Pradeep Jain - Chartered Accountant

PJ/Case Laws/07-08/03

PJ/Case laws/07-08/03

CASE LAWS

1.) This is a general concept in the Central Excise Act that the duty is payable on the intermediate goods when the finished goods is exempt from payment of duty. The duty is not payable if the final product is dutiable.

The respondent (M/s Mahavir Aluminum ltd.) is a manufacturer of Aluminum products. He was also manufacturing the Aluminium pipes used for irrigation purpose. These were exempt from payment of duty. During the course of manufacture, the aluminum billets were generated. The department demanded the duty on such billets. But the assessee contended that these billets are not marketable. If it is not marketable then they can not termed as “Goods” under the Central Excise Act. The Act defines this term as those things which can be purchased and sold in the market. When these are not goods then the duty cannot charged on the same.

But the respondent was also selling the billets into open market by paying excise duty. The Supreme Court in the aforesaid case held that “Ingots and Billets are two different commercial commodities. They have separate, distinct and identifiable marketability and saleability.” Thus the manufacture of aluminum ingots amounts to manufacture and the respondent is liable for paying tax.

[2007 (212) E.L.T. 3 (S.C.)]

2.) Earlier there was provision in the Service tax credit Rules that the credit of the service tax will be allowed only when the input and output services fall within same category. In the instant case, the Appellant (V.S. Dempo & Co. Pvt. Ltd.) is a service provider of ‘Port services’ and was availing the input service of “Steamer Agent”. The appellant was taking the credit of input services enjoyed by it on the ground that there is a definite overlapping of the service provided by the port service and steamer agent; therefore they both fall within the same category of service as per Rule 3(i). But the Revenue held that the deeming provision clearly states that two services are said to be falling within the ambit of same clause only if both the input and output service falls within the same sub-clause (90) of Section 65 of the Act. But as input service (Steamer agent) and output service (port service) both fall within different clauses the availment of Credit on input service is rightly to be disallowed and thus the appeal was rejected.

[2007 (6) S.T.R. 313 (Tri. Mumbai)]

3.) The appellant (Micrometic Grinding Technology) entered into an agreement with M/s Lizzini SPA for the purchase of technical know how. The department was of the view that this amounted to service rendered and attracted service tax. But the appellant contended that this was an agreement for mere transfer of exclusive license, technical information and assistances for manufacture and sale of CNG Internal Grinding Machine of Polar Model and its variants. Thus, this does not attract service tax and the appeal was allowed.

[2007 (6) S.T.R. 329 (Tri. Delhi)]

4.) The appellant (Sudarshan Chemicals industries) shortly paid the service tax duty. When it was brought to his notice he deposited the short duty amount before issuance of the Show Cause Notice. The appellant contended on the imposition of interest thereon on the ground that he had deposited the short duty before issuance of Show Cause Notice. But it was held by the Tribunal (Mumbai) that this no sufficient ground for non imposition of interest and the appellant is held liable to pay interest on the duty short paid. Appeal rejected.

[2007 (6) S.T.R. 335 (Tri. Mumbai)]

5.) The Respondent (Mahatma Phule M.S.S.G. Ltd.) availed the Cenvat Credit in respect of Capital goods, in respect of which the respondent also claimed depreciation under provisions of Income Tax Act, 1961. Later on this was brought to the notice of the respondent whereby realizing the mistake he reversed the Cenvat Credit and also paid interest applicable thereon before issuance of Show Cause Notice. The adjudicating officer imposed personal penalty on the respondent. The dispute was settled by the Tribunal holding that as the Credit was not utilized by the respondent and was lying unutilized in the records, imposition of penalty was not justified. Appeal rejected.

[2007 (6) S.T.R. 336 (Tri. Mumbai)]

6.) The appellant (Asian Paints (India) Ltd.) is a manufacturer of paints and varnishes. The appellant has sent some finished goods to the consignee. But the same were returned by the consignee as rejected material. The appellant reprocessed the returned goods and utilized them in manufacture of finished products. Thereafter he took MODVAT Credit of the same. The Adjudicating Authority denied the Modvat Credit taken on the ground that Modvat Credit can be taken only if the returned goods are used in or in relation to manufacture of final products but the appellant is reprocessing them this do not attract the availment of Modvat Credit. But the Commissioner (Appeal) set aside the order in original and allowed the availment of Cenvat Credit on the ground that the reprocessed goods were used in manufacture of final products and thus this attracts availment of MODVAT Credit. The tribunal has upheld the order.

[2007 (6) S.T.R. 354 (Tri. Mumbai)]

The above order also relates to old rules but the recent Rule 16 provides that we can take credit on return of material. If it is reprocessed then reversal of Cenvat credit is to be done. But if the processes employed amounts to manufacture then we have to pay the duty.

7.) The appellant (Vestal Communications) is a partnership firm. They filled a condonation application for delay in filling appeal on the ground that the partner who was looking after taxation matter of the appellant was sick and was bedridden for three months. Moreover appellant being new to Service Tax Procedures, invited a liberal approach in the matter. Having found sufficient reasons application was allowed.

[2007 (6) S.T.R. 377 (Tri. Chennai)]

8.) The appellant (Hemant N. Talekar) had deposited the tax accrued on him before issuance of Show cause Notice. The adjudicating officer held that the appellant must pay interest and penalty amount in reference to the matter. But the appellant approached Tribunal. Tribunal held that there is no dispute about deposit of service tax before issuance of show cause notice. Therefore, interest and penalty not leviable and the appeal was allowed.

[2007 (6) S.T.R. 378 (Tri. Bang.)]

9.) The respondent (Sunil S Kotian) was engaged in the business of hiring out his vehicle registered as taxi. He was not conducting ‘Tour operations’. The Government officers who were not provided with car although they were eligible to it in terms of the service contract are being asked to engage taxi. M/s BSNL hired the respondents taxi for one day for its employees. The question aroused that whether this service will fall within the category of ‘Tour Operator’ or ‘Rent a cab’ service. Tribunal held in the matter that as these hired vehicles were not used for pre-determined tours and it was restricted for the use of Government work, these do not fall in the category of ‘tour operator’ and must be categorized under ‘Rent a cab’ service.

[2007 (6) S.T.R. 379 (Tri. Bang.)]

10.) The appellant (Acer India Pvt. Ltd.) were carrying on the marketing and promotional activities. The appellant was providing services in relation to coordination and promotional activities relating to sale of computers by M/s Acer Middle East and Acer Singapore to Indian buyers and for which they received certain commission from their overseas buyers. They provided that their business was only promotion of sale of computers of overseas buyers. The dispute aroused that whether this service was to categorize under the head ‘Clearing and Forwarding Agent’ or not. The Tribunal held that the appellants were not carrying on any activity of ‘Clearing and Forwarding Agent’ in terms of the definition appearing in the concerned Act. Hence the impugned order was set aside and the appeal was allowed.

[2007 (6) S.T.R. 380 (Tri. Bang.)]

But this service is clearly covered now under the “ Business Auxiliary Services.”

*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*

Comments

PJ/Case Laws/07-08/03

Post a Comment

Query