CESTAT Weekly Round-Up

Top Stories CESTAT Weekly Round-Up This round-up analytically summarises the key stories related to the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) reported at Taxscan.in during December 2 to December 9, 2023 By Amal Michael – On December 10, 2023 11:30 am – 39 mins read CHA considered as Merely processing agent of documents for Clearance of goods and not inspector to weigh Genuineness of transaction: CESTAT Quashes Revocation of CB License Durga Link Logistics (Pvt.) Ltd vs Commissioner of Customs 2023 TAXSCAN (CESTAT) 1536 The New Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the Customs House Agent (CHA) was considered as merely the processing agent of documents for the clearance of goods and not the inspector to weigh the genuineness of the transaction. The bench was comprised of Rachna Gupta (Judicial) and Subba Rao (Technical). The two-member bench comprising Rachna Gupta (Judicial) and Subba Rao (Technical) held that the assessee as a customs broker was not liable to inspect the genuineness of the transaction.  The assessee appealed against the order passed by the adjudicating authority for confirming the revocation of the customs broker license, forfeiture of the security deposit, and imposition of a penalty of Rs.50,000/- The Bench observed that the goods were duly sealed by the exporter after obtaining self-sealing permission from the department. Hence, the assessee had no occasion to verify the quantity and weight of the goods sealed and the assessee had no means to verify the item-wise quantity or weight of the goods and, as, a customs broker, he was not required to do so.

CENVAT credit of Excise Duty Demand on iron and steel products used in Manufacture of Final products: CESTAT Set Asides Demand due to Credit Eligibility M/s Corporate Ispat Alloys Limited vs Commissioner of Central Excise, Bolpur 2023 TAXSCAN (CESTAT) 1542 A two member bench of the Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the CENVAT credit of excise duty demand on iron and steel products used in the manufacture of final products. The bench was comprised of Muralidhar (Judicial) and Anpazhakan (Technical) In the assessee’s written submission, it was asserted that items such as Angles, Channels, Beams, Joists, Sheets, Plate, Coils, etc., employed in the construction of furnace equipment and furnace structure, as well as in the manufacturing of raw material handling systems and pollution control equipment, qualify for credit as ‘inputs’ used in the production of capital goods. The Bench noted that Angles, Channels, Beams, Joists, Sheets, Plates, Coils, etc., when utilized in the production of furnace equipment and furnace structure, raw material handling systems, and pollution control equipment, are eligible for credit as ‘inputs.’ Any steel item used for fabrication of capital goods or inputs is entitled for CENVAT credit of Excise Duty in terms of Rule 2(l) CCR: CESTAT M/s Corporate Ispat Alloys Limited vs Commissioner of Central Excise, Bolpur 2023 TAXSCAN (CESTAT) 1542 A two member bench of the Kolkata Customs, Excise and Service Tax Appellate Tribunal (CESTAT)comprising Muralidhar (Judicial) and Anpazhakan (Technical)  held that any steel item that has been used for the fabrication of capital goods or inputs is entitled to CENVAT credit in terms of Rule 2(l)/2(k) of the CENVAT Credit Rules (CCR), 2004.

In the written submission of the assessee, the assessee stated that the iron and steel products were used for furnace equipment and furnace structure, raw material handling system, and pollution control equipment and had availed CENVAT credit on the Angles, Channels, Beams, Joists, Sheets, Plate, Coils etc, as ‘inputs’ as the same were used in the manufacture of capital goods.  The counsel for the department relied on the decisions made by the lower authorities and contended that the assessee was not entitled to get the CENVAT credit.

The Bench observed that in the case of Vandana Global Ltd. Vs. CCE, the court held that angles, Channels, Beams, Joists, Sheets, Plate, Coils, etc used for furnace equipment and furnace structure, raw material handling systems, pollution control equipment, are eligible for credit as ‘inputs, used in the manufacture of capital goods.  CESTAT Quashes Denial of CENVAT credit of Excise Duty on Manufacture of HCFC on ground of CENVAT credit Eligibility M/s. Balasore Alloys Limited vs Commissioner of CGST & CX, Bhubaneswar-I Commissionerate 2023 TAXSCAN (CESTAT) 1538 The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) comprising Muralidhar (Judicial) and Anpazhakan (Technical) quashed the denial of CENVAT credit of excise duty on the manufacture of High Carbon Ferro Chrome (HCFC) on the ground of CENVAT credit eligibility. The two-member bench comprising Muralidhar (Judicial) and Anpazhakan (Technical) held that the demand confirmed in the impugned order was not sustainable and quashed while allowing the appeal filed by the assessee.

To Read the full text of the Order The Bench observed that the CENVAT credit on capital goods would be admissible in the hands of the factory and the denial of CENVAT credit on input services and capital goods was not sustainable. Replica Fire Arms cannot Discharge a projectile and are not Falls under ‘firearms’ defined under Arms Act: CESTAT Quashes Confiscation of Goods Windlass Online Stores Pvt. Ltd vs Commissioner of Customs 2023 TAXSCAN (CESTAT) 1541 A two-member bench of the New Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) comprising Binu Tamta (Judicial) and Subba Rao (Technical) quashed the confiscation of replica firearms on the grounds of non-falling goods under the category of firearms( defined under the Arms Act, 1959).  Windlass Online Stores Pvt. Ltd, the appellant assessee filed a Bill of Entry for clearance of goods imported from an Overseas supplier – Denix S.A. C/Dels Bijuteers, Spain.

The description, quantity, and value of the goods declared by the importer in the said Bill of Entry as per invoice.  The assessee appealed against the order passed by the adjudicating authority for confirming the customs duty demand and for the confiscation of goods under section 112(a) of the Customs Act,1962.  The bench held that since the impugned order does not reflect any application of mind, it would be appropriate to remand the appeal to the Commissioner (Appeals) to discuss the issues on merit and quashed the confiscation of goods.  No Prohibition or Restriction either under Customs Act or under FTP to import “Replica Fire Arms”: CESTAT Windlass Online Stores Pvt. Ltd vs Commissioner of Customs 2023 TAXSCAN (CESTAT) 1541 The New Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that there is no prohibition or restriction, either under the Customs Act, 1962, or the Foreign Trade Policy, regarding the import of replica firearms. The two-member bench comprising Binu Tamta (Judicial) and Subba Rao (Technical) held that the assessee was not liable to pay the customs duty demand imposed against the assessee.  Windlass Online Stores Pvt. Ltd., the appellant assessee, submitted a Bill of Entry for the clearance of goods imported from an overseas supplier, Denix S.A. C/Dels Bijuteers, Spain, specifying the description, quantity, and value of the goods as per the invoice. The assessee challenged the order issued by the adjudicating authority, which confirmed the customs duty demand and ordered the confiscation of goods under section 112(a) of the Customs Act, 1962.

The tribunal noted that the certificate/declaration from the supplier/manufacturer stated that the imported goods were classifiable under CTH 83062900, and therefore, there was no prohibition or restriction under the Customs Act or the Foreign Trade Policy for importing “Replica Firearms.” Mild Steel Items used for manufacturing of Capital goods within factory premises are eligible for CENVAT Credit of Excise Duty: CESTAT M/s. Amit Metaliks Limited vs Commr. of Central Excise 2023 TAXSCAN (CESTAT) 1539 A two-member bench of the Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT)  comprising Muralidhar (Judicial) and K Anpazhakan (Technical) held that all the mild steel (MS) items for manufacturing of capital goods within the factory premises are eligible for CENVAT Credit.

The assessee appealed against the order passed by the adjudicating authority for confirming the CENVAT Credit demand taken on Capital goods and inputs used for Capital goods The bench held that the capital goods that are embedded are required for the manufacture of the finished goods, and CENVAT Credit cannot be denied.  Customs Duty Demand on Import of Antique Finished Rifles without verifying FSL Report: CESTAT Quashes Demand Windlass Online Stores Pvt. Ltd vs Commissioner of Customs 2023 TAXSCAN (CESTAT) 1541 The New Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the Customs duty demand on the import of antique finished rifles without verifying the Forensic Science Laboratory (FSL). The two-member bench comprising Binu Tamta (Judicial) and Subba Rao (Technical) quashed the Customs duty demand against the assessee.

