More Judgements

1. Home
2. More Judgements

Service Tax - Refund of excess Service Tax paid - The appellant paid excess service tax from December 2016 to May 2017 due to an inadvertent error – Rejection of refund on the ground that the refund claim was time barred under Section 11B of the Central Excise Act, 1944 – HELD - The excess service tax paid by the appellant was not in the nature of tax payable, but rather an inadvertent overpayment. Therefore, the limitation under Section 11B would not apply in the present case - In case of payment of tax made under mistake of law, the period of limitation as otherwise raised in terms of Section 11B of the Act would be ... [Read more]

Service Tax - Refund of excess Service Tax paid - The appellant paid excess service tax from December 2016 to May 2017 due to an inadvertent error – Rejection of refund on the ground that the refund claim was time barred under Section 11B of the Central Excise Act, 1944 – HELD - The excess service tax paid by the appellant was not in the nature of tax payable, but rather an inadvertent overpayment. Therefore, the limitation under Section 11B would not apply in the present case - In case of payment of tax made under mistake of law, the period of limitation as otherwise raised in terms of Section 11B of the Act would be inapplicable. The excess payment of service tax is an admitted fact, and this amount deposited in excess was by an inadvertent error, which the Govt cannot retain or withhold. Such claim, therefore, would not fall within legal parameters of Section 11B of the Act – The impugned order is set aside and the appeal is allowed [Read less]

Service Tax - Appellant is a multimodal transporter booking and selling cargo space to customers contesting demand on reimbursable expenses and the freight margin arisen due to the difference between the price at which cargo space is booked by the appellant and the price at which it is offered to their customers - HELD - The Supreme Court in Union of India v Intercontinental Consultants and Technocrats Pvt Ltd has struck down Rule 5 as ultra vires Section 67 of the Finance Act, 1994, holding that Section 67 does not permit inclusion of reimbursable expenses in the value of taxable services – Further, the Section 67 which... [Read more]

Service Tax - Appellant is a multimodal transporter booking and selling cargo space to customers contesting demand on reimbursable expenses and the freight margin arisen due to the difference between the price at which cargo space is booked by the appellant and the price at which it is offered to their customers - HELD - The Supreme Court in Union of India v Intercontinental Consultants and Technocrats Pvt Ltd has struck down Rule 5 as ultra vires Section 67 of the Finance Act, 1994, holding that Section 67 does not permit inclusion of reimbursable expenses in the value of taxable services – Further, the Section 67 which deals with valuation of taxable services for charging service tax does not provide for inclusion of the aforesaid expenditure or cost incurred while providing the services as they cannot be treated as element/components of service, till the amendment to Section 67 made effective from May 14, 2015. Concededly, the period involved in the present Appeals are from 01-04-2013 to 31-03-2015, and hence the said decision would squarely apply, rendering the entire demand confirmed in the impugned order unsustainable – Regarding freight margins, the activity of booking and selling cargo space is a principal-to-principal transaction and the margin earned therein is not exigible to service tax - The appeals are allowed by setting aside the demands on reimbursable expenses and freight margins, and the penalties imposed [Read less]

Customs - Claiming exemption benefit under SAFTA Notification No. 99/2011-CUS at appellate stage - The appellant had imported instant ACT II Popcorn from Bangladesh, its subsidiary company but failed to claim the benefit of SAFTA exemption Notification No. 99/2011-CUS during the initial assessment. The Commissioner (Appeals) rejected the appellant's claim of the exemption benefit at the appellate stage on the grounds that the exemption benefit cannot be availed at the appellate stage and should have been availed at the time of clearance, and that the appeals are premature as the assessments were provisional and not finaliz... [Read more]

Customs - Claiming exemption benefit under SAFTA Notification No. 99/2011-CUS at appellate stage - The appellant had imported instant ACT II Popcorn from Bangladesh, its subsidiary company but failed to claim the benefit of SAFTA exemption Notification No. 99/2011-CUS during the initial assessment. The Commissioner (Appeals) rejected the appellant's claim of the exemption benefit at the appellate stage on the grounds that the exemption benefit cannot be availed at the appellate stage and should have been availed at the time of clearance, and that the appeals are premature as the assessments were provisional and not finalized - Whether the appellant is entitled to claim the SAFTA exemption benefit at the appellate stage, even though it was not claimed during the initial self-assessment of the Bills of Entry - HELD - The exemption benefit under the SAFTA Notification can be claimed by the appellant at any stage, including the appellate stage, as long as the eligibility conditions are met. There is no estoppel in law that if the appellant had carried out self-assessment without claiming the exemption, it was debarred from claiming the benefit later. It is obligatory on the authorities to ensure that appropriate legal benefit as admissible in law is granted even if the importer fails to claim the benefit of a particular Notification - The provisional assessment of the goods does not restrict the scope of re-assessment only to the valuation aspect, the authorities are required to consider the admissibility of the exemption benefit even at the time of finalization of the assessments. The exemption benefit can be claimed at the appellate stage, even if not claimed initially – The matter is remanded to the original authority, directing them to examine the admissibility of the SAFTA exemption Notification No. 99/2011-CUS to the instant case and, if admissible, to grant the same while carrying out the exercise of finalization of the impugned Bills of Entry - The appeal is disposed of by way of remand [Read less]

