Pradeep Jain - Chartered Accountant

PJ/Case laws/07-08/05

PJ/Case laws/07-08/05 Date: 19-01-2008

CASE LAWS

1.) The appellant Indus Motor Co. were an authorized Service Station of M/S Maruti Udhyog Ltd. They were providing free services to its customers with an object to detect the manufacturing defects on behalf of M/s Maruti Udhyog. The learned Department representatives demanded the service tax on the above mentioned service and held that the appellant used to get the reimbursement of the said service rendered hence is liable to pay Service tax. But the Department officials were unable to evidence there findings. The appeal was allowed in the favour of the appellant on the ground that they were rendering the services free of charge and the revenue can not cnfirm the demand unless it shows some evidence that the appellant got some reimbursement for same.

[2008 (9) S.T.R. 18 (Tri.-Bang.)]

But as new Valuation rules, the service tax is payable on the free services also.

2.) M/s Microstar Computers (The appellant) are manufacturers of Computers and were availing CENVAT Credit on the Inputs used. The appellant claimed refund of Credit lying in their CENVAT Credit A/c on the occasion being that their final product was fully exempted from 9-7-2004. The respondent contended the pleading of the appellant on the ground that there is no provision in the law for refund of unutilized credit consequent to the final product getting fully exempted.

The appellant in reply to the above supported its plead on the ground that inspite of having sufficient balance in CENVAT Credit A/c they were compelled by the Excise Authorities to pay the duty from PLA. And since now they can not avail the benefit of CENVAT Credit in future they shall get refund of the same.

The Appellate authority on the grounds of the Merits placed by the appellant and with reference to the case of M/s Gauri Plasticulture, disposed off the order in original and allowed the appeal.

[2008 (9) S.T.R. 22 (Tri.–Ahmd.)]

3.) Vandana Energy & Steels Pvt. Ltd. (the Respondent) were manufacturing Ferro Alloys and availing the CENVAT Credit on the basis of the Photo copy of the Office copy of extra copy of invoices. The adjudicating authority found that the assess never received the invoices or that they may have been lost before the goods have been received to them and thereby held that the CENVAT Credit was not allowable to the assessee.

The Commissioner Appeals set aside the order in original on the ground that the assessee has lost both the copies of the invoices and has also filed the complaint about such loss with the police and it would be unjust on the assessee if the claim is not allowed.

The Revenue challenged the order of the Commissioner appeals before the Tribunal. The Tribunal allowed the appeal on the facts of the following:-

(1) “Decision of full Bench of Tribunal in CCE, New Delhi V. Avis Electronics Pvt. Ltd.”

The fact of the decision in this case was that to avail the CENVAT Credit on inputs the claim must be based on the duplicate copy of the invoice. In case the duplicate copy has been lost in transit he can take credit on the basis of the original. Hence there is no scope for the availing CENVAT Credit under the cover of a photocopy of some extra copy of an invoice.

(2) “Para 10(d) of Circular No. 96/7/95-CX, dated 30/2/1995 specifically states that “in no circumstances photocopy shall be accepted.””

[2008 (9) E.L.T. 31 (Tri.-Del.)]

4.) Bharti Soap Works (the Appellant) approached to the Assistant Commissioner for clarification of the issue regarding liability to discharge Service Tax in the absence of the transporter issuing Consignment note. In response to the clarification seeked by the assessee the Assistant Commissioner stated that it is the responsibility of the goods recipient to receive the goods in proper form i.e. Consignment Note.

The assessee appealed to the Commissioner Appeals against the clarification and contended that the transporters were illiterate persons and they were not in the habit of issuing consignment note.

The Commissioner Appeals rejected the appeal of the assessee on the ground that issue of Consignment Note is a mandatory irrespective of a transporter being illiterate/literate or big/small. He further submitted that everyone is bound by law and ignorance of law is no excuse.

[2008 (9) S.T.R. 80 (Tri.-Bang.)]

5.) Speciality Papers Ltd. (the respondent) is a manufacturer of paper and paper board. They used Wire cloth for dragging the water remained in pump. The original authority disallowed the credit of the same on the ground that it can not be considered as capital goods and the same is not used for manufacture of final product.