The Bench observed that the antique finished rifles cannot discharge a projectile in their present condition and these are not firearms as defined in the Arms Act, 1959. Though, it was submitted that after modification the same could be used as firearms, in the present state, they are not firearms as defined in the Arms Act.  CESTAT Quashes CENVAT credit of Excise duty demand taken on Capital goods on ground of Absence of Sufficient Evidence M/s. Amit Metaliks Limited vs Commr. of Central Excise 2023 TAXSCAN (CESTAT) 1539 The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the CENVAT credit of excise duty demand which taken on the capital goods on the ground of absence of sufficient evidence. The two-member bench comprising Muralidhar (Judicial) and K Anpazhakan (Technical) quashed the CENVAT credit demand imposed against the assessee.

The assessee appealed against the order passed by the adjudicating authority for confirming the CENVAT Credit demand taken on Capital goods and inputs used for Capital goods. The Bench observed that the assessee had filed their Monthly Returns properly declaring the CENVAT credit taken by them on various counts and interpretations, suppression clause cannot be invoked against the assessee. Therefore, the assessee could have the bonafide belief that they are eligible for CENVAT Credit.  Refund claims filed on Account of Service Tax paid by Mistake, are not governed by time limit specified u/s 11B Central Excise Act: CESTAT M/s. Bansal Biscuits Private Limited vs Commr. of Central Excise & Service Tax, Patna 2023 TAXSCAN (CESTAT) 1540 A two member bench of the Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) comprising of Muralidhar (Judicial) and Anpazhakan (Technical) held that refund claims filed on account of Service Tax paid by mistake, are not governed by the time limit specified under Section 11B of the Central Excise Act,1944. The two-member bench comprising) held that Section 11B of the Central Excise Act is not applicable in this case.

The assessee appealed against the order passed by the Adjudicating Authority for rejecting the refund claim under Section 11B of the Central Excise Act read with Section 83 of the Finance Act, 1994.  The bench pointed out that the refund claims filed on account of Service Tax paid by mistake, are not governed by the time limit specified under Section 11B of the Central Excise Act and in the present case the provisions of Section 11B of the Central Excise Act (time limit) would not be applicable.  No Service Tax Leviable on Transportation of ‘Food Stuff’ towards GTA expenses: CESTAT M/s. Bansal Biscuits Private Limited vs Commr. of Central Excise & Service Tax, Patna 2023 TAXSCAN (CESTAT) 1540 The Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that when ‘foodstuff’ was transported, the same would be exempted from payment of Service Tax towards GTA expenses.  The two-member bench consisted of Muralidhar (Judicial) and Anpazhakan (Technical). The Bench observed that as per Notification No. 25/2012-ST dated 20/06/2012, when ‘foodstuff’ was transported, the same would be exempted from payment of Service Tax towards GTA expenses.  The bench held that there was no necessity to go into the aspect as to whether the biscuits can qualify as foodstuff to be eligible for the exemption.

Set Back to L.G. Electronics: CESTAT rejects Claim of Concessional Rate of Basic Customs Duty on Import of G-Watch L.G. Electronics India Private Limited vs Principal Commissioner of Customs, New Delhi 2023 TAXSCAN (CESTAT) 1544 A two-member bench of the Tribunal the New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), rejected the claim of concessional rate of basic customs duty on import of G-watch. The bench affirmed that the imported product is a Smart Watch, classifiable under 8517 6290 and the appellant had erroneously categorized it under 9102 1900. Consequently, the benefit under exemption Notification No. 152/2009-Cus. was not applicable to products of the 8517 tariff entry. The advantage under exemption Notification No. 152/2009-Cus. Is not applicable to products falling under the 8517 tariff entry; hence, it is determined that the claim for the same was incorrect. The claim of concessional rate of basic customs duty is rejected. However, the order imposing penalties and confiscating the goods is annulled.

As a result, the current appeal is partially granted. Modification of Already existing Machinery if installed capacity gets increased by more than 25% are Eligible for Duty Exemption: CESTAT M/s. The Rishabh Velveleen Ltd vs Commissioner of Central Excise 2023 TAXSCAN (CESTAT) 1543 The New Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the modification of already existing machinery if installed capacity gets increased by more than 25% is eligible for excise duty exemption under exemption notification. The two-member bench comprising Rachna Gupta (Judicial) and Subba Rao (Technical) held that the benefit of clause 2(b) of Notification No. 50/2003 was wrongly denied to the assessee.  The Bench observed that the benefit of notification is available to the unit existing before 07.01.2003 if the increase in its installed capacity by 25% or more has been effected after 07.01.2003 and in the case of Commissioner of Customs & Central Excise Vs. Uttaranchal Iron & Ispat Ltd, the court held that the modification of already existing machinery if the installed capacity gets increased by more than 25%, the assessee shall be entitled to the benefits of Notification No.50/2003-CE dated 10.06.2003.   CESTAT Quashes Denial of Excise Duty Exemption on Clearance of Flock Fabrics on ground of Genuineness of IIT Roorkee Report M/s. The Rishabh Velveleen Ltd vs Commissioner of Central Excise 2023 TAXSCAN (CESTAT) 1543 The two-member bench of the New Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) comprising Rachna Gupta (Judicial) and Subba Rao (Technical) quashed the denial of excise duty exemption on clearance of flock fabric. IIT Roorkee had been assigned to study the matter and submit a report on it.

The bench relied on the Indian Institute of Technology (IIT) Roorkee Report to reach its conclusions.    The Bench observed that the denial and the demand of duty were not as per the law the demand was presumptive and baseless and the IIT report had established that the installed capacity of the assessee’s unit was enhanced by more than 25% after 07.01.2003.  Confiscation of Spare Parts of goods for non-compliance of post import conditions of Project Import Regulations: CESTAT quashes Penalty due to Insufficient Evidence M/s. Nortech Power Projects Private Limited vs Commissioner of Customs (Port), Kolkata 2023 TAXSCAN (CESTAT) 1545 The two-member bench (Technical) Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) comprising Ashok Jindal (Judicial) and Rajeev Tandon quashed the penalty imposed on confiscation of spare parts of goods for non-compliance of post import regulations on the ground of insufficient evidence.

The assessee had appealed against the order passed by the Commissioner (Appeals) for confiscation of the goods for non-compliance with the post-import conditions of the Project Import Regulations and imposition of penalty on the assessee.  The Bench observed that claiming a refund of the legitimate amount due to them, was no favor being solicited from the department but seeking back what rightly belongs to the assessee. Activity of Mere packing of Rechargeable batteries along with Battery chargers does not amount to Manufacture: CESTAT Eveready Industries India Ltd. vs Commissioner of Central Excise  2023 TAXSCAN (CESTAT) 1546 The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) granted relief to the Eveready Industry by quashing the excise duty demand on the clearance of primary batteries on the ground of absence of manufacturing under section 2(f) of the Central Excise Act,1944. The two-member bench comprised of Muralidhar (Judicial) and Anpazhakan (Technical). The Bench observed that the activity of mere packing and labeling undertaken by the assessee would not amount to “manufacture” in terms of Section 2(f) of the Central Excise Act.

Accordingly, the demand confirmed in the impugned order was not sustainable. Since the demand was not sustainable, the question of demanding interest and imposing a penalty does not arise.  No re-enhancement of value possible once value of goods was enhanced and paid Customs duty thereon: CESTAT M/s. Premier Trading Company vs Commissioner of Customs (Port), Kolkata 2023 TAXSCAN (CESTAT) 1547 The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that re-enhancement of value for assessment purposes, undertaken when the goods were already assessed and exercise for enhancement of declared value was already undertaken at the time of assessment was patently illegal and unjustified. The two-member bench comprised of Ashok Jindal (Judicial) and Rajeev Tandon (Technical) The bench observed that no re-enhancement of value was possible once the value of goods was enhanced and duty paid thereon and Reassessment was not possible once earlier assessment had become final, without undertaking any appeal or review.  CESTAT upholds quashing of Confiscation of Silver ornaments and Silver Boondi on ground of absence of evidence of Smuggling Commissioner of Customs vs M/s Lalit Krishna Agrawal 2023 TAXSCAN (CESTAT) 1548 The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld the quashing of the confiscation of silver ornaments and silver boondi on the grounds of the absence of evidence of smuggling. The two-member bench comprised of Ashok Jindal (Judicial) and Rajeev Tandon (Technical).

