugar Factory v/s CCE [2006 (197) ELT 467 (SC)]. Also, in view of judgment given in Anand Nishikawa Company Ltd, the impugned demand could not be confirmed against the appellants owing to limitation. Impugned order vacated.
Decision: - Appeal allowed.
Comments: - The department normally raises the demand and invokes extended period saying that it was not shown in the returns. When the law does not require to show the same in returns then the assessee can not show the same. This decision will be far reaching effect in such cases.
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Citation: 2010 (259) ELT 424 (Tri-Del)
Issue: - Whether non recording of information in the register ST XXVI-B will amount to presumption that the goods have never crossed the barrier on relevant dates in concerned vehicles?
Brief Facts: - Respondents are engaged in the manufacture of PVC and HDPE Pipes etc. Department conducted investigation in which it was revealed that from the period from 1998 to 2001, one M/s Karan & Company, Parwanoo had issued invoices in relation to various raw materials in favour of respondent but the said goods were never supplied to the respondent. On the said invoices respondent had availed modvat credit. Accordingly, Department issued show cause notice dated 09.07.2003 to the respondent under Section 11A of CEA, 1944. The Lower Authority dropped the demand.
Against this order, Revenue is in appeal before the Tribunal.
Appellant’s Contentions: - Revenue contended that every supplier who brought the goods within Parwanoo was required to submit ST-XXVI-A form at the entry point for due compliance of the sales tax liability under local Sales Tax Act in force in the area. Such form required disclosure of details about the goods transported in the vehicle which enters Parwanoo and those records were transcribed in the register maintained by the statutory authorities under Sales Tax Act called ST XXVI-B register. Investigation revealed that no vehicle carrying the goods had ever entered the entry point in the said area. The details of any vehicle were not found in the afore-mentioned statutory records. This fact was also confirmed by E.T.O. at Parwanoo. On the letter by Sr, Intelligence Officer to ETO, Revenue submitted that though respondents tried to contend that such forms were submitted from time to time and they were about 32 forms, but the details given in said forms do not tally with the statutory records. It was submitted that the forms made available by the respondents carried totally different numbers.
Revenue submitted that shortage was also found on physical verification of the stock of the raw materials and the finished products vis-à-vis statutory records. For this discrepancy no explanation was given by the respondents.
Relying upon the judgment in V. K. Enterprises v/s CCE, Panchkula [2010 (249) ELT 462 (Tri-Del)] it was submitted that it is always the obligation of the manufacturer and the registered dealers to account for the goods on which credit has been taken and such obligation does not cease to exist even after credit is availed and utilized. This obligation was not discharged by respondents.
Reasoning of Judgment: - The Tribunal held that ETO, Sales Tax department clearly confirmed that no vehicle of the description disclosed in the invoices and the said ST XXVI-A form allegedly furnished by the dealers had ever crossed the barrier on the dates specified in the said documents. It was held that once the statutory provision required the dealer to furnish the information at the entry point in a particular form, it is to be presumed that record maintained in that regard is true and correct till the presumption in that regard is rebutted.
On the material on record, the Tribunal held that the presumption arose in favour of Revenue and against the respondent that no such goods had ever crossed the barrier on the relevant dates in the concerned vehicles. And the said presumption is not rebutted. Corroboration to this fact is provided by the correspondence between the ETO, Sales Tax barrier, Parwanoo and Revenue. Thus, it revealed the conduct of the respondents in furnishing incorrect information.
Thus, it was held that the allegation of fake invoices and attempt to avail credit on the basis of such fake invoices was established. Impugned orders set aside. Demand confirmed against the respondents.
Decision: - Appeals allowed with consequential relief.
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Case: Commr of C. Ex.,
Citation: 1999 (114) ELT 160 (Tribunal)
Issue: - Whether minor variation in the description or sub-heading of the declared input will amount to denial of Modvat credit?
