WEEKLY SUMMARY

4th March – 10th March

10.03.2017

2017-VIL-140-ALH

U.P. Value Added Tax Act - Section 2 (P), Section 14 r/w Rule 21(12) - reversal of input tax credit - denial of benefit of input tax credit on the ground that the sale of manufactured goods was not made vide tax invoice – HELD – sub-rule 12 of Rule 21 provides that no credit towards amount of input tax shall be allowed in respect of purchases of VAT goods, which has been sold to registered dealer by a registered dealer, where such registered dealer has not issued tax invoice. The dealer, herein, is not the purchaser, but is the seller, who has sold the manufactured goods vide sale invoice. It is the purchaser who has purchased the goods vide sale invoice, who would be denied input tax credit under the rules, but such provision shall have no application so far as the present dealer is concerned, who is the seller. Rule-21(12) of the Rules had no applicability in the fact situation of the present case - the view taken by the Tribunal, to the contrary is based on misconstruction of the rule - The Revision is allowed

2017-VIL-142-KER

Kerala Value Added Tax Act - Section 8(a) - mandate to continue under the compounding scheme once applied for and allowed – revenue contends that the petitioner having applied for compounding for all works in the year 2015-16; the second work awarded in that assessment year would also be treated as compounded – HELD - by the use of words “shall”; till 2014 there was a mandate to continue under the compounding scheme once applied for and allowed. In the year 2014-15, the same was confined such continuance till the end of the assessment year. The word 'shall' as employed in the earlier proviso was also changed to 'may', making the continuance optional. There was no change in the assessment year 2015-16, and hence there was no such proviso, which required a dealer, who had applied for compounding, for a work in the earlier year to continue under the compounding scheme itself in that year also - the 4th proviso of Section 8(a) was introduced only after the commencement of the subject assessment year being 2016-17 - the mere fact that the petitioner's work, which commenced in the previous year, had been compounded for that year would not require continuance under the scheme in the subsequent year, for reason of there being no provision available requiring such a continuance - the omission to file a monthly return can only be considered an inadvertent omission. The Assessing Officer also had not taken any proceedings against the petitioner, for reason of non-filing of monthly returns - the impugned assessment order would stand set aside and the petition is allowed

2017-VIL-141-RAJ

Rajasthan Value Added Tax Act - whether the Sun Control Films sold by assessee fall in the category of industrial input / insulating material and are liable to tax under entry 225 of Schedule-IV instead of Schedule-V – revenue view that the product does not fall in any of the entries enumerated by the assessee and it falls in the residuary category - HELD – the entry No.225 which has been relied upon by the assessee should certainly cover the material being sold by the assessee and has rightly been held by the Tax Board to fall within entry 225 of Schedule-IV as in the said entry even Polyester Film has also been marked or shown specifically - when specific entry is enumerated or shown by the Legislature it has to be adopted or applied rather than carrying it to residuary clause or entry if there is no specific entry. It is a case where specific entry is available, therefore, both, the AO as well as the DC(A) have gone wrong to take it to Schedule-V or the residuary Schedule to tax at higher rate – revenue petitions being devoid of any merits, are dismissed

2017-VIL-246-CESTAT-DEL-CE

Central Excise - Rule 6(3) of CCR, 2004 - Cenvat Credit on molasses used in the manufacture of rectified spirit - ethyl alcohol manufactured and cleared by the appellant availing exemption under Notification 3/2005-CE - The Department is of the view that the Ethyl alcohol/Rectified Spirit cleared by the appellant is a non-excisable item and hence, the credit availed on molasses attributable to such Ethyl alcohol is not legally sustainable – denial of cenvat credit - HELD - after restructuring of Central Excise Tariff from 6 digit to 8 digit w.e.f. 01.03.2005, rectified spirit and extra neutral alcohol are exempted by Notification 3/2005-CE and the appellants had correctly discharged their obligation under Rule 6 of Cenvat Credit Rules, 2004 - The reliance placed by the Revenue on the entries made in HSN in order to understand the scope of Central Excise Tariff is not proper in the context of the present case. It is clear that in Central Excise levy, there are certain restrictions placed by the Constitution with reference to the powers of Union Govt. to tax on alcohol for human consumption. With this background, the Central Excise Tariff is structured and it is not equivalent or comparable to the HSN to that extent - the impugned order holding ethyl alcohol as non excisable product is not legally sustainable - the impugned order is to be set aside and appeals are to be allowed

2017-VIL-247-CESTAT-DEL-CE

Central Excise - appellant is fixing the brand name “Autopal”, though the said brand name is registered in the name of another entity of their group companies - Admissibility of benefit of exemption under Notification No. 8/2003-CE dated 01.03.2003 to the goods manufactured by the appellant – HELD - the appellant is under wrong belief that they can use the brand name “Autopal”, and they can still claim SSI benefit under the Notification No. 8/2003-CE dated 01.03.2003 even when this brand name is owned by some other company of their group companies - the established brand name “Autopal” is registered in the name of M/s Autolite India Ltd., and it has been used by the appellant only to avail the advantage of an established brand name in connection with sale of the goods manufactured by the appellant and, therefore, the appellant is not entitled to the benefit of exemption provided under notification No. 8/2003-CE – appeal aappeal dismissed - . The Revenue does not have automatic knowledge of the fact that the brand ‘Autopal’ does not belong to the appellant but belongs to another company. It makes no difference that M/s Autolite India Ltd. is a group company - the appeal is rejected on time barred as well as on merit

2017-VIL-138-JHR-CE

Central Excise – allegation of clandestine removal on basis of electricity consumption pattern – HELD - there are varieties of report available in the markets, one could not have been chosen by the revenue, arbitrarily, without carrying out the experiment of consumption of electricity for one ton of manufacturing at the petitioner's manufacturing unit. This type of experiment is a must by the department, whenever assessees are canvassing the ground of electricity consumption pattern vis-a-vis clandestine removal of finished products. Otherwise, without such experiment, if any one of the report relied upon, then it is arbitrariness and whenever there is any arbitrariness, there is always violation of Article 14 of the Constitution. Whenever arbitrariness is present, equality is absent - The Order-in-Original is based upon mere presumptions and possibilities and nothing has been proved by the revenue, especially unaccounted manufacturing of M.S. Ingots and the clandestine removal thereof - The documents which are referred to in the SCN and relied upon, should have been supplied to the petitioner - the Order-in-Original is quashed and set aside – petition allowed by remand

2017-VIL-248-CESTAT-MUM-CU

Customs - appellants had exported biscuits and assorted confectionary products and seeking duty drawback benefits as per para 4.1 (b) (ii) of Foreign Trade Policy – rejection of appellant application for conversion of shipping bill from draw back into DFIA shipping bills – HELD - para 2.56 of Hand Book of Procedures permits the conversion from one scheme to another. In the case in hand duty draw back benefit of shipping bill has not been granted till to-day, accordingly, the appellant has sought conversion of shipping bills. It is to be noted that para 3 of the Board’s Circular 36/2010-Cus dated 23.09.2010 permit the Commissioner of Customs to allow the conversion of shipping bill from export promotion scheme to another schemes on case to case basis depending on the merits of the case - conversion of shipping bill from Duty drawback to DFIA Scheme needs to be allowed as appellant though had sought duty draw back were not sanctioned, entitles him to apply for conversion from duty drawback scheme to DFIA scheme. In both the schemes the level of examination by authorities of export cargo, remains the same - the provisions of Section 149 of the Customs Act, 1962 does not prescribe time limit for amendment of the shipping bills hence the Board’s Circular seeking restriction on time limit for conversion is beyond the mandate of law - the impugned order is unsustainable and liable to be set aside and direct the lower authorities to convert the drawback shipping bills to DFIA shipping bills – appeal is allowed