Central Excise - Classification of petroleum products - Prior to 13.05.1999, appellants were classifying all their products under CTH 3814.00 as Industrial Solvents. Later, they changed the classification and filed a declaration classifying Rishisol S-1, S-2, S-3 under CTH 2710.13 and Rishisol B-1 under CTH 2710.90 - Department issued show cause notices proposing classification of all four products under CTH 2710.13 and demanding differential duty - Whether the products Rishisol S-1, S-2, S-3 and Rishisol B-1 are correctly classifiable under CTH 2710.13 as "Motor spirit" or should be classified under other tariff headings ... [Read more]

Central Excise - Classification of petroleum products - Prior to 13.05.1999, appellants were classifying all their products under CTH 3814.00 as Industrial Solvents. Later, they changed the classification and filed a declaration classifying Rishisol S-1, S-2, S-3 under CTH 2710.13 and Rishisol B-1 under CTH 2710.90 - Department issued show cause notices proposing classification of all four products under CTH 2710.13 and demanding differential duty - Whether the products Rishisol S-1, S-2, S-3 and Rishisol B-1 are correctly classifiable under CTH 2710.13 as "Motor spirit" or should be classified under other tariff headings – HELD - For any product to be classified under the broad rubric of "Motor Spirit" under CTH 2710.13, it should satisfy three conditions: (a) being a hydrocarbon oil excluding crude mineral oil, (b) having flash point below 25 degree Celsius, and (c) being suitable for use as fuel in spark ignition engine, by itself or in admixture with any other substance - The technical expert's report opined that the products in question, though meeting conditions (a) and (b), were not found to be suitable for use as fuel in spark ignition engines, either by itself or in admixture with any other substance. The report stated that these products have low octane number, high vapor pressure and do not meet the distillation requirements for motor gasoline, and hence are not environment friendly or efficient for use in spark ignition engines - All the three conditions must be satisfied for classification under CTH 2710.13. Since the third condition was not met in the present case, the impugned order of the Commissioner (Appeals) classifying the products under tariff headings other than 2710.13 is upheld - The appeal of the Revenue is dismissed [Read less]

Service Tax – Assignment of employees to work to foreign group companies on the on-site working basis, Export of Service - Appellants assigned their employees to work from their foreign group companies on the on-site working basis and received salary, perquisites and commission of 15% in convertible foreign exchange. The revenue department held that the services were not used outside India and the appellants were liable to pay service tax under the category of manpower recruitment or supply agency services – HELD - The presence or absence of a written agreement is not a material factor to decide the nature of the agree... [Read more]

Service Tax – Assignment of employees to work to foreign group companies on the on-site working basis, Export of Service - Appellants assigned their employees to work from their foreign group companies on the on-site working basis and received salary, perquisites and commission of 15% in convertible foreign exchange. The revenue department held that the services were not used outside India and the appellants were liable to pay service tax under the category of manpower recruitment or supply agency services – HELD - The presence or absence of a written agreement is not a material factor to decide the nature of the agreement, as the agreement can be oral and based on mutual understanding. The mere fact that the services were rendered in India and the employees were physically present in India does not mean that the services were not used outside India. Service tax is a destination-based consumption tax and the location of the service recipient is the relevant factor, not the place of performance - In the instant case, the beneficiary of the services was located outside India and the consideration was received in convertible foreign exchange, indicating that the services were exported. The phrase “on-site” only indicates the place of working of the employees assigned by the appellants. It in no way conveys an understanding that the services rendered by the said assigned employees were used inside India. The appellants' claim of exporting the services cannot be brushed aside. The revenue failed to prove that the services were used in India and not used outside India - The impugned order is set aside and the appeal is allowed [Read less]

Central Excise - Captive consumption of relays for manufacture of control panels - The Appellant was engaged in the manufacture of relays, control panels, ODs switches and parts thereto. Relays were captively used in the manufacture of control panels which were cleared without payment of duty for Mega Power Projects. The Department sought to deny the exemption to captively consumed relays under Notification No. 67/1995-CE dated 16.03.1995 on the ground that the control panel, the final product did not suffer duty. The exemption for captive consumption was rejected citing Rule 6 of Cenvat Credit Rules, 2004 - HELD - The iss... [Read more]

Central Excise - Captive consumption of relays for manufacture of control panels - The Appellant was engaged in the manufacture of relays, control panels, ODs switches and parts thereto. Relays were captively used in the manufacture of control panels which were cleared without payment of duty for Mega Power Projects. The Department sought to deny the exemption to captively consumed relays under Notification No. 67/1995-CE dated 16.03.1995 on the ground that the control panel, the final product did not suffer duty. The exemption for captive consumption was rejected citing Rule 6 of Cenvat Credit Rules, 2004 - HELD - The issue involved in these Appeals has already been decided and stands squarely covered by its earlier decisions in the Appellant's own case. The Appellant has complied with the provisions of Rule 6 of CCR, 2004 and is covered by the exclusion clause (vii) of the said Rule. The Department's contention that the Appellant did not discharge the obligation under Rule 6 was self-contradictory as the original authority had already recorded that the Rule prescribing the obligation is not applicable to the clearances under dispute. The eligibility of the Appellant for exemption under Notification No. 67/1995 cannot be disputed as they have followed the provisions and complied with the requirements of the said Notification - Accordingly, the impugned orders is set aside and the appeals are allowed [Read less]