Brief Facts: - The respondent was making declaration with regard to Modvat which was accepted for 6 years by the Department. Thereafter, there was dispute of the mentioning of sub-heading of the declared input and minor variation in the gate passes with regard to description of the inputs. Department objected to the same and denied Modvat to the respondent.
The Tribunal held that Modvat was available to the respondent as there was only slight variation in the gate passes as regard description of goods. Against this Revenue has filed appeal before the High Court.
Appellant’s Contentions: - Revenue submitted that the Tribunal in a number of cases had held that there are contradictory decisions of the Tribunal holding that on the issue of availability of Modvat credit, where no declaration has been filed. It was also submitted that there is no Supreme Court’s authoritative judgment on this point and submits that the matter may be referred to the High Court for conclusive settlement on this disputed legal position.
In the rejoinder, Revenue referred to the Supreme Court’s decision in the case reported in 1994 (69) E.L.T. A169 and submitted that according to the Collector, there was no declaration in this particular case. As such, it becomes a case of non-declaration.
Respondent’s Contentions: - Respondent referred to the Supreme Court’s decision in the case of New Jehangir Vakil Mills Ltd. v. Commissioner of Income-tax, Bombay North, Kutch and Saurashtra [1959 (37) ITR 11] on the scope of reference. It was submitted that a question of law which is not arising out of the Tribunal’s Order is not a question of law requiring reference. The dispute in the instant case was not as regards the non-filing of declaration, but was a question of unspecific declaration. Reliance was placed on decision in Lupin Laboratories v. Collector of Central Excise, Indore [1994 (71) E.L.T. 278 (Tribunal)] where a similar question i.e. whether the technical or minor infraction of a procedural nature can stand in the way of substantive benefit, was not referred to the High Court.
Reasoning of Judgment: - High Court agreed with the contention of the respondent that it is not a case where no declaration was filed by them at all and the Modvat credit was taken without filing any declaration. The Tribunal has allowed the appeal after following the various precedent judgments on the point. The High Court found that the question whether the minor variation should result in the denial of substantive benefit was not referred to the High Court in the case of Lupin Laboratories, by observing that the point is a well-settled legal issue.
High Court referred to refer to the observations made by the Gauhati High Court in the case of Commissioner of Income-tax v. Basanta Kumar Agarwalla and Another [1983 (140) ITR 418] quoted by the Tribunal in the case of Commissioner of Central Excise, Bangalore v. Shanthala Ductile & Grey Iron Foundary (P) Ltd. [1998 (29) RLT 591 (CEGAT)], “that the object of a reference is to get a decision from the High Court on a problematic or debatable questions and not on a dubious and simple point of law, although somehow the determination is somewhere linked up with a provision of law and the Tribunal is obliged to refer only that question of law which calls for investigation, examination, debate or when it is a dubious problem.”
Accordingly, the High Court held that as the Tribunal has consistently held that minor variation in the description or sub-heading of the declared input, are not a result in denial of Modvat credit and a question on this point has already been rejected to be referred to the High Court, following the said Orders, reject the present applications of the Revenue.
Decision: - Applications rejected.
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Service Tax Section
Case: In Re: Able Adds Pvt Ltd
Citation: 2005 (187) ELT 133 (Commr. Appl.)
Issue: - Whether penal action would survive or not on merits as well as on account of limitation?
Brief Facts: - Appellant were engaged in obtaining orders of advertisement for Kasturi and Sons Limited which is a publisher of Newspapers. Advertising Agency service was brought under Service tax net from 01.11.1996. In January 1998, Revenue informed the Appellant that they were required to pay the service tax after getting themselves registered under the category of ‘Advertising Agency’. Appellant replied that they are engaged in only obtaining/canvassing the advertisements from the potential advertisers and passing on the same to the publishers and therefore they do not come under the category of advertising agency.
On this issue, communication was exchange in February 1998 and thereafter in 19.9.2001, August 2002. Thereafter, in July 2003, Show cause notice was issued to the appellants alleging that they have to pay service tax under the category of Advertising Agency.