2017-VIL-139-GUJ-CU

Customs - petitioner seeking direction to the respondent authorities for de-sealing of machineries and release of raw materials – HELD - period of more than six months has passed since the goods in question have been seized and the two machines in question have been sealed. Therefore, in the light of the provisions of sub-section (2) of section 110 of the Customs Act, since no notice under sub-section (1) thereof has been given in respect of the sealed machines, and no order extending the period of six months has been passed, continuation of the sealing of the machines is without any authority of law. Therefore, the respondents are not justified in not de-sealing the machines in question despite the fact that the DGCEI has given no objection certificate in that regard, when the respondents have no authority to continue with the sealing, the question of imposition of any condition for de-sealing the same would not arise - by virtue of the provisions of section 110A of the Customs Act, the respondent authorities are duly empowered to release the goods pending adjudication, hence, there should be no impediment in releasing the raw materials subject to the petitioner executing the requisite bond - the petition is allowed

2017-VIL-245-CESTAT-KOL-ST

Service Tax - appellants received and used Goods Transport Agency (GTA) Services in relation to export of iron ore fines – appellant filed refund claim in terms of Notification No.41/2007-ST dated 16.10.2007 - Adjudicating Authority disallowed the refund claim on GTA Services – HELD - in budget 2009 the scheme under Notification No. 41/2007-S.T. was simplified in Notification No. 17/2009-S.T. by providing self certification or Chartered Accountant’s certification about co-relation and nexus between input Services & the exports. That above logic can be followed for Notification No. 5/2006-C.E. (N.T.) where such simplification of Notification No. 17/2009-S.T. may not be available - the matter is remanded back to the Adjudicating authority to decide the matter on the basis of Chartered Accountant’s certificate to establish the co-relation required under Notification No. 41/2007-S.T. - the appeals are allowed by way of remand

2017-VIL-244-CESTAT-AHM-ST

Service Tax – appellant rendered services of laying down long distance pipelines for transfer of drinking water pursuant to a contract awarded by M/s Gujarat Water Supply and Sewerage Board – demand under Commercial or Industrial Construction Service – HELD - Revenue is required to show that the purpose of construction of pipelines is for “commerce” or “primarily for commerce”. Obviously, the purpose of buying water by the GWSSB was not for selling it, but for supplying it to needy people. In this case, buying and selling is incidental. The term used “for commerce” would mean that only purpose would be buying and selling, which is definitely not the case here. The term used “primarily for commerce” would mean that primary purpose should be buying and selling and the other purposes also may be served incidentally. In this case, purchase and sale of water are incidental and the main purpose is supply of water to needy citizens of the State – there is no reason to deviate from the precedent which is squarely applicable to the facts and circumstance of the present case - the impugned order is set-aside and the appeal is allowed

State Budget 17-18

Himachal Pradesh Budget 2017-18 - Budget Speech & Economic Survey for 2016-17

harNoti06

Haryana: amendment in Schedule B -Insertion of entry 'Bio-Diesel (B-100)'

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Rajasthan: Amendment to Rajasthan Investment Promotion Scheme-2014

rajCir12

Rajasthan: Details to be furnished for yarn brought into the State exclusively for job-work

gstNews

GST & Other News Updates

09.03.2017

2017-VIL-135-ORI

Orissa Sales Tax Act, 1947 – Section 2(g) - Sale – contract for supply of ballast to Railways - sale or works contract - Whether the ballast or boulder or chips is exigible to tax at the rate of 4% or 12% - validity of Tribunal ruling that supply of ballast to the Railway is sale falling within the scope of Section 2(g) of the Act and “ballast” falls within the ambit of “mineral” exigible to tax at the rate of 4% not at the rate of 12% as argued by the Revenue – whether loading charges to be deduction while computing the sales tax – HELD - there are different charges for supply & delivery and for loading & unloading of ballasts. It is needless to opine that the loading of ballasts supplied is a labour charge and the same cannot be termed as a sale after going through the contents of the deed of contract. On the other hand, the supply and delivery of stacks including all other nature of works as agreed to between the parties is a sale. The order of the Tribunal is correct for deducting the loading charges while computing the sales tax - When the ballasts, boulders and chips have got “common parlance” with the minerals as available in Entry 117 even without taking the aid of the Mines and Minerals (Regulation and Development) Act, 1957 or Rules made thereunder, the facts remain that the chips or boulders purchased assessee, is nothing but “mineral” - the opinion of the Tribunal that they are all mineral cannot be said to be incorrect even though the finding of the Tribunal is based on the definition of mineral in the Act, 1957 or Rules made thereunder. Even if taking the “common parlance test”, the result is same to the effect that the ballasts, boulders or chips are nothing but “mineral” under Sales Tax Act exigible to tax at the rate of 4% - the contention of the State that such plea of exigibility to tax at the rate of 4% of the taxable list before the Tribunal is barred by limitation is not acceptable as the said being question of law can be raised at any stage - Revisions, being devoid of any merits, stand dismissed

2017-VIL-137-KAR

Karnataka Value Added Tax Act - Agricultural implement - Whether Arecanut peeling / de-husking machine is classifiable under ‘Agricultural implements not operated manually or not driven by animals’ falling under Entry No.1 of III Schedule to the KVAT Act – HELD - after examining the facts in detail and the nature of the machine, the use of the machine, its marketability and other incidental aspects, and after applying the test of common parlance, the Tribunal has concluded that the machine is ‘Agricultural Implements Not Operated Manually Or Not Driven By Animals’, falling under Entry No.(I) of the Schedule-III of the Act - The nature and the character of the product is assessed after applying the ‘Marketability Tests’ as well as the ‘Common Parlance Test’. Such finding of fact would be outside the scope of the judicial review – even on merit, from the composition of the product and its exclusive use for agricultural purpose, it can be said as an ‘Agricultural Implement’ – the petition is dismissed

2017-VIL-136-BOM-CE

Central/State Excise - The petitioners are into manufacturing and sale of various drugs and pharmaceutical products – need for approval of price list as desired by the respondents - demand of differential duty – section 4(4)(c) of the Central Excise and Salt Act, 1944 - Medicinal and Toilet Preparations (Excise Duties) Act, 1995 - Related person – HELD - Merely because the M/s Boots-sole distributor is selling the entire production of the petitioner with unusually big margin coupled with making available the trade mark of the goods by M/s. Boots, does not mean that petitioner and M/s. Boots are related persons - The test applied Commissioner cannot, therefore, be enough for holding that section 4(4)(c) of the Act is attracted. For that to be attracted, the Commissioner would have to conclude that M/s. Boots is so associated with petitioner that they have interest, directly or indirectly, in the business of each other. The entire business of manufacturing of the goods is carried out by the petitioners on their own supports the conclusion that petitioner and M/s.Boots are not related persons - the Commissioner was not justified in reaching the conclusion that the transactions between the petitioners and M/s. Boots are not carried out at arms length. Once this conclusion is unsustainable, given the admitted facts and the established legal principles, then, it is not possible to agree with revenue that the price list as desired by the respondents needs to be approved. Rather the price as finalised by the petitioners and the list in that regard previously approved was rightly treated as final. There was no question of then calling upon the petitioners to alter their price structure and pay any differential duty - the impugned order is set aside and writ petition is allowed