Customs - Duty-free import under Target Plus Scheme, Fulfilment of Actual user condition and non-transferability requirement under Notification No. 32/2005-Cus by appellant-Merchant-exporter - Import of goods through high-seas sale and engagement of job workers for processing without endorsement on licenses - Whether the appellants have by complied with the conditions of Notification No. 32/2005-Cus. dated 08.04.2005, issued under the Target Plus Scheme, and whether the duty-free paper and paperboard imported thereunder were utilised in accordance with the actual-user and non-transferability conditions - HELD – The appel... [Read more]

Customs - Duty-free import under Target Plus Scheme, Fulfilment of Actual user condition and non-transferability requirement under Notification No. 32/2005-Cus by appellant-Merchant-exporter - Import of goods through high-seas sale and engagement of job workers for processing without endorsement on licenses - Whether the appellants have by complied with the conditions of Notification No. 32/2005-Cus. dated 08.04.2005, issued under the Target Plus Scheme, and whether the duty-free paper and paperboard imported thereunder were utilised in accordance with the actual-user and non-transferability conditions - HELD – The appellants failed to discharge the burden of proving compliance with the actual user and non-transferability conditions under the Target Plus Scheme. The imports through Haldia Port were routed through a non-existent job worker and delivered to an address where the importer did not have any presence, indicating diversion of goods. Similarly, the imports through Chennai Port involved high-seas sale to a third party and routing of goods through purported job workers who were either non-existent or did not have any control over the goods, establishing a pre-arranged mechanism to circumvent the scheme requirements - The failure to endorse the names and addresses of the job workers on the licenses, coupled with the lack of documentary evidence to demonstrate genuine utilization, lead to the conclusion that the goods were diverted in violation of the notification conditions. While the general legal principle is that utilization through job workers constitutes utilization by the importer, the specific facts of the case showed that the goods were not under the control of the license holder. Accordingly, the demand of duty, interest, and penalty under Sections 28 and 114A of the Customs Act, 1962 are upheld. However, the penalty under Section 112 is set aside - The appeals are disposed of [Read less]

Customs - Exemption under Notification No. 12/2012-Cus for "Reaper-cum-Binder" machinery - Whether imported paddy reapers without binder attachment are eligible for concessional duty under the notification – HELD - The exemption notification specifically refers to "Reaper-cum-Binder" which denotes an integrated machine performing both reaping and binding functions. Since the imported goods consisted only of paddy reapers without the binder attachment, they do not satisfy the description in the exemption notification and hence are not eligible for the concessional duty. The Tribunal relied on the principle of strict inter... [Read more]

Customs - Exemption under Notification No. 12/2012-Cus for "Reaper-cum-Binder" machinery - Whether imported paddy reapers without binder attachment are eligible for concessional duty under the notification – HELD - The exemption notification specifically refers to "Reaper-cum-Binder" which denotes an integrated machine performing both reaping and binding functions. Since the imported goods consisted only of paddy reapers without the binder attachment, they do not satisfy the description in the exemption notification and hence are not eligible for the concessional duty. The Tribunal relied on the principle of strict interpretation of exemption notifications and observed that the words "cum-binder" in the notification cannot be rendered otiose. However, the circumstances did not warrant confiscation of goods under Section 111(m) or imposition of redemption fine and penalty under Section 112(a) as there was no misdeclaration of goods and the dispute arose from a bona fide interpretation of the notification - the denial of exemption benefit was upheld, but the confiscation and penalty orders were set aside – The appeal is partly allowed - Confiscation under Section 111(m) and penalty under Section 112(a) of the Customs Act - Whether sustainable in the facts of the case – HELD – The confiscation and penalty cannot be justified merely because the importer claimed an exemption which was subsequently found inapplicable, in the absence of deliberate misdeclaration or intent to evade duty - In the present case, the goods were correctly declared as paddy reapers and the dispute was only with respect to the interpretation of the exemption notification. Consequently, the essential ingredient for invoking Section 111(m), i.e. misdeclaration of goods, was absent. Further, the Tribunal found that the circumstances indicated a bona fide claim of exemption, and hence the confiscation and penalty orders were not sustainable. Accordingly, the Tribunal set aside the confiscation and penalty orders. [Read less]

Service Tax - Eligibility of Cenvat credit - The appellant is engaged in the import and sale of heavy equipment, was subjected to a service tax audit by the revenue department. The revenue authority alleged that the appellant had not rendered any taxable service despite obtaining registration and was wrongly availing Cenvat credit on ineligible services - Whether the appellant's claim of Cenvat credit on the input services is eligible - HELD - The same issue had been previously decided in the appellant's favor by the same bench in its earlier order. It is not the case of the Revenue that the above common order of this Benc... [Read more]

Service Tax - Eligibility of Cenvat credit - The appellant is engaged in the import and sale of heavy equipment, was subjected to a service tax audit by the revenue department. The revenue authority alleged that the appellant had not rendered any taxable service despite obtaining registration and was wrongly availing Cenvat credit on ineligible services - Whether the appellant's claim of Cenvat credit on the input services is eligible - HELD - The same issue had been previously decided in the appellant's favor by the same bench in its earlier order. It is not the case of the Revenue that the above common order of this Bench has been set aside or reversed by higher judicial forum and hence, as long as the above order sustains, the same has to be followed – Further, the adjudicating authority had gone beyond the scope of the show-cause notice in denying the input tax credit - The impugned order is set aside and the appeal is allowed [Read less]