In the mean time, business auxiliary service was brought under service tax net by Finance Bill, 2003. As Appellant were selling the space and thereby canvassing for the publisher, they registered under the category of ‘business auxiliary service’ and started paying the service tax.
The Original Authority held that appellants were more than mere canvassing, and therefore liable to tax under the category of ‘Advertising Agency’. It was held that advertising agency service was more specific than Business Auxiliary Service. It was held that the commission received by the appellants from the publisher is alone being taxed and to this extent the Circular issued by the Board on 31-10-1996 renders necessary support. Thus, demand was confirmed by invoking extended period of limitation and with interest. Penalty was imposed.
Aggrieved by this appellant have filed appeal before the Commissioner (Appeal).
Appellant’s Contentions: - Appellants contended that they were only canvassing for advertisement and pass on the advertisement material received from the advertiser to the publishers. They do not undertake any estimation of the space, negotiation of the price, general layout of the advertisement, etc. The cost of advertisement is clearly and already pre-determined by the publisher and also published from time to time. The Appellants do not have any discretion to negotiate with regard to the cost of advertisement. Similarly, the layout of the advertisement is determined by the publisher/advertiser and not by the appellants. Hence the service of the appellants is clearly space selling or canvassing and not that of any advertising agency.
It was contended that the Adjudicating Authority had not in any manner given a finding that the appellants undertook any activities like estimation of the space, negotiation of the price, the layout of the advertisement, etc. It was contended that the Adjudicating Authority had not disputed the claims of the appellants regarding canvassing of space done by them.
It was further contended that the findings were contrary to CBEC Circular clarifying the position of the persons like the appellants who undertake the activity of receiving the advertisement as Franchisees of the publishers and passing on the same to the publishers, and receiving commission from the publishers. In this category of activity the appellants do not render any service of an ’advertising agency’.
It was submitted that the services of an advertising agency continues taxable as before. No part of the advertising agency service has been now brought under the category of business auxiliary service. It is the submission of the appellants that their service was never coming under the category of advertising agency. The nature of the service was merely canvassing/space selling and not that of any advertising agency.
Reasoning of Judgment: - The Commissioner (Appeal) held that the service of the appellants is clearly a service provided to the publisher by selling the space on a commission basis. This is clearly a business auxiliary service and not under advertising agency service.
The Commissioner (Appeal) relied upon the CBEC Circular wherein it was clarified that merely contacting the potential advertisers and obtaining the advertisement and passing on the same to the publisher would not come under the category of advertising agency. Where the agency apart from approaching the customer receiving the text of the advertisement, estimate the space, negotiate the price, indicate the layout, etc., such agency would come under the category of advertising agency.
Accordingly, the Commissioner (A) held that the activity of the appellants beyond the scope of service tax under the category of advertising agency as the appellants were merely receiving the advertisement and passing on the same to the publishers. The appellants were receiving the commission from the publishers.
It was held that the judgment of High Court reported at 2001 (131) ELT 529 and CBEC Circular dated 31.10.1996 relied upon by the Adjudicating Agency dealt with the question as to how the value of the services of an advertisement agent is to be determined. In that context the question whether the commission received by the agency is to be excluded or not was the dispute therein. Hence, the said were not relevant in the present case.
It was held that it is well settled proposition of law that where a dispute has not been raised or considered and decided upon, the said decision cannot be relied upon in support of such a proposition. {Mittal Engineering [1996 (88) E.L.T. 622 (S.C.)]}
It was held that quantification done by the lower Authority was incorrect. The total amount of commission received is to be considered as cum-tax and the tax should be excluded in arriving at the value liable to tax as clarified by the Delhi Commissionerate vide Trade Notice No. 20 dated 23-5-2002.
