Pradeep Jain - Chartered Accountant

PJ/Case laws/08-09/01

PJ/Case laws/08-09/01 Date: 28-04-2008

CASE LAWS

1. The appellant Reliance Industries Ltd. requested for a speaking order indicating grounds on which the Asst. Commissioner had finalized the bills of entry and raised demand of differential duty. This request was raised by the appellant on 19.3.07. and a speaking order was passed on 28.3.07. The appellant filed an appeal which was rejected on the ground that the finalized bills of entry were handed over to the appellant on 27.2.07 and the appeal which was filed on 18.5.07 was barred by limitation. Cestat set aside the impugned order and held that the speaking order of the Asst. Commissioner was in furtherance of his order of assessment finalizing the bills of entry. Therefore, the time limit for filing appeal is to be reckoned from the date of service of order dated 28.03.07. Moreover the Commissioner (Appeals) had power to condone the delay in filing appeal upto 30 days if 27.2.07 was to be taken as the relevant date. Order of Commissioner set aside. Appeal allowed by way of remand.

[2008 (85) RLT 101 (CESTAT-Ahbad.]

2. The appellants M/s Indoworth Ltd. are a 100% EOU engaged in the manufacture of polywool yarn, wool tops and blended yarns. They cleared furnace oil to another EOU under the provisions of Notification No. 53/97-Cus. Demands were raised on the ground that the said furnace oil had been cleared by the EOU without obtaining permission from the department. CESTAT held that notice has been issued only on ground of not obtaining prior permission to remove furnace oil. This may only be a procedural error. The benefit of the above mentioned Notification cannot be denied on this ground. The Commissioner could have granted post facto approval when the request was made to him during the adjudication.

Demand was also raised on short receipt of furnace oil than the quantity mentioned on the relevant Bills of entry. CESTAT held that the normal losses in transportation of liquid cargo have to be factored in and this should be condoned. Demand was set aside.

[2008 (85) RLT 105 (CESTAT-Mum.]

3. The issue involved in this appeal is regarding the enhancement of penalty imposed on the appellant under the provision of Section 84 of Finance Act, 1994. The appellant had failed to pay Service Tax for the period October 1998 to March 2003 before the stipulated time. Subsequently, on being pointed out, the appellant paid the duty of Service Tax along with interest. On this fact, the adjudicating authority imposed penalty under Section 77. On examination of records, Ld. Commissioner concluded that the order in original is not legal and correct. Hence he issued SCN for enhancement of the penalty under Section 76. CESTAT relied on the judgement of Hon’ble High Court of Bombay in ‘CCE & C, Nashik V Vinay S. Bole in which it was held that imposition of penalty under Section 76 is discretionary and provisions of Section 80 can be considered for imposition or non imposition or reduction in penalty; and allowed the appeal with consequential relief.

[2008 (85) RLT 117 (CESTAT-Mum.]

4. The appellants are 100% EOU who received dutiable inputs and availed Cenvat credit on the same. They applied for refund of Cenvat credit availed by them as they could not utilise the credit. The lower authority rejected the refund claims on the ground that in terms of sub rule (1) of Rule 6 of Cenvat Credit Rules,2004. The allegation was the appellants could not take credit of duty paid on inputs because their final products were subjected to nil rate of duty. The Commissioner (Appeals) also held that goods which are exported to nil rate of duty are actually exempt and even the credit could not have been availed by the appellant.

However, the CESTAT held that sub-rule (6) of the Rule 6 of carves certain exceptions to Rule 6 (1) the provisions of sub-rule (1), (2), (3) & (4) shall not be applicable to goods removed without payment of duty, which are actually cleared for export under bond in terms of Central Excise Rules, 2002. CESTAT held that appellants are entitled for Cenvat credit as there is nothing in rules which prohibits 100% EOUs from availing Cenvat credit. Therefore, in terms of Rule 5 of Cenvat Credit Rules, the appellants are rightly entitled for the refund. Appeals allowed.

[2008-TIOL-346-CESTAT-BANG]

5. The appellant “Tansi Structural & Galvanizing Works” were engaged in the process of cutting, drilling and welding of MS steel materials to make pre-fabricated buildings on contract basis. The order in original was passed against the appellants for demand of duty on the said process. The appellants approached the tribunal with the plea that such a process do not amount to manufacture and therefore no duty is leviable thereon. The Tribunal allowed the appeal on the basis that “Cutting, drilling and welding of the MS steel materials to make pre-fabricated building does not amount to manufacture as no new commodity emerges under Section 2(f) of Central Excise Act, 1944.