The Bench observed that the confiscation of goods and the penalty imposed against the use were not as per the law and there was no evidence proved by the revenue that the goods were smuggled in nature and the quashing of the confiscation of goods and penalty was as per the law and liable to be upheld.  CESTAT Set Asides Rejection of declared unit value of imported Auto Parts on ground of absence of Undervaluation M/s. Premier Trading Company vs Commissioner of Customs (Port), Kolkata 2023 TAXSCAN (CESTAT) 1547Top of Form The Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) quashed the rejection of the declared unit value of imported auto parts on the ground of absence of undervaluation. The two-member bench comprising Ashok Jindal (Judicial) and Rajeev Tandon (Technical) held that transaction value had been rejected, arbitrarily, as the department was not able to adduce any sustainable evidence on the matter.  The bench noted that, according to the court’s decision in the Rabindra Chandra Paul case, Rule 7A (Computed Value assessment) of the Customs Valuation Rules 2007 applies exclusively to cases where the buyer and seller are related. The current adjudication order did not include such a determination.

Therefore, employing this methodology for the valuation of various imported items such as radiators, cylinder blocks, crankshafts, etc., was not legally authorized. Hiring of vehicles to APSRTC not liable for Sales Tax: CESTAT sets aside Demand-cum-SCN Theegala Naga Venkata Padmavati vs Commissioner of Central Tax 2023 TAXSCAN (CESTAT) 1549 The Hyderabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) observed that the hiring of vehicles to the Andhra Pradesh State Road and Transport Corporation (APSRTC) is not liable for sales tax, and the tribunal set aside the Demand-Cum Show Cause Notice (SCN). The two member bench of the Tribunal comprised of Mr. Anil Choudhary, Member (Judicial) and A.K Jyothishi, Member (Technical). The issue to be decided was whether the hiring of vehicles/buses by appellants to the Andhra Pradesh State Road Transport Corporation (APSRTC) falls under the “Rent a Cab” service and is thus chargeable to service tax.

The bench concluded that the appellant’s vehicle hiring is deemed a “Transfer of Right to Use,” not falling under “Rent a Cab Service.” Scrutiny of judgments, circulars, and agreements concludes APSRTC maintains control. Relief to Ramco Cement: No Denial of CENVAT credits of Service Tax paid on Outward Transportation of Finished Products from factory to dealers and buyers, rules CESTAT The Chennai Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT), while granting relief to Ramco Cement, held that CENVAT credits of service tax paid on outward transportation of finished products from the factory to the place of dealers and buyers should not be denied. The two-member bench comprised of Sulekha Beevi C.S, Member (Judicial), and Vasa Seshagiri Rao, Member (Technical). The department contends that a certain credit is not eligible, asserting that the activity of outward transportation from the place of removal does not fall within the definition of input service according to Rule 2(l) of CENVAT Credit Rules 2004. Following this, a show-cause notice was issued, proposing to disallow the credit for the period January 2007 to February 2008, along with interest and a penalty under Rule 15(3) of CENVAT Credit Rules 2004. The appellant, displeased with the department’s decision, appealed to the Commissioner (Appeals), who upheld the order. The appellant’s counsel argued that the definition of ‘input services’ was amended from “from the place of removal” to “up to the place of removal” effective from 1/4/2008, and the matter had already been addressed in the appellant’s previous case. The department, affirmed the findings of the lower authorities.

Therefore, it was held that the CENVAT credits of service tax paid on outward transportation of finished products from the factory to the place of dealers and buyers should not be denied. Coaching of Competitive Entrance Examination provide to students for  getting admission in  Engineering and Medical Colleges are exempted from “Commercial Training or Coaching Services”: CESTAT M/s. Shiv Chhatrapati Shikshan Sanstha VS Commissioner of CGST & Central Excise, Aurangabad 2023 TAXSCAN (CESTAT) 1550 The Mumbai Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) ruled that coaching for competitive entrance examinations, provided to students seeking admission in engineering and medical colleges, is exempted from “Training or Coaching Services.” The two-member bench comprised of Dr. Suvendu Kumar Pati (Member – Judicial) and Anil G. Shakkarwar (Member-Technical). The appellant, asserting exemption under Sr. No. 9 of Notification No. 25/2012-ST, filed an appeal, contending that the adjudication order was based on earlier legislation and thus inapplicable to the present one. The department claimed that the services provided by the appellant are taxable under “Commercial Training or Coaching Services” and “Renting of Immovable Property Service.” Demands for the period from April 2015 to June 2017 were made in a follow-up show-cause notice dated April 6, 2018, leading to a confirmation of duty, interest, and penalty under Section 78 of the Finance Act, 1994.

No service tax leviable on coaching provided to students in respect of competitive entrance examination for getting admission in  Engineering and Medical Colleges: CESTAT  M/s. Shiv Chhatrapati Shikshan Sanstha VS Commissioner of CGST & Central Excise, Aurangabad 2023 TAXSCAN (CESTAT) 1550 The Mumbai Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) held that no service tax is levied on coaching provided to students for competitive entrance examinations to gain admission to engineering and medical colleges. The two-member bench, Dr. Suvendu Kumar Pati (Member – Judicial) and Anil G. Shakkarwar (Member – Technical), relied on the decision in M/s. Shri Chaitanya Educational Committee Vs. CC, CE & ST, stating that the definition of “educational institution” in Section 66D of the Finance Act, 1994, exempts such activities from service tax. Setback to Crompton Greaves: CESTAT rules transformers constitute ‘Inputs’ in terms of Rule 2(k) of CCR Crompton Greaves Ltd vs Commissioner of Central Excise 2023 TAXSCAN (CESTAT) 1554 The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that the transformers constitute ‘inputs’ in terms of rule 2(k) of the Cenvat Credit Rules (CCR), 2004.

The two-Member Bench of the Tribunal comprising CJ Mathew (Technical Member) and Ajay Sharma( Judicial Member) observed that   “The impugned goods constitute ‘inputs’ in terms of rule 2(k) of CENVAT Credit Rules, 2004, rejection of claim for restoration of credit is not tenable. Accordingly, the applications are restored to the original authority for disposal in terms of section 11B of Central Excise Act, 1944” the Bench concluded. Relief to Forbes Facility Services: CESTAT grants Service Tax Exemption as Services were provided to SEZ Unit Forbes Facility Services Pvt. Ltd vs Commissioner of CGST and Central Excise, Mumbai Central 2023 TAXSCAN (CESTAT) 1553 The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), granted service tax exemption as services were provided to SEZ unit. The two Member Bench of the Tribunal comprised of S.K.Mohanty, Member(Judicial) and M. M. Parthiban, Member (Technical). The two hospitals involved in this case, namely GPPH and MAIDS, are operated by the Government of N.C.T. We have scrutinized the agreements between the Appellant and G. B. Pant Hospital, a government entity of N.C.T., New Delhi. The agreement was made by the service recipient on behalf of the President of India, indicating that the hospital in question is a Government Hospital. The two hospitals involved in this case, namely GPPH and MAIDS, are operated by the Government of N.C.T.

We have scrutinized the agreements between the Appellant and G. B. Pant Hospital, a government entity of N.C.T., New Delhi. The agreement was made by the service recipient on behalf of the President of India, indicating that the hospital in question is a Government Hospital. The bench observed that “In respect of claiming exemption for payment of service tax on the services provided to SEZ Unit/Developer, the Notification No. 09/2009-S.T. dated 03.03.2009 as amended, in explicit terms provides that the services provided to the SEZ should be considered to grant of the benefit of exemption. In the case in hand, since the appellant had in fact provided the services to an unit of SEZ unit, in our considered view the benefit of the exemption provided under the Notification dated 03.03.2009 should also be available.”