Service Tax - Valuation of Works Contract Service - Whether the appellant, engaged in tyre retreading works contract involving transfer of property in goods, should pay service tax on the entire contract value or only on the service portion (labor charges) as per Rule 2A(i) of the Service Tax (Determination of Value) Rules, 2006 - HELD - The appellant's invoices separately disclosed the material cost and labor charges, and the value of goods transferred and labor charges were clearly ascertainable from the invoices. Accordingly, the valuation under Rule 2A(i) was squarely applicable, and the Department's reliance on Rule 2... [Read more]

Service Tax - Valuation of Works Contract Service - Whether the appellant, engaged in tyre retreading works contract involving transfer of property in goods, should pay service tax on the entire contract value or only on the service portion (labor charges) as per Rule 2A(i) of the Service Tax (Determination of Value) Rules, 2006 - HELD - The appellant's invoices separately disclosed the material cost and labor charges, and the value of goods transferred and labor charges were clearly ascertainable from the invoices. Accordingly, the valuation under Rule 2A(i) was squarely applicable, and the Department's reliance on Rule 2A(ii) was incorrect as the precondition for invoking Rule 2A(ii) was not satisfied. The Tribunal relied on various judicial precedents holding that once sales tax/VAT has been paid on the material portion, service tax cannot be levied on the same. Further, even if Rule 2A(ii) were to apply, service tax can be levied only on 30% of the contract value, as the appellant had already paid VAT on 70% of the contract value - the impugned order is set aside and the appeal filed by the appellant was allowed [Read less]

Customs - Classification of imported goods 'Gurjon Oil' and 'Patchouli Oil' under Customs Tariff - Eligibility for concessional rate of Basic Customs Duty (BCD) - Differential IGST demand - Appellant imported 'Gurjon Oil' and 'Patchouli Oil' from Indonesia and claimed exemption from payment of BCD under Notification No. 46/2011-Cus. dated 01.06.2011 as amended by Notification No. 82/2018-Cus. dated 31.12.2018. However, during audit, authorities objected to the classification and demanded differential IGST between the rate adopted by the appellant (12%) and the rate as per the Revenue (18%) - Whether the appellant is eligib... [Read more]

Customs - Classification of imported goods 'Gurjon Oil' and 'Patchouli Oil' under Customs Tariff - Eligibility for concessional rate of Basic Customs Duty (BCD) - Differential IGST demand - Appellant imported 'Gurjon Oil' and 'Patchouli Oil' from Indonesia and claimed exemption from payment of BCD under Notification No. 46/2011-Cus. dated 01.06.2011 as amended by Notification No. 82/2018-Cus. dated 31.12.2018. However, during audit, authorities objected to the classification and demanded differential IGST between the rate adopted by the appellant (12%) and the rate as per the Revenue (18%) - Whether the appellant is eligible for the concessional rate of BCD and whether the demand for differential IGST is legally sustainable – HELD - The classification adopted by the appellant in respect of 'Gurjon Oil' and 'Patchouli Oil' is correct, as all goods covered under Chapter Heading 3301, irrespective of the sub-heading, would be eligible for the concessional rate of BCD – The appellant has claimed the exemption under CTH 33019079 and have submitted all the documents, including the certificate of analysis, invoice, etc., showing the country of origin as “Indonesia”. The Customs had cleared the goods only after being satisfied with the classification adopted by the appellant and the documentary evidence placed by them towards the country of origin - The demand of BCD and Surcharge on Welfare Services (SWS) are set aside as the Customs authorities had cleared the goods after being satisfied with the classification and documentary evidence provided by the appellant – The impugned order is set aside and the appeal is allowedrnIssue 2: Differential IGST demand - The appellant had paid IGST at 12% under a bonafide belief and had volunteered to pay the differential amount at 18%, with a request to allow filing of a Supplementary Bill of Entry to avail input tax credit, which was not considered by the authorities. Since the taking of IGST credit is an indefeasible right of the appellant when they use the inputs and the finished goods suffers Excise Duty / GST at the time of clearance from the appellant’s factory, the Audit/GST officials should have considered the request of the appellant - When the differential duty/tax accrues as credit to the assessee, it results in a revenue neutral situation, hence the demand is not legally sustainable. Accordingly, the demand for differential IGST is set aside [Read less]

Customs - Import of waste and metallic scrap - Validity of confiscation of imported goods and imposition of penalties - Appellants imported aluminum scrap from UAE through an indenter. The pre-shipment inspection certificates (PSIC) submitted for the import were found to be invalid as they were issued without proper inspection of the goods. The customs authorities confiscated the goods and imposed penalties on the appellants and other parties involved - Whether the confiscation of the imported goods and imposition of penalties on the appellants are sustainable – HELD – The non-compliance of the conditions for import po... [Read more]