[2000 (117) ELT 177 (Tribunal)]

The appeal to Apex Court has been dismissed and this order has attained finality.

6. This is the case of Simplex Expeller Works vs. Commissioner of C. Ex., Chandigarh-I reported at 2001 (138) ELT 678 (Tri.-Del.). In this case, SSI exemption was denied on the ground that the manufacturing activity was carried out in a common hall with no partitions. Moreover there were common machineries and a common office of all the units. Thereby on the basis of these facts; the department was able to prove that the financial flow back was to one pocket.

Hence the Tribunal held that no SSI exemption would be available. Moreover the subsidiary outcome of the decision cleared the controversy that SSI exemption is not available on the basis of separate registration as SSI unit or separate Sales Tax number when all the activities are carried out collectively as members of one family at one place with one office.

[2001 (138) ELT 678 (Tri.-Del.)]

7. The appellant M/s Universal Industries was a proprietary firm of Shri R.H. More. Shri R. H. More was also a Partner/Director in different concerns and other partners/Directors of such concerns were his relatives only.

The Department alleged the clubbing of Clearances of the Private Limited Company, the partnership firm and the proprietary concern on the basis that Mr. R.H. More was the common individual as Director/Partner/Proprietor in the respective concerns. The Department’s contention was on the basis of Section 4 of the act governing the provisions of the concept of “Related Person”.

The appellant approached the Tribunal against the Departments contention with the view that all the units were engaged in the manufacture of different products form separate premises & were clearing the goods from their respective factories only.

The Hon’ble Tribunal allowed the appeal on the ground that merely because a common individual is a Partner/Director/Proprietor in all these concerns and other partners/Directors were his relatives only, will not be deemed as the basis for clubbing of clearances.

[2005 (188) E.L.T. 200 (Tri. - Mumbai)]

8. In the case of Blue Star Ltd. Vs. Commissioner of C.EX., Hyderabad-II the appellant M/s Blue Star Ltd. were issued an order in original on the ground that they had improperly determined the value of taxable services on service rendered as Erection, Commissioning and Installation Agency and consequently evasion of tax.

The appellants approached the Tribunal against the order in original with the contention that they actually executed the Works Contract on turnkey basis. Moreover their contract is also registered as Works Contract with the State Government.

The Tribunal set aside the order in original and allowed the appeal on the ground that the appellant’s contract was registered as Works Contract with State Government and thus Service tax cannot be charged on the total value/ gross receipt of the contract under Commercial construction activity. The levy of works contract has been introduced from a later date.

[2008 (10) S.T.R. 188 (Tri. Bang.)]

9. The Respondents M/s. Advance Diesel Engines (P) Ltd. are the recipients of the service under the heading ‘Goods Transport Agency’ and they were the service provider under the Act. The respondents took the benefit of Notification No. 32/2004-S.T. which enabled them to pay the service on a value of 25% of the freight paid to the transporter on the condition that they produce a declaration from the transporter that they have not availed the Cenvat Credit on input/capital goods at their end.

The respondents at the time of taking Credit did not produce the declaration but availed the Notification Benefit. Although when the matter before the Commissioner (Appeals) they belatedly produced the declaration.

The Commissioner (Appeals) accepted the declaration and allowed the credit to the respondents.

[2008 (10) S.T.R. 202 (Tri. Chennai)]

10. The Appellants M/s. Blue Star Ltd. were engaged in the manufacture of Air conditioners. They sold there goods through depots and also directly from their factory to their customers on door delivery basis. The transportation from the factory to the customer was covered by an umbrella insurance policy. The invoice value charged by the customers was an all covered price including freight, insurance etc. The Revenue contended to enhance the sale price as the possession of goods was transferred to the ultimate buyer at the buyer’s premises only.

The appellant argued on the same on the ground that as per Board’s Circular No. 59/1/2003-CX the insurance of goods during transit would not be the sole consideration to decide the ownership or the point of sale of the goods.

The Tribunal relying on the appellant’s contention held that assessable value will not be enhanced.

[2008 (224) E.L.T. 258 (Tri. Ahmedabad)]

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