Subsidy received from Sale of Mobile Handsets purchased from Independent Vendors is BAS, chargeable to Service Tax: CESTAT M/s Balaji Trading Co vs Commissioner (Appeals), Central Excise and Central Goods and Service Tax 2023 TAXSCAN (CESTAT) 1555 The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that the subsidy received from sale of mobile handsets purchased from independent vendors is business auxiliary services (BAS), chargeable to service tax. The two-Member Bench comprised of Justice Dilip Gupta, President and PV Subba Rao, Technical Member. The bench based its decision based on Balaji Enterprises versus Commissioner of Central Excise and Service Tax, Jaipur where the tribunal observed that “subsidy received by the appellant from Tata Tele Services on the sale of mobile handsets purchased by the appellant from independent vendors can be said to be an amount received for providing “business auxiliary services” to Tata Tele Services and, therefore, chargeable to service tax.”

Responsibility of CB is to play Crucial Role in protecting Interest of Revenue: CESTAT imposes Penalty of Rs 10, 000 on CB Atlantic Customs Brokers vs Commissioner of Customs 2023 TAXSCAN (CESTAT) 1556 The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), imposed penalty of Rupees 10,000 on the Customs Broker (CB) and observed that the responsibility of CB is to play crucial role in protecting interest of the revenue. The court observed “In view of the failure of the appellants to have acted in a proactive manner in fulfilment of the obligation under sub-regulation 10(a) ibid, particularly when they have received the documents from importer through intermediary logistics operator, we find that it is justifiable to impose a penalty of Rs.10,000/- against the appellants…” A Two Member Bench of the Tribunal comprising S.K. Mohanty, Member (Judicial) and M.M. Parthiban, Member (Technical) observed that “we are of the considered view that the responsibility of a Customs Broker is to play a crucial role in protecting the interest of Revenue and at the same time he is expected to facilitate expeditious clearance of import/export cargo by complying with all legal requirements.” Availment of CENVAT credit of Excise Duty without proper receipt of goods: CESTAT Upholds Credit Demand M/s Saha Industries vs Commissioner of Central Excise 2023 TAXSCAN (CESTAT) 1565 The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the availment of the CENVAT credit of excise duty without proper receipt of goods. The two-member bench comprised of Ashok Jindal (Judicial) and Anpazhakan (Technical).

The Bench observed that the assessee was involved only in paper transactions by taking invoices without any receipt of the goods in their premises and thereafter, enabling the recipient of the assessee to take credit without proper receipt of the goods.  Livelihood of Customs Broker and Employees is Dependent upon Functioning of Customs brokers Business: CESTAT quashes Revocation of CB Licence M/s H2O Logistics vs Principal Commissioner of Customs (General) 2023 TAXSCAN (CESTAT) 1563 The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the revocation of customs broker (CB) Licence and observed that livelihood of Customs broker and employees is dependent upon functioning of Customs brokers business. The two-Member Bench of the Tribunal comprised S.K. Mohanty, Member (Judicial) and M.M. Parthiban, Member. The bench observed that the timelines indicate that the suspension was continued during the inquiry proceedings for about 22 months. Normally, immediate suspension action prior to conduct of regular inquiry is taken considering the serious violations of CBLR, 2018 by the action of the Customs broker.

Otherwise, the regulations provide for conducting regular inquiry, while license of Customs broker is in operation, for taking a decision on the suspension or revocation of the license. If the entire process of suspension proceedings is unduly delayed, then the very purpose of prescribing specific time limits in relation to conduct of inquiry proceedings is nullified and to such extent the actions of the authorities is not really sanctioned by law. Splitting Value of Modem Artificially as value of Hardware and Value of Software so as to Evade Payment of duty: CESTAT upholds Excise Duty Demand MRO-TEK Ltd VS The Commissioner of Central Excise (Appeals-II) No.16/1, 5th Floor 2023 TAXSCAN (CESTAT) 1564 The Bangalore Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld the excise duty demand as there was splitting value of modem artificially as value of Hardware and value of the software so as to evade payment of duty. The bench, comprising DM Misra (Judicial Member) and R Bhagya Devi (Technical Member), noted that the appellant, despite customers’ purchase orders covering the total modem value with embedded software, knowingly separated the value into hardware and software components to avoid duty payment. The bench rejected the appellant’s argument that they believed in good faith in declaring the software value separately. Consequently, the Tribunal found no merit in the appeal and saw no reason to interfere with the Commissioner’s order.

Relief to Honda Cars: CESTAT quashes Excise Duty Demand Honda Cars India Ltd vs Commissioner of Central Excise Raigad 2023 TAXSCAN (CESTAT) 1558 The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed excise duty demand, thereby granting relief to M./s, Honda Cars. The Tribunal, comprising Ajay Sharma (Judicial Member) and CJ Mathew (Technical Member), observed that the appellant’s imported goods, upon being repacked after customs clearance, undergo a manufacturing process subject to excise duties under section 4A of the Central Excise Act, 1944. The affixing of the ‘retail selling price (RSP)’ becomes the final declaration for assessment. The Tribunal held that there is no application of Explanation 2(a) under section 4A, as there are no two prices. In favor of the appellant, the Tribunal set aside the demand, including interest and penalties, based on a prior Tribunal decision in their favor for the earlier period. CESTAT upholds Demand of Cenvat Credit of Service Tax paid on Outdoor Catering Service for Normal Period M/s Hawkins Cookers Limited vs Commissioner of CGST & Central Excise, Thane 2023 TAXSCAN (CESTAT) 1557

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld the demand of cenvat credit of service tax paid on outdoor catering service for normal period. M.M. Parthiban, Member (Technical) was the sole member on the bench The issue in dispute is in respect of Cenvat Credit taken by the appellants in respect of canteen facilities provided to their employees and staff, during shifts and office timings, and availing of service tax paid thereon in respect of services provided by an ‘outdoor caterer’ as eligible ‘input service’. The tribunal deemed the demand for interest for the extended period to be unsustainable, citing the Department’s awareness of the issue, as evidenced by a previous Tribunal order and various appellate authorities’ actions. The Tribunal set aside the interest and penalty imposed in the impugned order, confirming the Order-in-Original dated 27.06.2019. The matter is remanded back to the original authority to re-quantify the demand for the normal period related to the contested outdoor catering service on which Cenvat Credit was claimed by the appellants. CESTAT grants Cenvat Credit on Supply of Inputs by Manufacturers of Copper Commissioner of Central Excise Belapur vs KSH International Pvt Ltd 2023

TAXSCAN (CESTAT) 1559 The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) granted Cenvat Credit on the supply of inputs by manufacturers of copper.The two-Member Bench comprise of  CJ Mathew, Technical Member and Ajay Sharma, Judicial Member. M/s KSH International Pvt Ltd, a manufacturer of insulated conductors containing essential copper, was engaged in supplying its final product both domestically and for exports, fulfilling obligations under the ‘advance licence/authorization scheme’ of the Foreign Trade Policy (FTP). To acquire the primary ingredient, copper, duty-free, the respondent sourced it from M/s Hindalco Industries Ltd and M/s Sterlite Industries Ltd between October 2004 and March 2009. This was done by paying a duty of ₹5,26,47,414/- upon the invalidation of the ‘advance authorization’ to that extent. The bench observed that the manufacturers of copper had discharged the duty on the supplied inputs to the respondent. As a consequence there is no basis for denying eligibility for CENVAT credit. Tribunal granted CENVAT credit on the supply of inputs by the manufacturers of copper. Relief to JSW Steel: CESTAT grants Cenvat Credit on discharge of Tax Liability JSW Steel Ltd vs Commissioner of Central Excise, Customs & Service Tax Raigad 2023 TAXSCAN (CESTAT) 1560