Customs - Import of waste and metallic scrap - Validity of confiscation of imported goods and imposition of penalties - Appellants imported aluminum scrap from UAE through an indenter. The pre-shipment inspection certificates (PSIC) submitted for the import were found to be invalid as they were issued without proper inspection of the goods. The customs authorities confiscated the goods and imposed penalties on the appellants and other parties involved - Whether the confiscation of the imported goods and imposition of penalties on the appellants are sustainable – HELD – The non-compliance of the conditions for import policy may entail 100% inspection of goods but would not tantamount to improper import of goods liable to confiscation under Section 111 of the Customs Act, 1962 – The purpose of PSIC is to ensure that the consignment does not contain any types of arms, ammunition or other explosive material. As no such incriminating material was found in consignment, radiation level was not found in excess of neutral background, non-compliance of the condition of import policy may entail 100% inspection of goods but would not tantamount to improper import of goods liable to confiscation under Section 111 of the Customs Act, 1962 - There is no sufficient evidence to show that the appellants abetted in the production of invalid PSIC - the impugned order to the extent of confiscation of seized goods, imposition of Redemption fine and penalty on the appellants is set aside – The appeal is allowed [Read less]

Central Excise - Treatment of electricity generated in co-generation plant and wheeled out to electricity grid as exempted goods under CENVAT Credit Rules - The appellant, a manufacturer of sugar, denatured ethyl alcohol and bio-compost, operated a co-generation plant within the factory premises to generate electricity using bagasse, a waste product of the sugar manufacturing process. While a portion of the generated electricity was consumed captively, the surplus was wheeled out to the electricity grid - Department considered this surplus electricity as "exempted goods" under the CENVAT Credit Rules and demanded 6% of its... [Read more]

Central Excise - Treatment of electricity generated in co-generation plant and wheeled out to electricity grid as exempted goods under CENVAT Credit Rules - The appellant, a manufacturer of sugar, denatured ethyl alcohol and bio-compost, operated a co-generation plant within the factory premises to generate electricity using bagasse, a waste product of the sugar manufacturing process. While a portion of the generated electricity was consumed captively, the surplus was wheeled out to the electricity grid - Department considered this surplus electricity as "exempted goods" under the CENVAT Credit Rules and demanded 6% of its value under Rule 6(3)(i) on the ground that the appellant had not maintained separate accounts for common inputs and input services used for manufacturing activities and electricity generation – HELD - The electricity generated in the co-generation plant and wheeled out to the grid cannot be treated as an independent manufacturing activity attracting the provisions of Rule 6. The electricity generation was incidental to the sugar manufacturing process, and the appellant had already reversed the proportionate CENVAT credit attributable to the common input services used for electricity generation under Rule 6(3A). Once the proportionate credit was reversed, the appellant could not be compelled to pay 6% of the value of electricity under Rule 6(3)(i), as the object of the rule had been achieved – Further, the failure to intimate the Department about the exercise of the option under Rule 6(3A) was a mere procedural lapse and could not result in denial of the substantive benefit. Additionally, the demand is found to be time-barred under the normal limitation period prescribed under the CEA, 1944 - The impugned orders are set aside and the appeal is allowed [Read less]

Service Tax - Services provided to foreign educational institutions - Whether the services provided by the appellant to foreign educational institutions were taxable as intermediary services - HELD: The issue is no longer res integra, as in several decisions the Tribunal had held that the appellant's services when rendered to foreign universities and the earnings being in foreign exchange would not constitute intermediary services – The appellant’s services when rendered to foreign universities and the earnings being in foreign exchange would not constitute intermediary services - The demand confirmed and any penalty i... [Read more]

Service Tax - Services provided to foreign educational institutions - Whether the services provided by the appellant to foreign educational institutions were taxable as intermediary services - HELD: The issue is no longer res integra, as in several decisions the Tribunal had held that the appellant's services when rendered to foreign universities and the earnings being in foreign exchange would not constitute intermediary services – The appellant’s services when rendered to foreign universities and the earnings being in foreign exchange would not constitute intermediary services - The demand confirmed and any penalty imposed on the appellant on this account are set aside – The appeal is allowedrnIssue 2: Payment of service tax, interest, and penalty before show cause notice - Whether the proceedings stood concluded under the second proviso to Section 78 of the Finance Act, 1994 on payment of the service tax, interest and penalty before issuance of the show cause notice – HELD - The service tax along with interest and 15% as penalty deposited by the appellant during the investigations was sufficient compliance of the conditions laid down in Section 78 of the Finance Act, 1994, and consequently, the proceedings were deemed to have concluded. Accordingly, the demand in excess to the amount already paid by the appellant is set aside. [Read less]

Service Tax - CENVAT credit on recovery agent services - The appellant availed CENVAT credit of service tax paid under reverse charge on services provided by 'recovery agents' and reversed 50% of the credit monthly – With the amendment to the definition of "input service" with effect from 01.04.2011, it was alleged that recovery agent services were not used for providing the appellant's output service of money lending and therefore did not qualify as input services under Rule 2(l) of the CCR, 2004 - Whether the services of recovery agents, which are part of the loan recovery mechanism, have a direct and integral nexus wi... [Read more]