With regard to invoking of extended period of 5 years, the Commissioner (Appeal) relied upon the judgment given in Rubicon Steels [2003 (153) E.L.T. 73] wherein the decision of Larger Bench in Nizam Sugar factory v/s CCE [1999 (114) ELT 429] was considered. Reliance was also placed on CCE,
It was held that since the authorities were fully aware of the nature of the activity as early as in January 1998, the demand invoking the extended period of limitation cannot be issued in July 2003, as the entire period of demand is subsequent to the disclosure of the nature of activity to the department. Accordingly, it was held that entire proceedings were hit by limitation.
Thus, it was held that once the proceedings are without jurisdiction, the penal action would also not survive both on merits and also on account of limitation. Impugned order set aside.
Decision: - Appeals allowed.
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Case: Federal Mogul TPR India Ltd v/s Commr of C. Ex.,
Citation: 2010 (20) STR 329 (Tri-Bang)
Issue: - Whether benefit of cenvat credit paid on service tax by assessee cannot be denied to them on the basis that the Notification No. 8/05-ST was to be availed, which is a conditional notification?
Brief Facts: - During the period from April 2007 to June 2008, appellants had sent ‘Piston Rings in coil form’ under material movement challans to M/s Federal Mogul Goetze India Ltd (FMGIL) for the purpose of chrome plating on job work charges and had paid service tax on the said job work charges. Appellant had availed cenvat credit of service tax which was paid by M/s FMGIL.
Revenue contended that M/s FMGIL was not liable to pay any service tax on the ground that they should have availed the benefit of Notification No. 8/05-ST dated 01.03.2005. They sought recovery of credit of service tax taken by the appellant. Demand was confirmed and upheld in the appeal before the Commissioner (Appeal).
Against this, appellant have come in appeal before the Tribunal and an application for waiver of pre-deposit and stay has been made.
Appellant’s Contentions: - Appellant contended that the benefit of cenvat credit paid on service tax by M/s FMGIL cannot be denied to them as the Notification No. 8/05-ST is a conditional notification. There was no compulsion under provisions of Section 93 of the Finance Act, 1994 for availing the benefit of any Notification issued under the Service tax. It was submitted that Section 83 of the Finance Act, 1994 did not adopt or incorporate provisions of Section 5A of Central Excise Act, 1994. By non-availment of benefit of the said Notification by M/s FMGIL, they had not violated the provisions of law. It was for M/s FMGIL to conduct the business the way they wanted. As M/s FMGIL had paid the service tax, therefore, appellant correctly took the credit of service tax so paid.
Respondent’s Contentions: - Revenue contended that the statements of executive of M/s FMGIL clearly said that payment of service tax was done in order to liquidate the Cenvat credit which was available with them. It was submitted that M/s FMGIL had already issued a show cause notice was to why the amount which had been paid by them as service tax should not be considered as a deposit, since they were not liable to pay any service tax on the activities undertaken by them.
Reasoning of Judgment: - The Tribunal found that M/s FMGIL had discharged the service tax liability and raised invoices and the appellant had paid the said amount to M/s FMGIL. Tribunal perused the Notification No. 8/05-ST dated 01.03.2005 and found that said Notification could be construed as a conditional one and also perused Section 93. It was held that the said section did not envisage any compulsory availment of benefit of Notification issued under the said section.
Thus, it was held that appellant had prima facie made out a case for waiver of pre-deposit. Stay and waiver granted.
Decision: - Stay application allowed.
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Case: Commissioner of Cus & C. Ex,
Citation: 2010 (20) STR 312 (Tri-Del)
Issue – cum-Brief Facts: - Whether credit of service tax paid on Repair and Maintenance of power plant, Insurance of Cars and Two Wheelers, Repair and Maintenance and cleaning services, Security Services, Rent-a-cab Services, Commission on Sale and Mobile Phones services is available to the assessee (Respondent)?