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), granted Cenvat Credit on discharge of tax liability, thereby granting relief to JSW Steel Ltd, the appellant. The Two-Member Bench of the Tribunal comprised of CJ Mathew, Technical Member and Ajay Sharma, Judicial Member. The issue revolves around the disallowance of Cenvat credit amounting to ₹1,11,92,198/- for the period between August 2005 and April 2006. The recovery of this amount was ordered under Rule 14 of Cenvat Credit Rules, 2004, accompanied by applicable interest under Section 11AB of the Central Excise Act, 1944, and a penalty of a similar amount under Section 11AC of the Central Excise Act, 1944. The bench observed that upon discharge of tax/duties on procurement of inputs/service and the said ‘service’ conforming to rule 2(l) of Finance Act, 1994, the recipient of service is entitled to avail credit of such tax. There is nothing on record to evidence that ‘service’ or ‘production’ for which the impugned goods had been deployed were not taxable/dutiable. The bench further noted that the tax liability had been discharged by the appellant on the procurement of such services from abroad. Service Tax not leviable on Ground that SCN alleges Rendering of Commercial or Industrial Construction Service: CESTAT M/s JMD Ltd. vs Additional Director General, (Adjudication), DGCEI 2023 TAXSCAN (CESTAT) 1562 The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that the service tax is not leviable on ground that the show cause notice (SCN) alleges rendering of commercial or industrial construction service. The Two-Member Bench of the Tribunal comprised of Justice Dilip Gupta, President and PV Subba Rao, Technical Member.

The bench held that “No service tax could have been demanded from the appellant prior to 01.06.2007 and for the period post 01.06.2007 the demand of service tax cannot be sustained for the simple reason that the show cause notice alleged that the appellant had rendered commercial or industrial construction service and the Adjudicating Authority has also confirmed the demand under this head.” Wrong Claim of Excise Exemption Notification not Ground for Invoking Extended Period of Limitation: CESTAT M/s. Omega Biotech Ltd vs Commissioner of C.G.ST 2023 TAXSCAN (CESTAT) 1561 The New Delhi Bench of the Customs,

Excise and Service Tax Appellate Tribunal (CESTAT), observed that the wrong claim of excise exemption notification not ground for invoking the extended period of limitation. The two member bench comprised of Dr Rachna Gupta, Judicial Member and Mr. P.V. Subba Rao, Member (Technical) The bench observed thus, “The appellant had claimed the benefit of an exemption notification in its self-assessment which it was not entitled to. It has been the assertion of the appellant from the time of self-assessment up to and including in this appeal before us that it was entitled to the benefit this exemption notification. Wrong claim of an exemption notification is not a ground provided under section 11A for invoking extended period of limitation.” Role of CB is limited to File Bill of Entry on basis of Description of Goods: CESTAT Commissioner of Central Excise, Kolkata-II vs M/s Vrinda Engineers Pvt. Ltd., 2023 TAXSCAN (CESTAT) 1566 The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the goods supplied to mega power projects based on International competitive bidding are eligible for excise duty exemption. The two-member bench comprised of Ashok Jindal (Judicial) and Rajeev Tandon (Technical).

The Bench observed that the responsibility regarding proper classification/ valuation of goods is on the importer and the customs officials and not on the Customs Broker Further, it is submitted that the role of a Customs Broker is limited to filing of bill of entry based on description of goods and documents in support of the same furnished by the importer Goods supplied to Mega Power projects based on International competitive bidding are Eligible for Excise Duty Exemption: CESTAT Commissioner of Central Excise, Kolkata-II vs M/s Vrinda Engineers Pvt. Ltd 2023 TAXSCAN (CESTAT) 1566 The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the goods supplied to mega power projects based on International competitive bidding are eligible for excise duty exemption. The two-member bench comprised of Muralidhar (Judicial) and Anpazhakan (Technical). The Bench noted that, according to Entry 91 along with condition no.19 of Notification 06/2006 -CE dated 01.03.2006 and Entry No. 400 along with condition no. 86 of Notification 21/2002-Cus dated 01.02.2002, goods supplied through international competitive bidding under any Chapter of the First Schedule to the Central Excise Tariff are classified as ‘Nil’ rated.

The bench pointed out that this exemption is contingent upon the goods being exempted from the customs duties applicable when imported into India. P&H HC reprimands CESTAT for Decade-Long Stay on Pre-Deposit to Tobacco Company Commissioner of Central Excise & Service vs A.K.Singh 2023 TAXSCAN (HC) 1896 The Punjab and Haryana High Court has reprimanded the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) for virtually allowing a decade-long stay on the pre-deposit to Pelican Tobacco Co. Ltd.,  The bench, consisting of Justice G S Sandhawalia and Justice Lapita Banerji, emphasized that the director, who had filed writ petitions and SLPs, was well aware that both the company and himself were denied the benefit of exemption from pre-deposit waiver, and their appeals had been dismissed. The Bench further held thus, “The Tribunal in such circumstances has over-stepped its jurisdiction by allowing the application for condonation of delay and restoration of the appeals and thereafter proceeded ahead with the matter for the reasons best known to it….” Procedural Lapse Cannot Impede Grant of Substantive Benefit of Customs Duty: CESTAT  M/s. Softel Overseas Private Limited vs Commissioner of Customs (Port), Kolkata 2023 TAXSCAN (CESTAT) 1569 The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the procedural lapse cannot impede the grant of substantive benefit of Customs Duty.

The two-member bench comprised Ashok Jindal (Judicial) and Rajeev Tandon (Technical). In this case Sofitel Overseas Private Limited, the appellant, filed five Bills of Entry seeking the benefit of Notification No.12/2012-Customs, as amended by Notification No.25/2013-Customs, and paid duty at the rate of 7.5% during the clearance of the goods. The appeal was lodged against the adjudicating authority’s decision to reject the claimed benefit. The Bench pointed out that in the case of India Photographic Co. Ltd. vs. Collector of Customs, Bombay, the court held that procedural formality, if any cannot impede the grant of a substantive benefit. And these findings were found to be pertinent with regards to the case. CESTAT Quashes Suspension of CB License on Mis-declaration of Balloons on ground of Absence of Involvement M/s SP Agency vs Commissioner of Customs 2023 TAXSCAN (CESTAT) 1567 The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the suspension of the Customs Broker license on misdeclaration of balloons on the grounds of absence of involvement.  The two member bench comprised of Ashok Jindal (Judicial) and Rajeev Tandon (Technical). SP Agency, the appellant assessee imported one consignment of decorative items.  The decorative items were misdeclared by the appellant.

The assessee had appealed against the order passed by the Principal Commissioner of Customs (Airport & Administration), Kolkata for suspension of the license of the Customs Broker.  The Bench held that the order given by commissioner to immediately cancel the custom broker’s license was not valid. The bench also cited the absence of involvement by the custom’s broker in the movement of decorative items for quashing the suspension of custom broker’s license. CESTAT Quashes Denial of Customs Duty Exemption on ground of Procedural Lapse The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the denial of Customs duty exemption on the grounds of procedural lapse 2023 TAXSCAN (CESTAT) 1569 The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the denial of Customs duty exemption on the grounds of procedural lapse.

The two-member bench comprised of Ashok Jindal (Judicial) and Rajeev Tandon (Technical). The Bench observed that omission as pointed out does not violate any of the provisions of the Rules referred to above which could entail denial of the exemption. It was also settled law that where a more beneficial exemption is available to the assessee, it cannot be precluded from seeking duty relief thereto.  Also observed that procedural lapses, if any, cannot come in the way of disallowing a substantive benefit to the party, as long as there was no prejudice caused to the contents and the intentions of the documents.  Service Taxability of an Event cannot depend upon a decision taken by Foreign Client: CESTAT The Commissioner of GST & Central Excise vs M/s. Sundaram Asset Management Co. Ltd 2023 TAXSCAN (CESTAT) 1571 The Chennai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that the service taxability of an event cannot depend upon a decision taken by the foreign client. The two-member bench comprised of Sulekha Beevi (Judicial) and Vasa Seshagiri Rao (Technical). Sundaram Asset Management Co. Ltd, the respondent-assessee was engaged in the activity of management of assets of various schemes of Sundaram Mutual Fund and advises on investment to clients both in India and overseas. While providing advisory services to clients abroad they received the consideration in inconvertible foreign exchange.

