Pradeep Jain - Chartered Accountant

PJ/Case Laws/08-09/05

Case: SANGHI INDUSTRIES LTD. v/s COMMISSIONER OF C.EX., RAJKOT

Citation: 2008(230)E.L.T. 257(Tri. – Ahmd.)

Judgement:

The Assessee is engaged in the manufacture of coated M.S. pipes and during the relevant period, cleared the said goods to M/s Gujarat Water Supply and sewerage Board, a Govt. of Gujarat Undertaking for use in the Gujarat Earthquake & Rehabilitation Project which was funded by Asian Development Bank. The assessee wanted to claim the benefit of Rule 6 of the Cenvat Credit Rules which is explained as follows:

The manufacturer of dutiable as well as exempted final products is required to maintain separate records of inputs used so that credit of inputs can be taken by him only in respect of dutiable goods and if he is unable to maintain separate records then he is to pay 10% of the value of goods cleared by him. However there is one of the exceptions that if the same are supplied to the United Nations or an international Organisation for their official use or supplied to projects funded by them then this Rule is not applicable.

The department demanded 10% value as separate accounts were not maintained by the assessee on the contention that the “ Asian Development Bank” as specified by the assessee as International Organization was actually not included as an International Organization in the official website of Government of India and so the assessee cannot claim the benefit under Rule 6.

However, the Tribunal decided that as Asian Development Bank was clearly mentioned in the notification 108/95-C.E. as an International Organisation and so allowed the appellant to claim the benefit of Rule 6.

Case: COMMISSIONER OF C.Ex, PONDICHERRY V/s CESTAT

Citation: 2008(230)E.L.T.209(Mad.)

Judgement:

The assessee is a manufacturer of polypropylene bags and tubing and shifted his factory from Cuddalore to Pondicherry and got itself registered. He also transferred the Cenvat Credit lying unutilized in his accounts to new factory alongwith inputs of 16548.12 kgs and one capital goods which were found correct as per the verification report of Range officers. The Deputy Commissioner directed the Range Superintendent to conduct necessary verification of the receipt of the amount of inputs and capital goods. On physical verification it was contended that the credit balance transferred was not according to the inputs and capital goods transferred but it was decided that there is no clause in Rule 8 that the credit balance transferred should be in proportion to the inputs and capital goods transferred and hence as the requirement of Rule 8 was fulfilled by the assessee, the assessee was allowed to avail the Cenvat balance transferred.

Case: SANGHI INDUSTRIES LTD. V/s COMMISSIONER OF C.Ex. , HYDERABAD

Citation: 2008(230)E.L.T.375 (Tri.-BANGALORE)

Judgement:

The assessee availed Cenvat Credit on basis of original invoices instead on the basis of duplicate copy as specified in Rules and so Cenvat credit was denied to him. Moreover, it was also alleged that some of the invoices were issued by those dealers who were not registered and so the assessee cannot take credit. The assessee argued that duplicate invoices were taken away by the Sales Tax authorities when goods were in transit from the supplier and credit cannot be denied on the ground that required permission from competent authorities was not taken for the same. Further, the point raised that the dealer was not registered is only a procedural matter and relevant cases were quoted in which it was held that registration is required only to authenticate that the transaction is genuine. Hence the appeal was allowed in favour of the appellant.

Case: SHREE CEMENT LTD. V/s COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II

Citation: 2008(230) E.L.T. 379(Tri-DELHI)

Judgement:

The appellant cleared 957.63 MT of cement without payment of central excise duty on the grounds that damaged cement was brought into the factory for reprocessing under Rule 96 ZV of Central Excise Rules, 1944. The assessee said that the clearances made subsequently were of the quantities equal to the quantities already cleared on payment of duty. It was held that the procedure for receiving the damaged cement under Rule 96 ZV has not been correctly followed and the claim of the appellant that the entire quantity of damaged cement has been recovered was not believable. Moreover, Chemical Examiner reported that cement has setting properties which does not mean that it cannot be reproduced. The assessee explained their procedure that if the damaged cement is mixed with good cement subject to grinding reprocessed cement is obtained and as their quality of cement is already higher than the stipulated standards, such mixing has no impact on the overall quality of cement produced by them. The appellant was held eligible for claiming the benefit of Rule 96ZV.

Case: COMMISSIONER OF CENTRAL EXCISE, AHEMDABAD V/s SHAYONA ENTERPRISES

Citation: 2008(230) E.L.T. 378 (Tri.-Ahmd.)