Service Tax - CENVAT credit on recovery agent services - The appellant availed CENVAT credit of service tax paid under reverse charge on services provided by 'recovery agents' and reversed 50% of the credit monthly – With the amendment to the definition of "input service" with effect from 01.04.2011, it was alleged that recovery agent services were not used for providing the appellant's output service of money lending and therefore did not qualify as input services under Rule 2(l) of the CCR, 2004 - Whether the services of recovery agents, which are part of the loan recovery mechanism, have a direct and integral nexus with the appellant's output service of money lending and are hence eligible to be availed as an 'input service' under Rule 2(l) of the CENVAT Credit Rules, 2004 - HELD - The main definition, "input service" means any service used by a provider of taxable service for providing an output service. The test is whether the output service could practically be provided without the services provided by recovery agents. Timely recovery of loans is as critical for a non-banking financial company as for a bank. Delays lead to increased borrower liability, loss of alternative income, depreciation of collateral, potential capital loss, and liquidity stress that may threaten the lender's viability. Loan recovery is thus an integral part of the lending service, whether undertaken internally or through external agencies, enforcement of security, or legal proceedings. Money lending and recovery are two sides of a same service. There cannot be one without the other. Without an effective recovery mechanism, the output service of lending cannot be practically provided. Accordingly, services rendered by external collection agencies, which is part of the loan recovery mechanism, have a direct and integral nexus with the appellant's output service and are hence eligible to be availed as an 'input service' - The appellant is eligible for CENVAT credit on the services of recovery agents – The impugned order is set aside and the appeal is allowed [Read less]

In the absence of any enabling power either to condone the delay or to treat the period of two years as directory, the period prescribed in Section 54 is mandatory. The mere presence of the word “may” cannot always be construed as directory. However, merely because the provision under Section 54 is held to be mandatory, it cannot be said that the jurisdiction vested in this Court under Article 226 stands excluded.

Central Excise - Limitation period for demand of excise duty on clearance of capital goods as waste/scrap - The appellant, a manufacturer of excisable goods, was issued a show cause notice in 2017 for non-payment of excise duty on clearance of capital goods as waste/scrap during 2012-2013. The demand was confirmed by the adjudicating authority and upheld by the Commissioner - HELD - The entire demand is barred by limitation. The extended period of limitation cannot be invoked merely on the basis of audit objection, without any independent enquiry or evidence of suppression of facts by the appellant with intent to evade dut... [Read more]

Central Excise - Limitation period for demand of excise duty on clearance of capital goods as waste/scrap - The appellant, a manufacturer of excisable goods, was issued a show cause notice in 2017 for non-payment of excise duty on clearance of capital goods as waste/scrap during 2012-2013. The demand was confirmed by the adjudicating authority and upheld by the Commissioner - HELD - The entire demand is barred by limitation. The extended period of limitation cannot be invoked merely on the basis of audit objection, without any independent enquiry or evidence of suppression of facts by the appellant with intent to evade duty. Further, during the relevant period, there was no mechanism for recovering the amounts payable under Rule 3(5A) of the Cenvat Credit Rules on clearance of capital goods as waste/scrap. The impugned order is set aside on the grounds of limitation as well as merits - The appeal of the appellant is allowed [Read less]

Central Excise - Eligibility of CENVAT credit on capital goods such as towers, air conditioners, DG sets, battery sets, pre-fabricated structures, and input services used in construction/erection of transmission towers - The department denied CENVAT credit on the grounds that towers and its parts cannot be considered as parts & accessories of capital goods and would not fall under the definition of 'capital goods' as per Cenvat Credit Rules, and that towers and shelters are not covered as 'inputs' - Whether the Assessees are eligible for CENVAT credit on capital goods and input services used for towers and shelters - HELD ... [Read more]

Central Excise - Eligibility of CENVAT credit on capital goods such as towers, air conditioners, DG sets, battery sets, pre-fabricated structures, and input services used in construction/erection of transmission towers - The department denied CENVAT credit on the grounds that towers and its parts cannot be considered as parts & accessories of capital goods and would not fall under the definition of 'capital goods' as per Cenvat Credit Rules, and that towers and shelters are not covered as 'inputs' - Whether the Assessees are eligible for CENVAT credit on capital goods and input services used for towers and shelters - HELD - The Tribunal, following the judgments of the Supreme Court in Bharti Airtel Ltd. case and various High Courts and Tribunals, held that towers, pre-fabricated buildings, and input services used for their construction/erection are covered under the definition of 'capital goods' and 'inputs' under the Cenvat Credit Rules. These items are movable goods and not immovable property, and their use is essential for providing the output service of mobile telecommunications. Therefore, the Assessees are eligible for CENVAT credit on these items - The Tribunal allowed the Assessees' appeals and set aside the impugned orders denying the CENVAT credit - Transfer of CENVAT credit upon shifting of centralized registration from Jaipur to Gurgaon - The department denied transfer of CENVAT credit on the ground that the Assessees did not fulfill the conditions prescribed in Rule 10 of the Cenvat Credit Rules for transfer of CENVAT credit - Whether the Assessees are eligible to transfer the CENVAT credit upon shifting of centralized registration from Jaipur to Gurgaon - HELD – The Rule 10 does not bar the shifting of centralized accounting and billing function of a company. Shifting of centralized registration cannot be equated with the shifting or transfer of business, and there was no change in the Assessees' business or ownership status - Further, the mechanism of centralized registration was introduced for administrative and jurisdictional ease, and not to provide any tax advantage or credit benefits. The Tribunal also relied on the decisions in Central Bank of India and Mafatlal Industries Ltd. cases, which held that transfer of CENVAT credit cannot be denied merely on the ground of lack of proper documents - The Tribunal dismissed the Revenue's appeal and upheld the impugned order allowing the transfer of CENVAT credit upon shifting of centralized registration. [Read less]