2017-VIL-240-CESTAT-DEL-CE

Central Excise - valuation of goods cleared from one unit to another unit of the same company – captive consumption – related person - denial of credit availed on supplementary invoices - for valuation appellant adopted the value applicable to similar items sold to independent buyers – demand of differential duty by proposing valuation under Rule 8 of the Valuation Rules to be arrived at by applying 110% cost of manufacture – HELD - The view of Original Authority that Raipur Unit and Raigarh Unit of the appellant are related parties is fallacious and without any basis. Both are owned by single legal entity and as such, they cannot be two persons related to each other. Reference to Accounting Standard for annual balance sheet and term of “Associated Enterprises” is not relevant to the facts of the present case - the appellant/assessee is right in adopting value of independent sales to the goods cleared and transferred to their own unit at Raigarh. As such, there is no need for cost based value invoking the provisions of Rule 8 of the Valuation Rules – further, the credit availed by Raipur during the material time on valid documents, cannot be denied invoking the provisions of Rule 9(1)(b) - the impugned order is set aside and the appeal is allowed

2017-VIL-242-CESTAT-DEL-CU

Customs - appellants imported “Gold Findings” claiming exemption under Notification No.12/2012-Cus dated 17.3.2012 - The case of the Revenue is that goods were sold as such to the domestic traders and were not used for intended purpose. Accordingly, the concession under the said notification was sought to be denied to the appellants – HELD – HELD - In the absence of any post-import condition, the ultimate usage and consumption of the imported goods after their clearance is not in the domain of assessing officer, in absence of any such stipulation in the notification itself - the Original Authority, without basis of any statutory requirements, made observations of general nature and denied the exemption. The quantum of import is of no criteria and it is not for the Original Authority to decide the reasonable norm of such quantity and also to follow up the trail of further disposal of the imported goods. The findings and the reasonings adopted by the Original Authority is clearly beyond the scope of provisions of the said notification and as such, cannot be legally sustained. The Adjudicating Authority cannot add additional conditions in the statutory provisions when there is no conditions prescribed at all in the law - the impugned order is legally unsustainable. Accordingly, the same is set aside. The appeals are allowed

2017-VIL-241-CESTAT-DEL-ST

Service Tax - Appellants were rendering “liaisoning service” – during relevant time the said services were not liable to Service Tax – appellant deposited service tax out of ignorance – claim of refund of amount of service tax deposited mistakenly - The refund claim was rejected being time-barred as per Section 11B of the CEA, 1944 read with Section 83 of the Finance Act, 1994 – assessee contention that the deposited amount is not towards a tax but it is merely a deposit which was wrongly made. Hence, Section 11B of the Central Excise Act, 1944 is not applicable – HELD - At the relevant time, there was no authority/provision to collect the tax from the assessee-Appellants. Hence, this is an amount which was deposited in good faith. Therefore, mere payment made by the assessee-Appellants will neither validate the nature of payment nor the nature of transaction. In other words, mere payment of amount would not make it a Service Tax payable by them. Hence, the amount deposited by the assessee-Appellants by mistake/good faith cannot be termed as ‘Tax’ - Section 11B of the Central Excise Act, 1944 is not applicable in the present case. The claim has been made within the period of three years prescribed by Hon’ble Delhi High Court. Therefore, the assessees are entitled to get the refund and the same is not hit by the limitation prescribed under Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 – appeal is allowed

2017-VIL-243-CESTAT-CHE-ST

Service Tax - Whether the service of a sub-contractor availed by the appellant for rendering ultimate service to a service recipient abroad shall enable the appellant to the CENVAT credit of the service tax paid to the sub-contractor - relevant date for filing the refund claim in the case of export of service by a software service exporter – HELD – the adjudication order has not brought out that the service received from the sub-contractor for ultimate provision to the overseas service recipient was absent. There was an inextricable link between the input service and the output service. Therefore, the CENVAT credit in respect of service tax paid by the appellant to the sub-contractor makes the appellant eligible to claim that as a refund, if otherwise not deniable by law - the self-same service which has suffered tax shall equally grant right to the principal to get CENVAT credit of tax paid - the date of realization of the foreign exchange is relevant date for the purpose of counting limitation. Accordingly, learned adjudicating authority shall count the limitation from the date of realization of the foreign exchange – appeal allowed by remand

State Budget 2017

Delhi Budget 2017-18

mahaCir7T

Maharashtra: Extension of dates for disabling Provisional Login Id and Access Token of Phase 1 & Phase 2 dealers

telCir113

Telangana: Regarding deduction of tax at source by certain bodies / organisations - representation by OMCs – issuance of certain guidelines

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Delhi: Instruction regarding de-sealing of Business Premises

gstNews

GST News Updates

delCir26

Delhi: Extension in date for filing of online return for 3rd quarter of 2016-17 upto 17-03-2017

stNoti10

Service Tax: Amendment to Notification No 25/2012-Service Tax, dated 20.6.2012 - Exemption to services provided to an Educational Institution

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DGFT: Harmonising MEIS Schedule in the Appendix 3B (Table-2) with ITC (HS), 2017

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DGFT: Deletion of MEIS benefit on Flour, meal and powder of Gaur seeds under Exim Code 11061000- regd

08.03.2017

2017-VIL-133-ALH

U.P. Trade Tax Act - Section 8(1), Sec. 4-BB - shortfall in payment of tax due to reduction in set-off - bonafide dispute with regard to amount admissible towards set off – set-off from the tax paid on raw material/packing material - assessee contention that deficient amount of tax could not be treated to be admitted tax so as to incur liability of interest under Section 8(1) of the Act – HELD – There could be no dispute that set-off would be admissible only qua actual use of raw material and not beyond it. In the absence of any challenge on issue of correctness of allowing partial set-off otherwise need not be gone into - The intent of Section 8(1) read with explanation is clear, that once the assessee is found to have admitted its turnover, in the books of account, and rate of tax is not in issue, the total tax payable becomes the admitted tax. Any set off claimed by the assessee, if is disallowed and is accepted by the assessee, would not form a valid basis for assessee to contend that the amount of tax payable was not admitted - there was no dispute relating to classification of goods or the rate of tax payable. The turnover and the rate of tax were clearly mentioned in the books of account and therefore, the present case was fully covered by the explanation to Section 8(1) of the Act - hardship is not a relevant consideration in dealing with fiscal statutes, and if the liability to pay interest accrues under the Act, it cannot be avoided on the ground that it would cause undue hardship - Tribunal was justified in holding that the assessee is liable to pay interest under Section 8(1) of the Act, upon the shortfall in payment of tax – assessee revision is dismissed

2017-VIL-132-GUJ

Central Sales Tax Act, 1956 – Constitutional validity of Section 6A(1) – Form F - whether it is open for the petitioner to again challenge the Constitutional validity of Section 6A(1) of the CST Act in the subsequent assessment year when it withdrew the same in the previous assessment year after elaborate submissions - bar of res judicata with respect to different assessment period – forum shopping – maintainability of writ petition - HELD - it is not in dispute that earlier the petitioner specifically challenged the Constitutional validity of Section 6A (1) in which the petitioner made elaborate submissions on validity of Section 6A, however Division Bench was not inclined to accept the submissions made by the petitioner challenging the Constitutional validity of Section 6A of the Act and only thereafter the petitioner, having realized that the Court is not inclined to accept the submissions on Constitutional validity, took a conscious decision and did not press the challenge to the Constitutional validity of Section 6A of the Act – if seen from another angle, in a given case it may happen that the litigant approach the Court with a particular challenge and having realized that the Court is against him, he may withdrew the petition / challenge and thereafter may approach the Court with respect to very challenge before another Bench. This would give rise to eventuality of “forum shopping”. On this ground also, the present petition is not required to be entertained. Hence, petition challenging the Constitutional validity of Section 6A of the Act is not required to be entertained - Even otherwise on merits also, it cannot be said that Section 6(A)(1) of the Act can be said to be ultra vires to Article 269(3) of the Constitution of India and / or Section 6A(1) of the Act treats the transaction which is not “sale” shall be treated as “sale” (deemed sale), as sought to be contended on behalf of the petitioners – writ petition is dismissed