Judgement:

The assessee is engaged in the manufacture of SS Cold Rolls patta-patti. The Central Excise officers visited their factory and made an offence case against them. The assessee, during the course of examination, made a provisional deposit of an amount of Rs. 50000 towards the liability which may arise against them as a result of case filed against them. However, the assessee paid the entire amount of duty confirmed and also 25% of the penalty amount within time without utilizing the amount of provisional deposit and so applied for refund of the same. But the refund claim was rejected on the grounds of being time barred. It was held that if provisional deposits are not appropriated towards any final demand of duty or penalty, it is not to be treated as deposit of duty and so provisions of limitation would not come into action. Hence, the appellant was allowed the refund.

Case: COMMSSIONER OF CENTRAL EXCISE, CHANDIGARH V/s NEEPAZ STEELS LTD.

Citation: 2008 (230) E.L.T. 218 (P&H)

Judgement:

The assessee is a registered dealer availing Cenvat Credit of inputs used in the manufacture of final products. The department suspected that the assessee was showing use of fictitious vehicles for transportation of raw material and was fraudulently availing credit and so the central excise officers visited the premises of the assessee. It was found that in respect of large number of invoices, sales of raw material shown were transported on vehicles bearing registration Nos. of light transport vehicles such as scooters, motorcycles, and mopeds etc. which were incapable of transporting huge quantities of Iron & Steel items mentioned in the concerned invoices. Moreover, in some invoices, vehicle nos. mentioned was not issued by the concerned Transport Authority indicating fraudulent intention of the assessee. The assessee argued that the RT-12 (ER-1) filed by the assessee has been approved by the Range Officer which contained all the documents including the invoices under dispute on the basis of which Modvat credit has been utilized by them and that the assessee has not played any role in the wrong vehicle numbers. This argument of assessee was considered by the Tribunal. Further, the tribunal observed that as payments on the purchase of inputs were made through cheque & demand draft, inputs were used in the manufacture of final products and further as the Department has not been able to prove that any other raw material has been used by the assessee for manufacture of final products; hence the appeal has been rejected.

Case: COMMISSIONER OF CENTRAL EXCISE, MADURAI V/s ARUNA STEELS LTD.

Citation: 2008 (230) E.L.T. 325(Tri.-Chennai)

Judgement:

The assessee made clearance of goods in December 1999 while the duty was paid in September 2002 which was accepted by the Department. However, the Department issued Show Cause Notice demanding interest on the duty under section 11AB and penalty thereon under section 11AC in September 2004, after a period of 2 years. The appeal was rejected on the grounds that Sections 11AB & 11AC were invocable because the department accepted the duty paid by the assessee on 19.09.2002 and that department had knowledge of the material facts that time.

Case: Jayalaxmi Enterprises Vs. Commissioner of C.Ex., Mangalore

Citation: 2008 (9) S.T.R. 19 (Tri. Banglore)

Judgement:

The appellant was an agent of few cement companies. As per the agreement with their principal, they were entitled to commission on sales and also reimbursement of certain expenses. Revenue required the appellant to pay service tax under the category C&F agent, whereas the appellant contended even upto the stage of Hon. CESTAT that its activity is that of "Del credere" agent and not a C&F agent.

The Hon. CESTAT, based on the activity and the agreement between the appellant and its principal, held that activity of the appellant is clearly that of a C&F agent. With respect to the value of taxable service, the Hon. CESTAT held that the entire amount received by the appellant from their principal couldn't be subjected to service tax and is liable for deduction of reimbursable expenses, following various decisions.

Case: Febin Advertisers Vs. Commissioner of Central Excise, Calicut

Citation: 2008 (10) S.T.R. 50 (Tri. Banglore)

Judgement:

The assessee collected rentals in respect of hoardings owned by them for advertisement purposes. Further, they hired certain premises from the Railways and afterwards hired those premises for purposes of advertisement. The assessee contended that they had merely allowed certain spaces to be used for the display of advertisement. As they had not conceptualized visualized and designed the advertisements, they would not be covered under the definition of Advertising Agency in terms of the definition and also in terms of the Board's Circular No. 345/4/97 -TRU dated 16 - 8 - 1999.

Revenue proceeded against the appellants on the ground that they are engaged in providing advertisement services which are taxable in terms of the Finance Act, 1994. The department also submitted that the assessee had collected amounts from their clients as service tax and had not remitted the same to the Exchequer and that the amounts collected as Service tax is liable to be paid to the Department.

Held that though service tax is not leviable on mere renting of space under advertising services, the assesse was directed to pay the tax collected with interest and penalty to the extent of tax collected and not remitted was levied since the amount had been collected in the form of Service Tax.

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PJ/Case Laws/08-09/05

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