Pradeep Jain - Chartered Accountant

PJ/Case Laws/08-09/07

Case: CCE, Jaipur – II vs. Bohra Synthetics P. Ltd.

Citation: 2008(89) RLT 680 (CESTAT – Del.)

Judgement:

The respondents M/s BOHRA SYNTHETICS P. LTD. are engaged in the manufacturing and export of manmade fabrics. They filed a refund claim of deemed credit, taken on inputs used in the manufacture of goods exported under bond and remained unutilized.

Revenue appealed, against the admissibility of refund; in Commissioner (Appeals) alleging that the main input is grey fabrics for producing processed fabrics and the same was exempted from duty. It further argued that it was not declared as eligible input for taking credit and hence deemed credit is not allowable when it is used as input for manufacture of processed fabrics.

The respondent argued that since grey fabric was exempt from Central Excise Duty, the manufacturer of grey fabrics was not in a position to avail actual Cenvat credit of the duty paid on yarn used in manufacture of grey fabrics. That’s why the provisions of deemed credit were incorporated in the Rules.

Commissioner (Appeal) dismissed the Revenue’s appeal on the merits of the case. His decision was based on Damini Printers (p) Ltd. vs. CCE, Noida [2005 (68) RLT 820 (CESTAT-Del.)] wherein the Tribunal held that deemed credit would be available if declared inputs are contained in final products and on the merits of the allegation of Respondent.

Case: ABS India Ltd. v. Commissioner of Service tax, Bangalore

Citation: (2008) 17 STT 223(BANG. – CESTATE)

Judgement:

The appellant M/s ABS India Ltd. had a subsidiary company in Singapore. Appellant booked orders for its subsidiary for which it charged commission. The appellant used to charge service tax thereon but afterwards, he used to file claim for refund of same. His refund claim was rejected on the basis that service was rendered in India and also delivered and utilized in India.

Adjudicating authority held that service was delivered only to the subsidiary, who was recipient of service, therefore, only on this reason it cannot be said that service is delivered in India. Because of booking of orders, subsidiary got business; it was held that service is utilized in abroad. Therefore on the basis of Rule 3(2) of The Export of Services Rules, 2005, it was held that the service had been exported and not required to pay service tax. Hence the appeal was allowed with consequential relief.

Case: S. Gopakumar versus CCE (APPEALS), Cochin

Citation: 2009 (90) RLT 78(CESTAT – Ban.)

Judgement:

The appellant, S. Gopakumar, was providing the service of Architect since 1998. Appellants bona fidely believed that he would not be liable to service tax, though the bills were raised in respect of work commenced prior to 16.10.1998 and completed long after the said date. Revenue proceeded against the appellant on the ground that he had not paid service tax and imposed penalty on the evaded duty

Appellant approached the CESTAT against the order of Revenue. Adjudicating authority held that appellant bona fidely believed that he was not liable to service tax for the work undertaken prior to 16.10.1998 and completed long after the said date. The bills were raised later and appellant was not in a position to collect service tax from customers. Once the irregularity was pointed out by the department, the appellant paid service tax along with the interest. Therefore, there was no intention to defraud the Revenue. CESTAT held that there is no justification for the imposition of penalties under section 78. Hence, Penalties were set aside and appeal allowed with consequential relief.

Case: Shri Saptagiri Steel Rolling Machine versus CCE, BELGUAM

Citation: 2009 (90) RLT 20(CESTAT – Che.)

Judgement:

The Jurisdictional Range officer visited the appellant Sri Saptagiri Steel Rolling Mill’s factory on 10.01.2001 and conducted verification of physical stock of finished goods and raw materials. They found shortage of 4.58 MTs of M S Bars and 3.7 MTs of re-rollable scrap. Managing partner of the firm gave the statement that in his absence manager had sold the finished goods without raising the invoice and entering the same in the RG 1 but MD attributed the shortage as burning loss.

Later appellant admitted evasion. Commissioner (A) sustained the demand for duty. He vacated the penalty imposed on the firm u/s 11AC as the duty due has been discharged by appellant before issue of Show Cause Notice. The appellant argued before the Tribunal that the show cause notice proposing to recover the duty was barred by limitation.

The tribunal held that the appellants had rightly taken the ground of limitation against the demand and thus allowed the Appeal.

Case: Gujarat Polysol Chemicals Pvt. Ltd. & ANR versus CCE, DAMAN

Citation: 2009 (90) RLT 15 (CESTAT - Ahmedabad)

Judgement:

Fire took place in the factory of appellant M/s Gujarat Polysol Chemicals Pvt. Ltd. and dispute regarding remission of duty in respect of such Finished Goods emerged. The Commissioner (Appeal) rejected the application on the ground that fire occurred on account of short circuit and it cannot be held a natural cause as the applicant did not took reasonable preventive steps.