2017-VIL-231-CESTAT-MUM-CE

Central Excise – valuation - demand of duty on the notional interest on the trade advance - whether notional interest on the advances given to the respondent by M/s Mahindra Ford India Ltd is liable to be included in the assessable value of the vehicles manufactured by the respondent for M/s. Mahindra Ford India Ltd. in a case where the respondents have paid duty on the ultimate sales price of M/s. MFIL to its dealers/customers - respondents during the disputed period, besides manufacturing their own range of vehicles also undertook manufacturing of vehicles on behalf of MFIL – HELD - M/s MFIL has availed the exemption from the operation of Rule 174 and complied with the condition of notification No.27/92-CE(NT). According to which, the principal has to provide to the respondent all the information for the purpose of manufacture and clearance of the goods including the value under Section 4 of the Act. There is no dispute that M/s. MFIL has provided all the necessary information including the value which is in terms of Section 4(1)(a) i.e. sale price of M/s. MFIL to customer. Accordingly, the respondent has discharged excise duty on such price of the vehicle. The notional interest can only be added, in case the respondent valued their goods on cost construction method or if the goods is sold by the respondent to M/s. MFIL at a price lower than the price at which M/s. MFIL sold the vehicle. The present case does not fall any of these two categories. Therefore for this reason also the notional interest which has not influenced the value in the present case cannot be charged to excise duty – revenue appeal is dismissed

2017-VIL-237-CESTAT-MUM-CE

Central Excise – Valuation - Rule 5 of CEVR, 2000 - demand of differential duty on the freight contending that freight is includable in the assessable value – assessee contention that during the relevant period transportation from the place of removal to the place of delivery was not includable in the assessable value as the depot/branches was not considered as place of removal, therefore, the place of removal was factory gate – demand on the ground that the sales depot of the appellant is the place of removal - HELD - From the combined reading of definition of place of removal and Rule 5 of Central Excise Valuation Rules, 2000, it is clear that in the transaction value in terms of Section 4 (1) (a), the transportation from the place of removal upto the place of delivery of such excisable goods is excludable from the transaction value. At the relevant time, the place of removal was only factory gate or warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty from where such goods were removed. As per the said definition the depot or branch of assessee was not place of removal. Therefore, the factory gate is only the place of removal in the present case. If this is so, then transportation charges collected from the customers for transportation of goods from the factory gate upto the place of customer is not includable in the assessable value - the demand is unsustainable. The impugned order is set aside and the appeal is allowed

2017-VIL-134-BOM-CE

Central Excise – Modvat Credit - corelation between input scrap actually received and used in the manufacture of excisable goods and the scrap described in the invoice - whether the description of CRCA scrap actually observed and M.S. Off Cuts, etc., mentioned on the duty documents would lead to a conclusion that the inputs allegedly received and taken credit were not covered by the duty paid documents – HELD - the order passed by the CESTAT and referring to all the materials on record cannot be termed as perverse or vitiated by any error of law apparent on the face of the record. The argument that there should be corelation established between the input scrap actually received and used in the manufacture of excisable goods and the scrap described in the invoice under which the input scrap was received does not merit any acceptance. Eventually when the documents placed on record themselves point out that all types of scrap were utilised by the assessee, then, one cannot just pick and choose any statement or single out a document to deny the Modvat Credit. The fraud, as alleged, has thus not been established and proved – revenue appeal is dismissed

2017-VIL-230-CESTAT-DEL-CE

Central Excise - classification of various printed paper products - classified under CETH Central Excise - classification of various printed paper products - classified under CETH 48211020 by the Revenue as “paper or paper board labels of all kinds, whether or not printed” whereas appellants claim classification under CETH 49111030 as printed inlay cards coming under Heading “other printed matter, including printed pictures and photographs” – HELD - The impugned order is very cryptic and did not examine all legal provisions, more specifically chapter notes and HSN explanation alongwith nature of product manufactured by the appellant. In fact, in para 8 of the impugned order the claim of the appellant was not accepted only on the ground that inlay cards are not mentioned in the chapter heading, such reasoning is unjustified and not relevant to arrive at the correct classification. The impugned order has not given any detailed finding on any of the points raised by appellant to arrive at the correct classification of the products - Further, the claim of the appellant for exemption with reference to products cleared for exports has to be examined for a finding. The reference to denial of Cenvat credit is without any basis or reasons and accordingly the same is set aside – appeal is allowed by remand

2017-VIL-238-CESTAT-MUM-CU

Customs - whether the appellant has to discharge the countervailing duty based upon the MRP value declared on the goods or as per the provisions of Section 14 of the Customs Act, 1962 – assessee submission that goods are not meant for sale and are required to be supplied free of cost to the medical fraternity, hence for the purpose of charging CVD should not be on retail price – HELD - the purchase order placed by the appellant to suppliers, are on the condition that stickers of MRP are affixed on the backside of each container and the MRP is indicated by appellant himself. The provisions of notification issued under Section 4A of the Central Excise Act, 1944 for the purpose of valuation and discharge of CVD may be. Since the products are covered under Section 4A of the Central Excise Act, 1944, the provisions mandate for discharge of duty on declared MRP, the appellant has no case on merit - the impugned order is upheld and the appeal is rejected

2017-VIL-239-CESTAT-MUM-CU

Customs - The appellant imported “Energy Saving Lamps” from Sri Lanka - At the time of import, the foreign manufacturer of the energy saving lamps was not registered with Bureau of Indian Standards for the purpose of import - the goods were confiscated and penalty and redemption fine was imposed - procedural delays in getting BIS registration – assessee in appeal – HELD - It is apparent that there was sufficient time for the manufacturer to get registered with BIS. The policy of the Government at the material time was to permit import of goods which confirmed to be the quality standard of BIS. The appellant argued that the said item was excluded from the said requirement on 06/05/2004 should be treated as a clarificatory amendment applicable retrospective does not hold much water, in view of the fact that the same was introduced in the year 2000 and was rescinded on the year 2004. However, it is apparent that the appellant had tried to obtain the registration much before the actual imports and in these circumstances, imposition of heavy redemption fine and penalty is not justified and penalty is reduced - The appeal is partly allowed

2017-VIL-232-CESTAT-DEL-CU

Customs – EOU unit - confiscation of imported goods namely Multi Blade Frame Saw Machine under Section 111(o) of the Customs Act, 1962 with option of redemption – violation of condition of Notification no. 53/1997-Cus dated 03.06.1997 - HELD - the appellants have not been complying with the provisions of law all along as the machinery imported namely Multi Blade Frame Saw (MBFS) for marble was not put in operation within one year of its import, which is the requirement as per the Notification no. 53/1997-Cus dated 03.06.1997. The appellants argue that they could not put into operation as the supplementary machines were not imported due to differences with the bank cannot exonerate them of their responsibility as they did not get extension of time period from the Customs for putting the machine into operation within prescribed time – appeal dismissed