The revenue appealed against the order passed by the Commissioner (Appeals) for confirming the sanctioning of a rebate claim of Rs.48,82,448/- to the assessee.  The Bench observed that the client who is abroad can opt to accept the advice given by the assessee or reject the same. In such circumstances, a decision taken by a foreign client to invest in India cannot be said to be the deciding factor whether the advisory services amount to the export of service or not.  CESTAT quashes Service Tax Demand on ‘Technical Inspection and Certification Agency Service’ on ground of Service Tax Exemption M/s Sidmak Laboratories (India) Private Limited, vs The Commissioner of Central Excise and Service Tax 2023 TAXSCAN (CESTAT) 1572 The New Delhi bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) quashed the service tax demand on technical inspection and certification agency service on the grounds of service tax exemption.  The two-member bench comprised of Dilip Gupta (President) and Subba Rao (Technical). Sidmak Laboratories (India) Private Limited, a pharmaceutical manufacturer and exporter, appealed against the order confirming a service tax demand of Rs. 4,55,734/- along with interest. The demand was based on payments made by the assessee to the US FDA for obtaining approval for exporting drugs.

The appellant argued that no service tax was applicable to these payments, while the department relied on lower authorities’ decisions, asserting the assessee’s liability for service tax payment. The Bench observed that the US FDA was a statutory authority and its approval of pharmaceuticals to be exported to that country was the statutory function. CHA Service availed before Date of export: CESTAT Quashes Rejection of Service Tax Refund Claim M/s Sigma Moulds and Stampings Pvt. Ltd vs The Commissioner of Central Excise and Service Tax 2023 TAXSCAN (CESTAT) 1573 The Chandigarh bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) quashed the rejection of the service tax refund claim on grounds of availing of CHA service before the date of export. The bench comprised of a single member, Anjani Kumar (Technical) Sigma Moulds and Stampings Pvt. Ltd, a manufacturer of auto parts that exported goods, appealed against the rejection of its service tax refund claim amounting to Rs.40,906/-. The Commissioner (Appeals) had denied the refund, prompting the assessee to file an appeal challenging this decision.

The Bench observed that the services availed are that of the CHA whose services are required at the Port of export and therefore, the services are bound to be later than the date of removal of goods from the factory and before the actual export and the services are availed before export, the contention of the Department was incorrect.  CENVAT Credit of Service Tax Admissible in Refund proceeding in Absence of any proceeding initiated u/r 14 of CCR: CESTAT M/s. Siemens Technology & Services Pvt. Ltd VS Commissioner of Service Tax-III, Mumbai 2023 TAXSCAN (CESTAT) 1576 The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the CENVAT credit of service tax is admissible in refund proceedings in the absence of any proceedings initiated under rule 14 of CCR. The two-member bench comprised of Suvendu Kumar Pati (Judicial) and Anil G Shakkawar (Technical). Siemens Technology & Services Pvt. Ltd had appealed against the denial of CENVAT credit amounting to Rs.1,22,29,342/-. The Commissioner (Appeals) had confirmed the denial of credit, leading the assessee to file an appeal challenging this decision. The CENVAT credit in question was accumulated on Service Tax liability discharged under the reverse charge mechanism for services procured from outside India and under the normal procedure for services availed within India.

The Bench pointed out that in the case of Capital India Pvt. Ltd. Vs. CCT, the court held that no recovery proceeding was initiated for the alleged erroneous taking of credit, and denial of the said amount during a refund preceding is not in conformity to the law.  Appeal before tribunal abates as per Rule 22 of CESTAT (Procedure) Rules, when NCLT approves Resolution Plan: CESTAT  Ruchi Soya Industries Ltd vs Commissioner of CE & ST 2023 TAXSCAN (CESTAT) 1574 The Bangalore Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) held that the appeal before the tribunal should be abated as per Rule 22 of the CESTAT (Procedure) Rules when the National Law Company Law Tribunal (NCLT) approves the resolution plan. The two-member bench comprised of Dr. D. M. Misra, Member (Judicial), and Pullela Nageswara Rao, Member (Technical) The appellant, Ruchi Soya Industries Ltd, a manufacturer of Edible Refined Oils and Fatty Acids, faced a show-cause notice accusing them of wrongly claiming exemption under Notification No. 3/2006-CE for clearing RBD Palm Stearin at the “Nil” rate of duty. The proposal suggested classifying the product under sub-heading 38231112 of the Central Excise Tariff Act, 1985, and recovering duty, interest, and penalty.

The Commissioner (Appeals) upheld the department’s order, prompting the appellant to file an appeal before the tribunal. The bench observed that the appeal abates once the IRP is appointed and/or the Resolution plan is approved. As a result, the appeal is dismissed in accordance with CESTAT (Procedure) Rules, 1982, Rule 22, and this is the relief/Order that may be issued in accordance with the aforementioned Rule. CESTAT urges Customs Brokers to safeguard against fraudulent transactions in accordance with CBLR, 2018  M/s. SKH Freight Logistics Pvt. Ltd vs Commissioner of Customs (Airport & General) 2023 TAXSCAN (CESTAT) 1570 The Delhi bench of CESTAT (Customs, Excise and Service Tax Appellate Tribunal) in its recent verdict emphasized  the role of Customs Broker in preventing illegal transactions. SKH Freight Logistics, a customs brokerage agency, was found to have acted on behalf of M/s. Linwood Sales without proper authorization, violating Regulation 10(a) of CBLR.The Customs Broker was implicated in facilitating fraudulent, undervalued exports and failed to comply with various regulations, including advising the exporter on Customs Act provisions and conducting proper client inquiries. The Customs Broker’s failure to verify the correctness of IEC and GSTIN, misrepresentation of company details, and use of forged documents led to findings of violations of Regulations 10(a), 10(b), 10(d)10(k) and 10(n) of CBLR.

The two-member bench, comprising Dr. Rachna Gupta, Member (Judicial), and Hemambik R. Priya, Member (Technical), revoked the appellant’s license based on these violations. No service tax Leviable on Amount paid to USFDA to obtain their approval for export of drug: CESTAT M/s Sidmak Laboratories (India) Private Limited, vs The Commissioner of Central Excise and Service Tax 2023 TAXSCAN (CESTAT) 1572 The New Delhi bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that the service tax cannot be levied on the amount paid to the USFDA to obtain their approval for the export of drugs.  Sidmak Laboratories (India) Private Limited, an appellant assessee in the pharmaceutical industry, appealed against the order confirming a service tax demand of Rs. 4,55,734. The adjudicating authority had upheld the demand under the proviso to Section 73(1) of the Finance Act, 1994, along with interest under Section 75.

The appeal contested the service tax levy on the amount paid to the USFDA for obtaining approval for exporting drugs. The two-member bench comprising Dilip Gupta (President) and Subba Rao (Technical) held that the USFDA was a statutory authority mandated by the US laws to regulate the import of pharmaceuticals into the country.  On-Site Emergency medical services set up at factory not Input Service: CESTAT disallows Cenvat Credit Claim of Saint Gobain Glass M/s. Saint Gobain Glass India Limited vs Commissioner of Central Excise and Service Tax 2023 TAXSCAN (CESTAT) 1577 The Chennai Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) held that the on-site emergency medical service set up at the factory of Saint Gobain Galss India Limited could not fall under Input service. Saint Gobain Glass India Limited had appealed against the denial of CENVAT Credit for Service Tax paid on input services. The dispute arose over services used in setting up the factory before and after 01.04.2011. The department contended that services post this date were ineligible for credit due to changes in the definition of “input service.”