Assessee approached the Commissioner Appeals and the commissioner (A) set aside the order in original on the ground that the wire cloth are essential for manufacture of paper and are covered as inputs under Rule 57A.

The Revenue approached the Tribunal against the order of Commissioner (A) but the Tribunal upheld the orders of the Commissioner (A) on the same ground and with reference to the case of CCE, Chandigarh V. Zenith Papers.

[2008 (221) E.L.T. 65 (Tri.-Ahmd.)]

6.) Sony BMG Music Entertainment (I) Pvt. Ltd. (the Respondent) used to import Pre-recorded Compact Audio disc and DVD’s and paid Royalty on the same. The Revenue was of the view that the Royalty charges paid by the importer for the right to reproduce imported goods should be added to the price actually paid or payable by the importer, for the determination of Customs Value. The Tribunal rejected the appeal of the revenue providing benefit to the importer on the ground that

Clause ‘C’ of sub rule 1 of Rule 9 of Customs Valuation Rules, 1988 provides that for Royalties to be a part of the Customs Value it should be a condition mentioned in the agreement entered into between the supplier and importer.

But in the present case there is no such condition mentioned in the agreement between Sony BMG Music Entertainment (I) Pvt. Ltd. and the Supplier.

Hence appeal rejected.

[2007 (218) E.L.T. 699 (Tri. – Mumbai)]

7.) Balajee Electro Steels Ltd. (the appellant) consumed 10% of their production captively and rest sold to unrelated Buyers. The Department alleged for the applicability of Rule 8 & 9 of the Central Excise Valuation Rules, 2000 for the purpose of valuation of such captively consumed goods.

Rule 8 & 9 provides for the valuation of the said goods at the rate of 115/110% of the cost of production.

The assessee argued to the contention of the Department officials that Rule 8 & 9 are not applicable as the entire quantity of the production is not captively consumed and a major part of it is sold to independent buyers. Have it been captively consumed in entirety the aforementioned rules have been applicable.

Further more the assessee placed that Rule 4 of the said Rules must be applicable which provides for the valuation of the goods captively consumed at the sale price to the independent buyers at any time nearest to the time of such removal.

The CESTAT seeing the merit in the findings of the claims of the assessee remanded the case to the original authority.

[2007 (83) RLT 885 (CESTAT – Kol.)]

8.) Controls and Drives Coimbatore (P) Ltd. imported electronic components and taken CENVAT Credit of CVD paid thereon. They took the credit on the basis of photocopy of “Courier bills of Entry”. The original authority denied the admissibility of Credit on the ground that the document evidencing the payment of duty was invalid as it was mere a photocopy.

The assessee approached the Tribunal against the order. The assessee contended that the value of the import was very small and only a consolidated Bill of Entry containing details of goods imported by four or five importers was required to be filed and therefore the original document was not available to all the importers.

The appellate tribunal seeing the merits of the assessee’s contention allowed the appeal.

[2007 (83) RLT 894 (CESTAT – Chen.)]

9.) Mohan Bakers Pvt. Ltd. (the appellant) was brought to frivolous charges by a show cause notice issued to him after two years from the date of inspection. The appellant approached the Tribunal for grant of relief for such time barred action of the department.

The officials of the Tribunal held that any action of the Department which is belated, calls for an explanation and in case the department is unable to explain the initiation of proceedings after two years of inspection it will be presumed that the assessee is not dealt in properly and was deprived of justice.

Thereby the Tribunal allowed the appeal and made the case of Revenue fatal.

[2008 (221) ELT 308 (Tri. - Kolkata)]

10.) Satia Paper Mills Ltd. (the appellant) was availing Cenvat Credit on dutiable as well as exempted finished goods. The adjudicating authority disallowed the Credit on 6 Pcs. Of felt cloth and wire mesh on the ground that the same were not recorded in RG 23 A Part I on the date when the Credit was availed.

The appellant approached the Tribunal against the order in original on the ground that those 6 items were recorded in a separate register.

The authority rejected the appeal as the appellant was unable to show the said 6 Pcs in RG 23 A Part I and disallowed the credit of the same to the assessee.

[2008 (221) ELT 291 (Tri. – Del.)]

By:-

FCA Pradeep Jain

Siddharth Rutiya

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