2017-VIL-236-CESTAT-BLR-ST

Service Tax – appellant is engaged in exporting the service under the category ITSS and BAS - Commissioner (A) has rejected the refund claims filed under Rule 5 of CCR, 2004 on the ground that no export has taken place from the Gurgaon unit (branch office), as such, no refund was allowed on input services availed at Gurgaon unit and consequently, lack of nexus between the input services received and output services exported – HELD - the findings in the impugned orders that the appellants have failed to disclose the export turnover relating to BAS in the monthly SOFTEX filed with the STPI, is not sustainable in law, further, the appellant has been raising the export invoices only at Bangalore unit as it has a centralized accounting and billing system and the same is permissible under Rule 4 of the Service Tax Rules, 1994 - in the SOFTEX return, only export of software services is disclosed, as the Bangalore unit is registered as a software technology park of India. The BAS provided from Gurgaon unit is not disclosed in the monthly SOFTEX filed with the STPI as the Gurgaon unit is not registered with STPI. Therefore, only on this ground the refund is wrongly rejected. Further, as far as lack of nexus with regard to the input service viz., parking and cafeteria rent; building maintenance and housekeeping; book keeping; financial services; internet and telephone services, all these services are necessary for running of the business and are held to be input services - the appeals are allowed by way of remand to the original authority

2017-VIL-235-CESTAT-DEL-ST

Service Tax – Activity of disseminating developmental information to the common people at gross root level and informing rural people to derive benefit from various developmental programmes of the Govt, for IPRD, Govt. of AP - department view that the service rendered falls under “Public Relation Service” falling under section 65(105)(zzzs) – The adjudicating authority has dropped the demand by observing that the activity was neither ‘management’ of any activity nor fall within the purview of ‘Public Relations’ – revenue in appeal - HELD - From a reference to the various activities illustrated in section 65(86c), the activities undertaken are to be considered as public relations. No doubt, such public relations have been undertaken by the AP Government (IPRD) to the public at large. The view taken by the adjudicating authority that such activities will need to be concerned with business, commerce or industry is without basis. The definition of the term ‘public relation service’ provides that the service could be provided “in any manner” and should be in relation to managing the public relation of a client. The definition makes it amply clear that the scope of tax is not limited to management of public relations. The use of the phrases “in relation to” and “in any manner” widens the scope of the taxability with reference to public relations - the ld. Commissioner has erred in taking the view that no service tax would be leviable on the activities carried-out by the respondent - the appeal filed by revenue is allowed

2017-VIL-233-CESTAT-AHM-ST

Service Tax – eligibility of Cenvat Credit on inward freight (Goods Transport Agency services) against the duty paying documents namely, GAR-7 challan – The contention of the Revenue that the invoices were raised in the name of Head Office, therefore, the service tax paid by the appellants cannot be held admissible – HELD - there is nothing in the said Rules of 2005 or in the Rules of 2004 which would automatically and without any additional reasons disentitle an input service distributor from availing Cenvat credit unless and until such registration was applied and granted - to avail CENVAT credit, registration of Head Office as an input service distributor cannot be insistent upon - details of GAR-7 challans and the corresponding invoices in tabular form fairly established appellant’s case. Thus, there is no doubt that the appellant has discharged the service tax against GAR-7 challans, prescribed documents under Rule 9 of CENVAT Credit Rules, 2004 in availing the CENVAT credit – appeal is allowed

2017-VIL-234-CESTAT-DEL-ST

Service Tax - The appellants are engaged in managing various airports in India – appellants are engaged in various composite activities starting from receipt to loading of cargo for outward movement by aircraft – demand under storage and warehousing” – HELD - the appellants are basically engaged in various composite activities starting from receipt, shifting, handling, loading, packaging in suitable manner, security X-ray, scanning and loading of cargo for outward movement by aircraft. These activities are not relating to storage and warehousing of cargo. Till the shipment, the cargo is held for a short duration by the appellant. During this duration, various activities to make the cargo fit for shipment is undertaken - appellant are not involved in providing storage and warehousing service with reference to the cargo. As such, there is no tax liability under this tax entry for the appellant upto 09/09/2004 – However, the services rendered by the appellant are taxable under the category airport service w.e.f. 10/09/2004 – demand be restricted to the normal period - appeal partly allowed

State Budget 2017-18

Rajasthan Budget 2017-18: Budget Speech & Press Note + Rajasthan Finance Bill, 2017

rajBudgetNoti1718

Rajasthan Budget 2017-18 - Budget Notifications

gstNews

GST & other News updates

07.03.2017

2017-VIL-129-RAJ

Rajasthan VAT Act - Classification of bubble gums, chewing gums, sugar candies etc. - branded confectionery goods and coco products – assessees claim the product are in the nature of sugar candy, primarily of sugar, therefore, falls under Entry 163 Schedule-IV under item “Sugar Candy made of sugar and glucose but excluding coco” – AO view that the products are the nature of branded confectionery/coco and would fall in Schedule-V – revenue appeal against deletion of penalty levied under section 61 – reopening of assessment on basis of survey and escaped assessment – HELD – On the basis of subsequent material gathered at the time of survey, the reopening and consequent reassessment orders is in accordance with the provisions of sec. 26 of the Act - the AO had taken into consideration that the products manufactured by the assessees are produced on account of constant mixing and blending with various ingredients and these are hardened sweet confectionery which are prepared by mixing various ingredients - a Sugar Candy contains purely lumps of sugar and nothing more, whereas in the instant cases it is merely not sugar but many more ingredients are added to it. These are essentially toffees or other products and cannot fall purely as a Sugar Candy containing majority of sugar - applying the common parlance test, the products in which the assessees are dealing or manufacturing / producing would not fall within the Entry 163 of Schedule-IV and fall under residuary entry – the issue being a debatable issue, the penalty was rightly deleted by the Tax Board – Assessee as well as revenue appeals are dismissed

2017-VIL-130-KAR

Karnataka Value Added Tax Act, 2003 – “Running Account Bills” to the awarders of the work contract - input tax credit on the basis of such tax invoices - whether Karnataka Water Supply Board is ‘Government’ and whether the Running Bills prepared by the Board can be construed as “Tax Invoices” within the meaning of Rule 27(2) proviso of KVAT Rules, 2005 – revenue appeal against Tribunal order negativing the contention of Revenue – HELD - Karnataka Water Board, which is creation of a Statute, namely Bangalore Water Supply and Sewerage Act, 1964, is ‘Government’ within the meaning of proviso to Rule 27(2) of the KVAT Rules. The purpose of the said Proviso giving the status of “Tax Invoices or Bill of Sale” even to the “Running Account Bills” to the awarders of the work contract by the Government or its departments is obviously to allow such contractors to take input tax credit on the basis of such tax invoices – there is no reason to hold that the Karnataka Water Board, is not a Department of the Government or so as to fall outside the ambit and scope of Rule 27(2) of the KVAT Rules. The Tribunal order is upheld and Revision Petition filed by the State is dismissed

2017-VIL-131-MAD

Tamil Nadu VAT Act – Notice proposing for reversal of Input Tax Credit - application for adjournment - The petitioner sought time to respond to the proposal but the impugned order was passed without disposing of the application for adjournment - breach of principles of natural justice – HELD - the respondent assessing officer is required to consider and pass an order on an application for adjournment when circumstances necessitate such accommodation. It is not as if several adjournments had been sought. One month's accommodation sought by the petitioner cannot be said to be unreasonable. The argument advanced by department that the impugned orders were passed after the period of one month had passed is misconceived because the petitioner needs to know where he stood qua his request for accommodation. It is for this reason that it was incumbent on respondent/ assessing officer to consider the request for accommodation - the impugned orders are set aside and petition is allowed