The appellant argued that services received before the commencement of production fell under “Erection, Commissioning, and Installation Service,” making them eligible for credit. The tribunal observed that the appellant availed credit on “Emergency Medical Services” for on-site use. The bench disallowed Cenvat credit on Emergency Medical Services, stating they weren’t proved for personal consumption and couldn’t be considered eligible input services. CESTAT Upholds Sanctioning of Service Tax Rebate Claim on Advisory Services on ground of Refund Eligibility The Chennai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) upheld the sanctioning of service tax rebate claim on the advisory service on the grounds of refund eligibility. The two-member bench comprised of Sulekha Beevi (Judicial) and Vasa Seshagiri Rao (Technical) Sundaram Asset Management Co. Ltd received consideration in inconvertible foreign exchange for advisory services to clients abroad. The Commissioner (Appeals) confirmed the sanctioning of a rebate claim of Rs.48,82,448/- to the assessee.

The revenue had appealed against this decision. The Bench observed that the Commissioner (Appeals) had rightly discussed the issue in detail and held that the refund was eligible to the assessee. Though the decision referred by the Commissioner (Appeals) had analyzed the issues based on a circular of 2009 the reasoning given by the Commissioner (Appeals) was proper and did not require any interference.    CESTAT Set Asides Denial of CENVAT Credit on Information Technology Software Services on ground of CENVAT Credit Eligibility M/s. Siemens Technology & Services Pvt. Ltd VS Commissioner of Service Tax-III, Mumbai 2023 TAXSCAN (CESTAT) 1576 The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) quashed the denial of the CENVAT credit on information technologies software services on the grounds of credit eligibility.  The Bench observed that since the input services were used in or concerning the provision of output service exported by the assessee, the benefit of refund provided under Rule 5 of the CCR should be available to it.

The two-member bench comprising Suvenda Kumar Pati (Judicial) and Anil G Shakkarwar (Technical) held that so long as it is not established that services are not utilized, CENVAT Credit cannot be denied.  Canned pineapple slices classifiable under CTH 0804, attracts 30% Customs Duty: CESTAT HOLYLAND MARKETING PVT LTD vs COMMISSIONER OF CUSTOMS (IMPORT) ICD, TUGHLAKABAD 2023 TAXSCAN (CESTAT) 1578 The New Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that canned pineapple slices are classifiable under CTH 0804, Attracts 30% customs Duty. Holy Land Marketing Pvt. Ltd. faced an investigation for alleged misclassification of “Canned Pineapple Slices” and incorrect customs duty exemptions. The appellant challenged the adjudication proceedings, emphasizing flaws in the show cause notice handling and contesting the invocation of the extended period. The classification dispute involved conflicting opinions by customs officials, adding complexity to the legal battle.

The issue to be decided was whether The Adjudication Authority erred in classifying Canned Pineapple Slices under 0804 attracts 30% Customs Duty. The two-member bench of the Tribunal comprising Dr Rachana Gupta  (Judicial Member) and Hemambika R Priya Member (Technical Member) concluded that classification of the canned pineapple slices would be CTH 0804. However, the demand for differential duty is limited to the normal period only. No PDI charges included in assessable value for purposes of Paying Excise duty: CESTAT Quashes Excise Duty Demand in Favour of Suzuki Motorcycle M/s Suzuki Motorcycle India vs The Commissioner of Central Excise 2023 TAXSCAN (CESTAT) 1580 The Chandigarh bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the excise duty demand in favor of Suzuki Motorcycle and held that no post-delivery inspection charges would be included in the assessable value for purposes of paying excise duty. The two-member bench comprised of S S Garg (Judicial) and Anjani Kumar (Technical) Suzuki Motorcycle India Private Limited had contested a demand of Rs.1,31,15,550/- along with interest and equal penalty. The dispute centered around whether pre-delivery inspection (PDI) charges should be included in the assessable value for paying excise duty. The appellant argued against the inclusion of PDI charges.

The Bench observed that in the case of General Motors India Pvt. Ltd, the court held that PDI charges and free ASS charges would not be included in the assessable value under Section 4 of the Central Excise Act to pay excise duty.  Iron ore fines exempted from payment of Customs Duty: CESTAT allows Refund Claim M/s. Odisha Mining Corporation Limited vs Commissioner of Central Excise, Customs & Service Tax 2023 TAXSCAN (CESTAT) 1579 The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) observed that Iron Ore Fines are exempted from payment of Customs Duty. The judge bench comprised of Ashok Jindal (Judicial Member) and Rajeev Tendan (Technical Member). The bench concluded that iron ore fines were exempted from payment of duty vide Notification No.129/08 dated 07.12.2008, no duty was payable on 08.12.2008, therefore, the appellant was not liable to pay duty. Accordingly, the appellant is entitled for the refund claim of the duty paid. Relief to Tata AIG: CESTAT Quashes Denial Service Tax Credit of Appox. 7 crores on ground of CENVAT credit Eligibility  Tata AIG General Insurance Co. Ltd vs Commissioner of Service Tax-VI, Mumbai 2023 TAXSCAN (CESTAT) 1581 The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) granted relief to the Tata AIG by quashing the denial of service tax credit of approximately 7 crores on the grounds of CENVAT credit eligibility.

The two-member bench comprised Suvena Kumar (Judicial) and Anil G Shakkarwar (Technical) The Bench observed that without opening an assessment of the provision of service extended by the service provider, CENVAT Credits cannot be denied to the recipient who had paid the required Service Tax through the service receiver to avail of the input services.  Value of Scrap Cleared by Paying Excise Duty cannot be Included in Assessable Value: CESTAT Shilpa Steel & Power Ltd vs Commissioner of Central Excise, Nagpur 2023 TAXSCAN (CESTAT) 1583 The Mumbai bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the value of scrap cleared by excise duty cannot be included in the assessable value. The division bench comprised of Dr. Suvendu Kumar Pati, Member (Judicial) and Mr Anil G Shakkarwar, Member (Technical). M/s. Shilpa Steel & Power Ltd, a manufacturer of rolled products of Iron & Steel, engaged in job work for Steel Authority of India Limited (SAIL), faced a dispute regarding the inclusion of the sale proceeds of scrap generated during job work in the value of rolled products. The Department claimed that the appellant should have included the sale proceeds of the scrap as additional consideration in the value of the rolled products.

The appellant’s unsuccessful appeal before the Commissioner (Appeals) brought the matter to the current forum. Relief to Suzuki Motors: CESTAT quashes Excise Duty of Appox. 1.3 crores on After Sales Service Charge on ground of PDI exemption M/s Suzuki Motorcycle India vs The Commissioner of Central Excise 2023 TAXSCAN (CESTAT) 1580 The Chandigarh bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) granted relief to Suzuki Motors by quashing the excise duty demand on after-sale services charges on the grounds of PDI exemption. The two-member bench comprised of S S Garg (Judicial) and Anjani Kumar (Technical). The Bench observed that PDI and three free services are necessary on the part of a customer to remain eligible for any claim under warranty; it was obligatory on the part of the dealer to provide three free services as mentioned under the Warranty Clause and he had no free will to deny them.  Appeal abates once NCLT approves Resolution Plan, says CESTAT in Patanjali Food’s Appeal Patanjali Foods Limited vs The Commissioner of Customs 2023 TAXSCAN (CESTAT) 1584 The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) in Bangalore ruled that once resolution plans receive approval from the National Company Law Tribunal, the appeal would become void. Consequently, Patanjali Food’s appeal has been dismissed by the tribunal.

The two member bench comprised of Dr. D. M. Misra, Member (Judicial), and R. Bhagya Devi, Member (Technical).  The bench observed that the appeal abates once the IRP is appointed and/or Resolution plan approved. As a result, the appeal is dismissed in accordance with CESTAT (Procedure) Rules, 1982, Rule 22, and this is the relief/Order that may be issued in accordance with the aforementioned Rule. Import of ‘Steel Balls’ are Classifiable under Category of ‘Ball or Roller Bearings’: CESTAT  Shri Sumit Arora vs The Commissioner of Customs, Ludhiana 2023 TAXSCAN (CESTAT) 1582 Shri Sumit Arora vs The Commissioner of Customs, Ludhiana 2023 TAXSCAN (CESTAT) 1582 The Chandigarh bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the import of steel balls is classifiable under the category of ball or roller bearings.