Reasoning of Judgment: - The Tribunal held as under:
Repair and Maintenance of Power Plant: The Tribunal has allowed credit of service tax paid in relation to generation of steam and electricity as the said services were utilized towards maintenance of plant. The steam and electricity generated were being used within the factory of the party. Reliance was also placed on Sanghi Industries Ltd v/s CCE,
Insurance of cars and Two Wheeler: The Tribunal has not interfered with the order of the Commissioner (Appeal) in allowing the credit on insurance of vehicles relying upon the decision in the case of CCE, Jaipur II v/s J. K. Cement Works [2009 (14) STR 538]. It was held that this decision relates to maintenance and repair of capital assets and the same have been treated as input services. In the present case, insurance of vehicles also in in relation to maintenance related activities of vehicles, therefore, credit has to be allowed.
Repair and Maintenance and cleaning services: The Tribunal accepted the contention of the respondent that the works like maintenance of air cooler, pay loader, dumper, repairing and changing of damaged asbestos sheet of canteen building were undertaken within the factory and they have nexus with the business activity of the manufacture and clearance activity of the excisable goods and therefore, they are eligible for cenvat credit. Reliance was placed on the judgment given in the case of CCE, Jaipur-II v/s J. K. Cement Works [2009 (14) STR 538]. No interference with the impugned order.
Security Services: The Tribunal set aside the order of the Commissioner (Appeal) allowing credit on security services which were provided at a place other than the factory premises and respondent had not established that services provided had the direct nexus with the activities relating to manufacture and clearance of goods.
Rent-a-cab Services: It was found from the statement of Authorised Signatory that the rent-a-cab services were utilized by the executives of the respondent only in relation to procurement of raw materials, sale of finished goods and connected business activities. In view of the same and in view of reliance placed on Ace Glass Containers Ltd v/s CCE, Meerut-I [2010 (250) ELT 110] Tribunal upheld the allowance of credit of service tax by the Commissioner (Appeals).
Commission on sale: Record revealed that commission agent was engaged in relation to sale activities of their finished goods namely, sponge iron. It was held that procurement of order for sale of the finished goods definitely can be considered as part of business activity and therefore, services were input services and credit was rightly allowed by the Commissioner (Appeal).
Mobile Phones services: Reliance placed on judgment of High Court in CCE v/s Excel Crop Care Ltd [2008 (12) STR 436 (Guj)] wherein service tax credit in respect of mobile phones has been allowed. Credit allowed by the Commissioner (Appeals) not interfered with.
Decision: - Appeal disposed of in the above terms.
Comments: - We have seen that the department and audit parties are raising the objections on credit taken by the assessee but the Tribunal has allowed the credit to various units. Even the Mumbai High Court has allowed the credit on all business expenditure in cases of Coco-Cola and Ultratech Cement. We hope that these disputes will be settled now.
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Customs Section
Case: M/s Xerox India Ltd v/s Commissioner of Customs, Mumbai
Citation: 2010-TIOL-97-SC-Cus
Issue: - Classification of Printer cum fax cum scanner/copier – whether classifiable under heading 84.71.60 or under 8479.89 (Residual heading)?
Brief Facts: - Appellant are engaged in the trading of High Technology reproduction and duplicating machines, printers and Multi-functional Machines capable of discharging number of functions. During March, September and November, 1999, appellant imported machines and sought to classify them under sub-heading 8471.60. The Deputy Commissioner of Customs classified the same under heading 8479.89 (residual heading). The matter is now before the Apex court.
Reasoning of Judgment: - The
Further, it was held that Chapter note 5 (E) was not applicable as the Multi-functional machines are presented independently. Moreover, since the pre-dominant components were relating to printing function, chapter note 5 (D) also became relevant which included printers under heading 84.71.
The Apex Court accepted the contention of the appellant that based on the nature of functions they perform, the said machines would serve as input and output devices of an ADPM (Computer) and thus serve as unit of an ADPM, which on a reading of chapter note 5 © clearly classifies them as falling under heading 84.71.60. No case made out for classification of goods under residuary heading 84.79.89.
In the end it was held that the impugned machines where classifiable under heading 84.71.60. Impugned order set aside.
Decision: - Appeal allowed.
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