Customs - Undervaluation of imported goods - The Department alleged that the appellant imported rubber belts and PVC conveyors from overseas suppliers by undervaluing the same. Based on statements recorded under Section 108 of the Customs Act, the Department enhanced the declared assessable value and demanded differential duty - Whether the enhancement of assessable value by 25% and the differential duty demand upheld by the Commissioner (Appeals) can be sustained - HELD - The adjudicating authority and the appellate authority have not analyzed the issue in detail. The enhancement of the assessable value by 25% solely on t... [Read more]

Customs - Undervaluation of imported goods - The Department alleged that the appellant imported rubber belts and PVC conveyors from overseas suppliers by undervaluing the same. Based on statements recorded under Section 108 of the Customs Act, the Department enhanced the declared assessable value and demanded differential duty - Whether the enhancement of assessable value by 25% and the differential duty demand upheld by the Commissioner (Appeals) can be sustained - HELD - The adjudicating authority and the appellate authority have not analyzed the issue in detail. The enhancement of the assessable value by 25% solely on the basis of the statements of the appellant, which were initially retracted and later restored, without proper corroboration and without analyzing the contemporaneous imports and their values, is not sustainable. The contradictory orders of the Commissioner (Appeals) in dropping the penalty on one person and upholding it on the other, where the allegations were more or less on the same platform, cannot be sustained. Accordingly, the enhancement of the assessable value, the differential duty demand, and the penalties imposed on the individuals are is set aside - The appeals are allowed [Read less]

Customs - Classification of imported technical documents as "printed books" under CTH 49.01 or "other printed matter" under CTH 49.11, Benefit of exemption Notification No.12/2012-Cus. dated 17.03.2012 - The appellant, engaged in manufacturing of defense equipment, imported various technical documents, reports and manuals related to the equipment it imported for defense projects. The Revenue authorities reclassified the imports under CTH 49.11 "other printed matter" and denied the benefit of exemption – Whether Technical Manuals, Specification Handbooks, reports etc. imported against the BOEs mentioned above are classifi... [Read more]

Customs - Classification of imported technical documents as "printed books" under CTH 49.01 or "other printed matter" under CTH 49.11, Benefit of exemption Notification No.12/2012-Cus. dated 17.03.2012 - The appellant, engaged in manufacturing of defense equipment, imported various technical documents, reports and manuals related to the equipment it imported for defense projects. The Revenue authorities reclassified the imports under CTH 49.11 "other printed matter" and denied the benefit of exemption – Whether Technical Manuals, Specification Handbooks, reports etc. imported against the BOEs mentioned above are classifiable under CTH 49019900 as claimed by the appellant OR under CTH 49119990 as held by the learned Commissioner - HELD - Following the principles laid down by the Supreme Court in Gujarat Perstorp Electronics Ltd. case, the imported technical documents are correctly classifiable under CTH 49.01 "printed books" as they contain textual matter in the form of sheets for binding in loose-leaf binders, brochures, pamphlets and leaflets consisting of scientific theses, instruction notices etc. issued for specific technical purposes, and not merely for general public consumption - As per the HSN explanatory notes, the scope of CTH 49.01 is not restricted only to publications meant for general public, but covers a wide range of printed materials including those intended for specific technical use. As per the Supreme Court's guidance, the specific entry of CTH 49.01 should be preferred over the residuary entry of CTH 49.11. Accordingly, the imported technical documents etc. are correctly classifiable under CTH 49019900 and the appellant are eligible to the benefit of Notification No.12/2012-Cus. dated 17.03.2012 and No.50/2017-Cus. dated 30.06.2017 - the impugned order is set aside and the appeal is allowed [Read less]

Service Tax - Eligibility of CENVAT Credit on inputs, capital goods and input services for setting up and operating telecom towers and shelters - The assessee, engaged in providing passive infrastructure support and related operation and maintenance services to telecom operators, procured various inputs, capital goods and input services and availed CENVAT Credit. The revenue authorities alleged that the assessee wrongly availed CENVAT Credit on such items and issued show cause notices proposing to deny the credit - Whether the assessee is eligible to avail CENVAT Credit on (i) inputs and capital goods used for setting up a... [Read more]