2017-VIL-225-CESTAT-CHE-CE

Central Excise – demand of differential duty on value of the paints cleared to industrial customers – assessee supplied paints to M/s. BHEL or to their ancillary units, in packages on which markings were distinctly stenciled to indicate that they were for the exclusive use of BHEL. Allegation of the department that MRP prices had not been affixed on the packages so supplied - whether the paints supplied by the respondent-assesssee would require mandatory affixation of MRP or whether they are exempted from such requirement - assessment for levy of excise duty under Section 4A or Section 4 – raw material – HELD - the sales of paints to BHEL or to BIDASS were only for the purpose of exclusive use of BHEL or their ancillary units and not for any further retail sale - the paints so sold have only been obtained by the BHEL as original equipment purchases and accordingly, clearances of paints to these entities would necessarily attain the colour of packages / commodity which have been specifically packed for the exclusive use of BHEL and/or, their ancillary units - the paints supplied by the respondent will fall within the ambit of raw material, since without their application, the delivery end of the process would not be able to be effected by BHEL. The paints go into the making of the end product without which the presence of the end product is rendered impossible. Hence, the paints so supplied by respondent are definitely raw materials for BHEL - the valuation of the impugned goods would then not be under Section 4A but under Section 4. The view taken in the impugned order that the excisable goods are required to be assessed under Section 4A of the Act is therefore not sustainable and is set aside - even if the respondent claims to have been misled by advice, that cannot be used as a legal excuse for non-payment of applicable duty liability. Two wrongs cannot make a right. At the most, the fact of the respondent having been in receipt of such misleading advice can only be a mitigating factor in considering the propriety and /or quantum of penalty proposed in the SCN under Rule 25 of the Central Excise Rules, 2001/2002 read with Section 11AC of the Act - differential duty demand under Section 11A (2) of the Act, along with interest liability thereon under Section 11AB is upheld and penalty is set aside – revenue appeal partly allowed

2017-VIL-227-CESTAT-DEL-CE

Central Excise – assesses opted for payment of excise duty liability as per the scheme formulated under Notification No. 17/2007-CE dated 01/03/2007 - payment of excise duty based on number of cold rolling machines installed in the factory - closure of manufacturing facilities due to disconnection of power supply and sealing of DG set by the electricity department - SCN to demand differential duty and levy of penalty – HELD - due to forced closure of the unit by the State authorities, the assessee/ appellant could not manufacture or operate their machinery during March and April 2013. Such forced closure cannot be termed as a failure on the part of the assessee/appellant to avail the special procedure. The permission granted to the assessee to avail the special procedure and all other circumstances which make them eligible for such concession is existing all along. The closure of units admittedly, beyond the control of the assessee, is not to be treated as a failure to comply with the provisions and conditions of the notification during the period of forced closure of the units. The non-production of excisable goods during these two months can more appropriately termed as ceasing to work rather than failure to comply with the provisions - the Original Authority should have examine the request of the assessee to invoke the provision of para 7 of the said notification and should have given his finding - the impugned orders confirming the differential duty are not legally sustainable - assessee/appellant appeal is allowed by setting aside the impugned orders. The appeals filed by the Revenue for imposition of penalty are dismissed

2017-VIL-226-CESTAT-DEL-CE

Central Excise - manufacture of electrical storage batteries - liability to Central Excise duty in respect of these batteries on the ground that appellants have manufactured batteries with the brand name of others - benefit of Notification 8/2003-CE dated 01/03/2003 - The case of the Revenue is that respondents have manufactured batteries using different brand names of others - Commissioner (Appeals) dropped the demands – revenue in appeal – HELD - the persons to whom the said brand names belong have stated that they have assigned the brands in favour of respondent for the manufacture and supply of batteries to them - even in the absence of written agreement the submission of the owner of the brand name is acceptable as there is no need for written agreement in all cases - registration of assignment cannot be put as a condition to establish the fact of assignment. The notification bars availability of SSI exemption even to the manufacturer who uses unregistered brand name of another person - Regarding the other brand names which are unregistered, the evidences submitted did not categorically establish the ownership of such brands with any other specific person - the finding of the Commissioner (Appeals) is sustainable – revenue appeal is dismissed

2017-VIL-224-CESTAT-DEL-CU

Customs - valuation of the goods “Time Bound Software” and “Beta Software” – Software imported and distributed for demo/ trial purpose for a limited period of time and available for free download – Software imported from related parties for testing purpose – Valuation as per the appellant is Cost of media (including replication cost) on which software is loaded whereas Valuation as per revenue is Time Bound Software- Identical goods Method, under Rule 4, CVR – HELD - to decide on the valuation of “Time Bound Software” one has to go beyond Rule 4 of the Customs Valuation Rules 2007 as the value of identical goods which are imported around the same time is not available in this case - the valuation is to be decided under Rule 9 of CV Rules, 2007, which says that, subject to the provisions of Rule 3, where the value of imported goods cannot be determined under the provisions of any of the preceding rules, the value shall be determined using reasonable means consistent with the principles and general provisions of these rules and on the basis of data available in India. Consequently, the orders of lower Revenue authorities are set aside and the matter remanded to the original adjudication authority for deciding the valuation issue afresh under Rule 9 of CVR, 2007 r/w provisions of Section 14 (1) of Customs Act, 1962 - The item imported being beta software, one cannot be allowed to state that the said item is not “goods” in terms of Section 2(22) of the Customs Act. The item is a kind of moveable property which has been put into media- CD/DVSs and is being transacted/ passed over/ traded as such - the impugned order saying that valuation of the item “Beta Software” can be determined under Rule 4 of CVR, 2007 is not based on facts and cannot be called correct – impugned order is set aside and the appeal is allowed by way of remand to Original adjudicating authority

2017-VIL-223-CESTAT-DEL-CU

Customs – import of glass chatons, cutters and pocket scales - rejection of value of goods imported and re-determined under section 14(1) of the Customs Act r/w Rules 4 and 9 of the Customs Valuation Rules (CVR), 2007 - confiscated the goods with the option of redemption – HELD - the department does not have any contemporary import prices to compare with - The theoretical exercise of giving 10% discount against claim of 30% by the importer on the manufacturer’s price list cannot sustain revenue’s case of mis-declaration of value. In the practical world, unless manufacturer’s price list has got corroboratory evidences which can be in the form of contemporary imports or further corroboration from the manufacturer’s end on the prices for India for this much quantity, the Revenue’s order in appeal for enhancement of value cannot be sustained legally - The method of market enquiry for re-determination of the value for these goods is not free from doubt and unscientific - the enhancement of value is not sustainable - the impugned order is set aside and the appeals are allowed

2017-VIL-228-CESTAT-DEL-ST

Service Tax - appellant is engaged in the sale of the cement purchased from M/s Maihar Cement Limited and paying service tax under the “Business Auxiliary Service” - The department, on enquiry from M/s Maihar Cement Limited, came to know that the appellant is working as “clearing and forwarding” agent of the principal – demand of service tax under Clearing and Forwarding agent service – HELD - the principal M/s Maihar Cement Limited has undertaken the responsibility for the theft, godown rent, damage/ demurrage, safe transport etc. When it is so, then it proves that the ownership of the goods lie with the principal - no reason to interfere with the impugned order where the demand is rightly raised under (C&F Agent) service - the impugned order is upheld and appeal is dismissed

2017-VIL-229-CESTAT-DEL-ST

Service Tax - appellant is engaged in sale of entry ticket at the airport as per the agreement entered into with Airport Authority of India – demand of service tax by taking the view that the appellant has rendered “Airport Service” falling under Section 65(105)(zzzzm) read with Section 65(3c) of the Finance Act, 1994 – demand invoking extended period of limitation – limitation - HELD – the service tax is liable to be paid on the appellant’s activity in the category of airport service - in terms of the agreement with the Airport Authority of India the appellant was allowed to recover the entry charges alongwith service tax. The Airport Authority of India also have clarified the issue to the appellant regarding payment of service tax. In this situation, the extended period of limitation has been rightly invoked - show cause notice has been issued more than three years after the date of knowledge of the short payment. The proviso to Section 73 of the Finance Act, 1994 empowers the department to demand service tax within a period of five years from the date of issue of notice in cases where suppression of facts is established - the impugned order is upheld and the appeal is dismissed