The appellate authority set aside the appeal with consequential relief on the ground that goods destroyed by fire have to be treated as having been destroyed due to unavoidable reason.

Case: CCE, Chandigarh versus Nachiketa Paper Ltd.

Citation: 2009 (90) RLT 12 (CESTAT – Del.)

Judgement:

The respondent M/s Nachiketa Paper Ltd. is engaged in the manufacture of writing and printing paper. On 18.02.2006, the preventive staff of Central Excise Division visited his factory premises and on verification of records found that the cenvat credit on M.S.Angles/Channels to the extent of Rs. 19,350 had been taken which was not permissible.

The authorised signatory of the respondent accepted that the mistake was bonafide and as on 18.02.2006, the amount of Rs. 19,350 was voluntarily debited in RG 23 A Part II. However on receipt of Show Cause Notice on the same issue, respodent argued that the goods had been used in the manufacturing of part and accessories of capital goods already installed in the factory but were unable to specify the parts or accessories in which the goods in question had been allegedly used.

The commissioner partly allowed the appeal by setting aside penalty on the ground that the facts and circumstances, does not fall within the parameters of Section 11AC of the Act but upholding the demand for duty thereon along with interest.

Case: Pavansut Securities Services versus CCE, Rajkot

Citation: 2009 (90) RLT 77 (CESTAT – Ahmd.)

Judgement:

The appellant Pavansut Securities Services are engaged in providing security services. Service tax Rs. 2, 30, 670/- along with interest has been deposited by them before issue of Show Cause Notice.

The appellant approached the Tribunal to set aside penalty of Rs. 2, 31, 261/- imposed under section 11AC and penalty of Rs. 1000/- imposed u/s 77. The adjudicating authority disposed off the appeal on the ground that the penalty has already been imposed u/s 78 and hence penalty u/s 77 is set aside.

Case: CCE, Ahmedabad – I versus M. Square Chemicals

Citation: 2009 (90) RLT 232 (SC)

Judgement:

The appellant is engaged in manufacture of detergent powder and they were using the inputs soda ash. During the checking of soda ash the department found shortage of the same. They alleged that the same has been used in manufacture of finished goods cleared without payment of duty.

The period involved was from January, 1986 to July 1987 whereas the Show cause Notice was issued on 21^st May, 1992. Seeking the time limitation the show cause notice was valid only for the period from 21^st May, 1987 to 21^st July, 1987 and was barred by limitation for the period from January 1986 up to May 1987. The Tribunal dismissed the appeals on such grounds of limitation.

Case: CC & CE versus Textile Corpn. Marathwada Ltd.

Citation: 2009 (90) RLT 232 (SC)

Judgement:

The Respondents M/s Textile Corpn. Marathwada Ltd. carried out bleaching, dying, printing and mercerizing of textile fabrics. The question arouse in the present case, that whether excise duty would be levied at each stage of manufacture.

The Apex Court of India dismissed the appeal of the Revenue on the ground that if assessee pays duty at every stage then the assessee would be entitled to Modvat credit and, therefore, the entire exercise would be revenue neutral. Hence, duty is not required to be paid at every stage of manufacture.

Case: Mundra Port & Special Economic Zones Ltd. versus CCE, Rajkot

Citation: 2009 (90) RLT 88(CESTAT – Ahmd.)

Judgement:

The appellant Mundra Port & Special Economic Zones Ltd. are engaged in providing port services and cargo handling services, which are leviable to service tax. The appellant has availed credit in respect of steel and cement which was used for the construction of jetty and port building and it covers major part of demand.

Appellant clarified that the credit of Excise duty paid on the quantum of cement and steel stands availed by them, which was used for construction of port jetty, port building and other storage facility. In as much as jetty building and storage tanks etc. are essential for providing the port services, warehousing and cargo handling services, and such output service can’t be rendered by appellant in absence of jetty and storage, the cement and steel have to be considered as necessary inputs.

As against the above stand of appellant, revenue submitted that admittedly port jetty does not fall within the definition of capital goods. The cement and steel are not covered by even the definition of components, spares and accessories and as such the same cannot be considered to be eligible input for the manufacture of capital goods. Since the applicant’s premise is not a factory so the credit which is indirectly used in any infrastructure required for rendering port services is not permissible.

Having observing appellant arguments, the tribunal held that, the definition of capital goods, inputs and input services is in respect of the expression “used for providing output services”. It was held that cement and steel stand used for providing the output service of construction of building and not used in providing the port service. Accordingly, confirmed the demand.

Comments

S.L.Bansal on 31 March, 2009 wrote:

Go ahed. Very good contribution to assesses, tax practitioners and revenue officers, I wish a bright future for Pradeep & his staff. S.L.Bansal

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PJ/Case Laws/08-09/07

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