The Bench observed that the classification made by the assessee under the category of ball or roller bearings and the classification made by the revenue was not as per the law and liable to be deleted.  The two-member bench comprising S S Garg (Judicial) and Anjani Kumar (Technical) held that the impugned order was not legally sustainable and hence liable to be set aside. When the classification and duty demanded in the show-cause notice are set aside, there is no way that the penalty on the assessee’s company and its directors can survive.  No CENVAT credit of Service Tax denied at Recipient end without opening Assessment at service providers end: CESTAT Tata AIG General Insurance Co. Ltd vs Commissioner of Service Tax-VI, Mumbai 2023 TAXSCAN (CESTAT) 1581 The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that the CENVAT credit of service tax cannot be denied at the recipient’s end without opening an assessment at the service provider’s end.

The two-member bench comprised of Suvendu Kumar Pati (Judicial) and Anil G Shakkarwar (Technical) Tata AIG General Insurance Co. Ltd, a provider of general insurance services had received infrastructure facilities and support services from motor car dealers. The company availed input credits against tax payments for these services, including workstations and advertisement services. The appellant appealed a decision by the adjudicating authority that denied CENVAT Credit at the receiver’s end due to the alleged incorrect description of services in the invoices raised by the service provider. The bench held that CENVAT Credits cannot be denied to the recipient who had paid the required Service Tax through the service receiver to avail the input services.

CESTAT quashes Customs Duty on Import of Steel Balls on ground of Improper Classification Shri Sumit Arora vs The Commissioner of Customs, Ludhiana (CESTAT) 1582 The Chandigarh bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the Customs duty on the import of steel balls on the grounds of improper classification. The the two-member bench comprised S S Garg (Judicial) and Anjani Kumar (Technical). Sumit Arora, an importer of “Steel Balls,” appealed against the adjudicating authority’s decision on re-classification and the recovery of differential duty. The appellant argued that er heading 8482 9900, which specifically covered Steel Balls, should take precedence over chapter heading 8714, a general category for parts and accessories of motor vehicles, based on Clause (a) of Rule 3 of General Rules for Interpretation. Sale invoice can be either issued by a Company located in a Third Country or an AIFTA exporter: CESTAT allows Customs Duty Benefit The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the sale invoice can be either issued by a company located in a third country or an ASEAN India Free Trade Agreement (AIFTA) exporter.

The Bench observed that the Customs Authority in the importing party shall accept an AIFTA Certificate of Origin where the sales invoice was issued either by a company located in a third country or an AIFTA exporter for the account of the company, provided that the product meets the requirements of these rules.  The two-member bench comprising Sulekha Beevi (Judicial) and Vasa Seshagiri Rao (Technical) held that the assessee was eligible for the Customs duty demand CESTAT quashes rejection of the benefit of Preferential Trade Agreement on Steaming Non-Coking Coal Import on ground of Customs Duty Benefit Eligibility M/s. TCP Limited vs Commissioner of Customs 2023 TAXSCAN (CESTAT) 1586 The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the rejection of the benefit of a preferential trade agreement on steaming non-coking coal import on the grounds of Customs duty benefit eligibility.

The two-member bench comprised of Sulekha Beevi (Judicial) and Vasa Seshagiri Rao (Technical) TCP Limited, the appellant assessee was importing Steaming Non-Coking Coal and filed two Bills of Entry for clearance of the same, and the imported goods were supplied by Coal and Oil Company LLC, Dubai.  The assessee appealed against the order passed by the Commissioner (Appeals) for rejection of the concessional rate of duty as per the Preferential Trade Agreement.  The Bench observed that the impugned order rejecting the benefit of the concessional rate of duty as per the Preferential Trade Agreement is not justified.  No Service Tax Liability demandable only by calculating value without Examination of Activities and Transactions: CESTAT  Umesh Tilak Yadav vs Commissioner of Central Excise, Nagpur 2023 TAXSCAN (CESTAT) 1585 The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that the service tax liability cannot be demandable only by calculating value without examination of activities and transactions.

The Bench observed that it is essential to establish that the value on which such service tax is calculated is the value under Section 67 of the Finance Act,1994, and the same was derived from the consideration received by the assessee out of the activity which had to satisfy the definition of service under sub-section (44) of Section 65B of Finance Act.  The two-member bench comprising Anil G Shakkarwar (Judicial) and Suvenda Kumar Pati (Technical) held that the assessee had received the consideration by providing service that was missing in the show cause notice and was not liable for the demand raised by the revenue.  Recovery of CENVAT credit of Excise Duty availed on common input services attributable to exempted activity of trading: CESTAT Directs Re-adjudication M/s. VVF (India) Ltd vs Commissioner of Central Excise 2023 TAXSCAN (CESTAT) 1588 The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) directed re-adjudication for recovery of CENVAT credit of excise duty availed on the common input services attributable to exempted activity or trading.

The two-member bench comprised of Anil G Shakkarwar (Judicial) and Suvenda Kumar Pati (Technical) VVF (India) Ltd appealed against the adjudicating authority’s decision, which confirmed the demand for CENVAT credit on input service credit amounting to Rs.51,45,637 and imposed an equal penalty. The appellant argued that they did not avail credit for input services related to trading activities. Additionally, they highlighted Rule 6 of CENVAT Credit Rules, providing three options for the assessee to take credit on input services used for exempted goods or services. The appellant emphasized that the Revenue had not specified the quantum of credit availed on common input services in the show cause notice. The Bench observed that the matter needs to be remanded to the original authority with the direction to recover that quantum of CENVAT credit which was part of the CENVAT credit availed on common input services and which was attributable to exempted activity of trading.

Appeal can be Abated as per Rule 22 of CESTAT Procedure Rules w.e.f date of approval of resolution plan by NCLT: CESTAT Tiffins Barytes vs Commissioner of CE & ST, Belgaum 2023 TAXSCAN (CESTAT) 1587 The Bangalore bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the appeal can be abated as per rule 22 of the CESTAT procedure rules with effect from the date of approval of the resolution plan by NCLT. The two-member bench comprised of D M Misra (Judicial) and Pullela Nageshwara Rao (Technical). Tiffins Barytes had appealed against the adjudicating authority’s order confirming the demand of Rs. 41,79,510/- and Rs. 44,59,411/- for the period from 01.04.2006 to 31.03.2007. The dispute pertained to the transportation services provided by a Goods Transport Agency for moving minerals from the mines, both for export to foreign buyers and sales to domestic buyers.

The Bench pointed out that in the case of Murli Industries Ltd, the court had held that the appeal abated once the invoice registration portal was appointed and/or the Resolution plan was approved. Consequently, the appeal was abated as per Rule 22 of CESTAT (Procedure) Rules.  CESTAT Quashes Service Tax Demand against Umesh Tilak Yadhav on ground of Absence of Examination of Books of Accounts Umesh Tilak Yadav vs Commissioner of Central Excise, Nagpur 2023 TAXSCAN (CESTAT) 1585 The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) quashed the service tax demand against Umesh Tilak Yadhav on the grounds of the absence of examination of books of accounts.

The two-member bench comprised Anil G Shakkarwar (Judicial) and Suvenda Kumar Pati (Technical). Umesh Tilak Yadav, appealed against the Commissioner (Appeals) order confirming a service tax demand of Rs.24,43,804/- for the year 2014-15. The show cause notice highlighted a difference of Rs.1,97,71,881/- between the income declared in Income Tax Returns (ITR) and the value of service declared in Service Tax (ST) returns for the same period. The appeal contested the imposition of penalties under various sections. The Bench observed that based on the difference between the figures reposted in the ST return and the income tax return, it cannot be presumed that the difference was on account of the provision of service and only by calculating the service tax leviable on the said value without further examination of the activities of the appellant and examination of the transactions, service tax cannot be demanded.

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