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Assam: Online issuance of Road Permit (Form No. 62)

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Assam: Migration of the existing registered dealer under VAT to the upcoming GST regime

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Assam: Instructions regarding enrolment of existing dealers in GST Portal regarding

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Assam: Enrolment of existing dealers in GST Portal

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Customs: Guidelines for launching of prosecution in relation to offences punishable under Customs Act, 1962

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Customs: Regarding classification of Selfie Sticks with or without Bluetooth

06.03.2017

2017-VIL-127-ALH

U.P. Value Added Tax, 2008 - Section 2(ad), 2(y) - purchase price, sale price – taxable turnover of sale or purchase of goods – inclusion of freight in purchase price - Whether the transportation expenses borne by the assessee forms a part of its purchase price under Section 2(y) of the Act - Whether the Tribunal is justified in adding incentive amount to the sale price – rejection of books of account without any adverse material available on record – HELD - The contract of sale in the present case is by IOC in favour of revisionist to transfer lubricant oil. The transaction of sale is completed with delivery of goods to the assessee. The purchase price, therefore, would include the price actually paid and also other amounts, which are payable by the purchaser for completing the transaction of sale itself - The argument advanced by appellant that the freight though would constitute a part of the cost price, but would not be included in the purchase price, as this amount does not go to seller, is not liable to be accepted, inasmuch as the cost of freight is incurred to complete the transaction of sale itself, and therefore, the freight incurred for getting the commodity to the place of sale would have to be treated as part of purchase price, so as to include it in the turnover of purchase - Tribunal was justified in treating the expenses incurred towards transportation as constituting purchase price payable, and thus forming part of turnover of purchase - The amount of incentive is not an amount payable to a dealer as consideration for the sale of any goods. The amount of incentive has not been shown to have been received pursuant to contract of sale and any amount received dehors the contract of sale cannot be included within the definition of sale price, in terms of Section 2(ad) - Tribunal was not justified in adding the incentive received from IOC towards the sale price/turnover of sale - once it has been found that the physical stock available with the dealer on the date of survey tallied with books of account, the same was not liable to be discarded. However, the entry in the books of account appropriating the amount of freight towards expenses and not including it in the purchase price is found to be wrong, and on that basis, the liability of tax imposed would be justified

2017-VIL-128-RAJ

Rajasthan Sales Tax Act – section 2(36) – sale price - ex post facto discount - imposition of penalty u/s 61 on the ground that the assessee did not disclose in the return of sales the turnover of branches - petitioner allowed certain discount to the prospective buyers and also allows discount if the consumer/prospective buyer pays amount within a specified period – benefit of reduction of discount from the sale price – application of Explanation II of sec. 2(36) the Act – HELD - the assessee has not been able to justify as to how the discount was allowed to the prospective buyers and even no material has been placed as to whether it was a discount in the invoice - The burden was on the assessee, if it was claiming that the discount was allowed to the buyers but the assessee has utterly failed in providing any material. To say that the discount was allowed and there was oral agreement, cannot be accepted and it is a case of Limited Company and such an oral agreement cannot be said to even exist and the argument is not even worth considering at this stage. Limited Companies have to pass resolution and keep appropriate records, which is lacking in the instant case - it is an ex post facto discount and such a finding of fact cannot be interfered as no question of law can be said to emerge on this finding - the assessee liable for imposition of penalty for failure to disclose in the return of sales the turnover of branches – assessee appeal dismissed

2017-VIL-221-CESTAT-MUM-CE

Central Excise – job work – valuation – inclusion of freight element - whether the invoices raised by TISCO for supply of raw materials to the respondent is including freight element from TISCO to the respondent’s factory or it should be added over and above the cost of the raw materials mentioned in the invoices for arriving at the assessable value of the job-work goods manufactured and returned by the respondent to the principal M/s TISCO – HELD – the ld. Commissioner has considered that the freight was paid by M/s TISCO and the invoices for consolidated amount was raised and no freight was shown separately in the invoices - there is no doubt that even though the freight was paid by M/s TISCO, since invoice does not show freight separately, the freight is deemed to be included in the invoice value. Therefore, the proposal to add the freight amount over and above the invoice value of the raw material is not based on evidence - M/s TISCO adopted the price of the raw material supplied for the job-work on the basis of ‘depot sale price less conversion charges’. This clearly shows that except conversion charges all the elements including freight stand included in the value of the raw material cost. Therefore, the said price is clearly landed price of the raw material in the hands of respondent. For, this reason also, no further addition is required to be made such as freight in the assessable value of the respondent’s product – the ld. Commissioner applying his mind carefully dropped the demand where he found that the freight is included in the value shown in the invoice issued by M/s TISCO – Revenue appeal is dismissed

2017-VIL-220-CESTAT-AHM-CE

Central Excise – assessee cleared waste and scrap arising out of the capital goods installed in their factory on which CENVAT credit had been availed - whether clearance of Iron waste and scrap after 16.06.2005, generated out of capital goods on which CENVAT Credit availed, be subjected to duty on its transaction value - Rule 3(5A) of CCR, 2004, inserted w.e.f. 16.06.2005 – HELD – Before fastening the duty liability on waste and scrap under Rule 3(5A) of CCR, 2004 as was in existence at the relevant time, it is relevant to ascertain first whether CENVAT Credit had been availed on the capital goods, which had become later scrap - the onus lies on the department to establish that the waste and scrap did arise out of the capital goods on which credit availed, but, in the present case, the evidences adduced by the appellant in establishing the fact no CENVAT credit had been availed on such M. S. Angles, Channels, Beams, Nut Bolts etc., used in the repair and maintenance of the worn out parts of the plant and machinery, and the worn out parts were cleared as waste and scrap, needs to be verified, before confirming the duty on transaction value of waste and scrap under Rule 3(5A) of CCR, 2004 - the impugned order is set-aside and the matter is remanded to the original adjudicating authority to verify the fact whether CENVAT credit had been availed on the capital goods that became waste and scrap, on which duty was confirmed for the period after 16.06.2005 - Appeal is allowed by way of remand

2017-VIL-222-CESTAT-DEL-CE

Central Excise – Classification of “Keshyog Oil and Keshyog Herbal Powder Hair Wash / Shampoo” - Ayurvedic medicine under Chapter 30 or cosmetic/ toilet preparations under Chapter 33 – Manufacture - activity of labelling or re-labelling of products and making them marketable in combi-pack – HELD - the State Authorities in Madhya Pradesh have approved the products as Ayurvedic medicine. The Original Authority held that the registration by State Authorities is for the purpose of regulation of manufacture of the goods under reference - The packing of the product identifies the same as an Ayurvedic medicine - The product is made under a drug licence in accordance with an Ayurvedic Text and from Ayurvedic ingredients. It is packed and distributed in packings and with literature proclaiming it as Ayurvedic medicine. Therefore, the impugned items are rightly classifiable under Chapter 30 as Ayurvedic Medical Preparation - the appellants are undertaking repacking from bulk to retail, labelling and rendering the product fit for retail sale to consumer. As such the processes undertaken will amount to manufacture - The excise duty confirmed and penalties imposed on the appellants are upheld. The penalties imposed on individuals are set aside – appeal partly allowed

2017-VIL-216-CESTAT-AHM-CU

Customs – contravention of Section 34, 40, 51 - goods were stuffed in the factory of the appellant, after being loaded on the vessel the goods were exported without Let Export Order (LEO) and pending assessment of Shipping Bill - violation of various provisions of Customs Act, 1962 - denial of DEPB benefit – imposition of penalty on the exporter, CHA, surveyor and shipping agent - penalty under Section 114(iii) – HELD - the principle laid down for imposition of penalty on the exporter and the CHA in various judgments is consistent in observing that once the factory stuffed container is gated in, no control remains with the exporter and/or CHA, hence, in the event of sailing of the vessel with the container of exported goods before issuance of LEO, imposition of penalty on the exporter and the CHA is unwarranted. In the present case, there is no substantial evidence either against the exporter or the CHA brought on record attributing their involvement for loading of the container and thereafter sailing of the vessel, without LEO, resulting into contravention of provisions of the section 34, 40 and 51 the Customs Act – none of the documents prepared by the surveyor could be considered as indicating their involvement - considering the active role of the shipping line agent in discharging / loading the export cargo on the vessel, the ld. Commissioner has rightly arrived at the conclusion that for sailing/export of the container without LEO, the shipping line agent is at fault and accordingly penalized them, however, the amount of penalty is reduced – appeal disposed in favour of exporter-appellant

2017-VIL-219-CESTAT-MUM-CU

Customs – Valuation – loading of the value - goods imported from supplier who is shareholder in the parent company – rejection of transaction value and loading by 20% of the value – denovo adjudication - HELD - the adjudicating authority did not take up the adjudication despite submission of all documents - the action of lower authorities is totally depreciable that too in a matter wherein the question of valuation is involved. We are unable to fathom what was going in the minds of the lower authorities in not taking up the denovo adjudication after the matter was sent back by first appellate authority. Suffice to say that this callous attitude of lower authorities leads to miscarriage of justice as is seen in this case – the adjudicating authority needs to be reprimanded for delaying the denovo adjudication despite the documents being produced. Subsequent action of putting the blame on appellants for seeking adjournment is to correct the initial wrong doing - in the interest of justice, the matter is remanded back to adjudicating authority to reconsider the issue afresh

2017-VIL-217-CESTAT-DEL-ST

Service Tax - In terms agreement entered into by the appellant (AIL) with its subsidiary company (AASL) the AIL rendered support to AASL for the purpose of Ground Traffic and other Support Service – whether service tax is payable by AIL on the activities performed by AIL for AASL under the said agreements – though AIL raised bills to AASL, the were bearing AASL loss and providing financial aid to keep it afloat – non-payment of service tax by the appellant on the ground of non-receipt of consideration in terms of 4% of the revenue earned - power and jurisdiction of ADG, DGCEI for demand of service tax under the Finance Act, 1994 – HELD - vide Notification No. 3/2004 dated 11.03.2004 has appointed the ADG, DGCEI as proper officer in terms of Rule 3 of Service Tax Rules, 1994. Accordingly, no infirmity in the jurisdiction of ADG, DGCEI to issue the present show cause notice - even though AASL is a 100% subsidiary of AIL, the two companies are having distinct and separate identities and even registered separately under the Companies Act and have maintained separate books of accounts and their profit and loss account were to be determined separately. Consequently, AASL cannot be considered as a branch or extended arm of AIL. The MOU and the various agreements have created a legal fiction that AASL is a separate entity from AIL and the services were rendered by AIL to AASL for a consideration of 4% commission which was to be retained by AIL. In view of this, service tax is liable to be paid by AIL for the commission received from AASL in terms of the agreement. However, it has been claimed that the consideration has actually not been received by AIL from AASL. It is also contended that entire consideration is written off for the reason of loss incurred by AASL - this factum can be settled through a certificate from an independent Chartered Accountant, who may be asked to look into the books of AASL and AIL for the relevant period and may be asked to certify whether such consideration has been received AIL by book transfer or otherwise, as per the terms of the agreement entered into between two companies - Revenue is entitled to invoke the extended period of limitation in this case - matter remanded to the adjudicating authority for obtaining such certificate from the Chartered Accountant and to pass a de-novo order in the matter

2017-VIL-215-CESTAT-DEL-ST

Service Tax – GTA Service - transportation of imported goods from the Port to the site - The appellant awarded work order to M/s Lee & Muirhead, who in turn, sub-contracted the work of transportation of the goods to M/s Essemm Logistics for the transportation of goods to NTPC site and issued the consignment note in the name of NTPC as consignor as well as consignee. M/s Lee & Muirhead also issued delivery note in the name of NTPC - Revenue view that the appellant is liable to pay service tax under GTA inasmuch as they paid the freight to M/s Lee & Muirhead for the services provided to NTPC – demand, interest and penalties HELD – it is the appellant who pays freight for the transportation of the goods. In terms of the sub-contract executed with M/s Lee & Muirhead, the latter have actually paid the freight charges to M/s Essemm Logistics who has actually handled the transportation of the goods. But such payment of freight is clearly made by M/s Lee & Muirhead only as the agent of the appellant which subsequently would be reimbursed by the appellant. Consequently, the liability for payment of service tax under GTA in this case falls on the appellant in terms of Rule 2(d)(v) of Service Tax Rules, 1994 - the impugned order is upheld and appeal is dismissed

2017-VIL-218-CESTAT-CHD-ST

Service Tax - Business Auxiliary Services - eligibility of refund under Rule 5 of Cenvat Credit Rules, 2004 read with Notification No. 5/2006-CE(N.T.) dated 14.03.2006 - refund claims denied on the ground that premises of the service provider were not registered with on the date of availing the cenvat credit and were registered subsequently – HELD - In the absence of statutory provisions which prescribes that registration is mandatory and that if such a registration is not made the assessee is not entitled to the benefit of refund, the authorities have committed a serious error in rejecting the claim for refund on the ground which is not existence in law - issue is squarely covered by judgment of the Hon’ble Karnataka High Court in the case of mPortal India Wireless Solutions – assessee appeal is allowed

GSTbill

Goods and Services Tax (GST) Council approves the Central Goods and Services Tax (CGST) Bill and the Integrated Goods and Services Tax (IGST) Bill

Data Care

Guest Article: Advance Ruling by the ARA, Maharashtra u/s 55 of the MVAT Act, 2002 & u/r 63 of MVAT Rules, 2005 in the case of Data Care Corporation

State Budget 2017-18

Haryana Budget 2017-18 - Budget Speech

Economic Survey of Haryana 2016-17

Chhattisgarh Budget 2017-18 - Press Note (Attached)

Chhattisgarh Budget 2017-18 - Budget Speech [in Hindi]

04.03.2017

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Tamil Nadu: Increase in rate of tax on petrol and diesel

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Maharashtra: Corrigendum to Trade Circular 5T of 2017 dt. 27-02-2017 and release of Phase 3 of GST Enrollment

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News updates on GST

hpNoti5

Himachal Pradesh Taxation (On Certain Goods Carried By Road) Act, 1999 - Reduction in tax rate on Clinker

Customs Notification

cuNoti16NT: Courier Imports and Exports (Clearance) Amendment Regulations, 2017

cuNoti17NT: Appointment of Common Adjudicating Authority

cuNoti18NT: Amendments in Notification No. 31/97-Customs, dated the 7th July, 1997

cuNoti19NT: Amendments in Notification No. 384/86-Customs, dated the 23rd July, 1986

cuNoti20NT: Appointment of Commissioner of Customs for purpose of Adjudication

25feb-03mar

Weekly Summary for the week of 25th Feb to 03rd March

gstNews

News updates on GST