Service Tax - Eligibility of CENVAT Credit on inputs, capital goods and input services for setting up and operating telecom towers and shelters - The assessee, engaged in providing passive infrastructure support and related operation and maintenance services to telecom operators, procured various inputs, capital goods and input services and availed CENVAT Credit. The revenue authorities alleged that the assessee wrongly availed CENVAT Credit on such items and issued show cause notices proposing to deny the credit - Whether the assessee is eligible to avail CENVAT Credit on (i) inputs and capital goods used for setting up and operating telecom towers and shelters, and (ii) input services used for installation, maintenance and operation of telecom towers and shelters - HELD - The issues are no longer res integra and have been settled in favor of the assessee by the Supreme Court, High Courts and various Tribunal benches - Regarding inputs and capital goods, the Supreme Court has held that telecom towers and pre-fabricated shelters, although not devices for transmission or reception of signals, are essential infrastructure for rendering the output service of mobile telecommunications and hence, their use in providing output services qualifies them for CENVAT Credit under the Cenvat Credit Rules. The Tribunal's own earlier decisions and various High Court and Tribunal rulings have also consistently upheld the assessee's eligibility for CENVAT Credit on such items - Regarding input services, the Larger Bench of the Tribunal has held that the expression "input service" has a wide latitude and therefore, input services used for setting up and operation of telecom towers are eligible for credit, provided such services are used in the course of providing taxable output services. This position has also been affirmed by various Tribunal benches - Following the binding judicial precedents, the impugned orders denying the CENVAT Credit are set aside and the appeals filed by the assessee are allowed. The appeals filed by the revenue challenging the dropping of demands were dismissed [Read less]

Customs AAR - Leviability of 5% IGST on imports of Active Pharmaceutical Ingredients (APIs) or Bulk drugs in terms of Sl. No. 226 of Schedule I to Notification No. 9/2025-Integrated Tax (Rate) – Whether bulk drugs/APIs are covered under the expression ‘All Drugs and Medicines’ - HELD – Bulk Drugs/APIs falls within the statutory meaning of “drug”. The bulk drugs and APIs imported by applicant, whether for manufacturing formulations, testing, clinical trials, bioavailability, or bioequivalence studies, qualify as "All Drugs" under Sl. No. 226 of Schedule I to Notification No. 9/2025-IT (Rate) dated September 17, ... [Read more]

Customs AAR - Leviability of 5% IGST on imports of Active Pharmaceutical Ingredients (APIs) or Bulk drugs in terms of Sl. No. 226 of Schedule I to Notification No. 9/2025-Integrated Tax (Rate) – Whether bulk drugs/APIs are covered under the expression ‘All Drugs and Medicines’ - HELD – Bulk Drugs/APIs falls within the statutory meaning of “drug”. The bulk drugs and APIs imported by applicant, whether for manufacturing formulations, testing, clinical trials, bioavailability, or bioequivalence studies, qualify as "All Drugs" under Sl. No. 226 of Schedule I to Notification No. 9/2025-IT (Rate) dated September 17, 2025 attracting 5% IGST, provided they are not covered under Sl. No. 113 of Notification No. 10/2025–Integrated Tax (Rate), which lists NIL-rated drugs or medicines – Ordered accordingly [Read less]

Service Tax - Levy of service tax on ocean freight charges collected by the appellant as a multimodal transporter - Whether the ocean freight charges collected by the appellant from its customers can be included in the taxable value for the purpose of payment of service tax - HELD - The law laid down by the Supreme Court in the case of Union of India v Intercontinental Consultants and Technocrats Pvt Ltd, is squarely applicable to the present case. The Supreme Court had held that the expenditure incurred by the service provider and reimbursed by the customer cannot be included in the taxable value for the purpose of paymen... [Read more]

Service Tax - Levy of service tax on ocean freight charges collected by the appellant as a multimodal transporter - Whether the ocean freight charges collected by the appellant from its customers can be included in the taxable value for the purpose of payment of service tax - HELD - The law laid down by the Supreme Court in the case of Union of India v Intercontinental Consultants and Technocrats Pvt Ltd, is squarely applicable to the present case. The Supreme Court had held that the expenditure incurred by the service provider and reimbursed by the customer cannot be included in the taxable value for the purpose of payment of service tax, as Section 67 of the Finance Act, 1994 does not permit such inclusion until the amendment made effective from May 14, 2015. Since the period involved in the present appeal is from April 2013 to March 2015, the Supreme Court's decision would apply, making the entire demand confirmed in the impugned order unsustainable – Further, the Department has failed to provide any evidence to show that the appellant is acting as an agent of either the shipping lines or the exporters. The collection of ocean freight by a multimodal transporter from its customers is a principal-to-principal transaction and not a taxable service. The issue has been consistently decided in favour of the appellant in various decisions of the CESTAT - In light of the above, the impugned order is set aside and the appeal is allowed [Read less]

GST - Circular No.224/18/2024-GST - The petitioner challenged the order passed by the adjudication order and the order rejecting the petitioner's application under Section 161 of the CGST Act, 2017 - Whether the petitioner could avail the alternative recovery process by filing an undertaking/declaration in terms of the Circular dated 11.07.2024 and the Circular dated 17.09.2025 – HELD – The CBIC had issued a circular dated 11.07.2024 providing guidelines for recovery of outstanding dues in cases where the first appeal has been disposed of till the Appellate Tribunal comes into operation. As per the Circular, the taxpay... [Read more]

GST - Circular No.224/18/2024-GST - The petitioner challenged the order passed by the adjudication order and the order rejecting the petitioner's application under Section 161 of the CGST Act, 2017 - Whether the petitioner could avail the alternative recovery process by filing an undertaking/declaration in terms of the Circular dated 11.07.2024 and the Circular dated 17.09.2025 – HELD – The CBIC had issued a circular dated 11.07.2024 providing guidelines for recovery of outstanding dues in cases where the first appeal has been disposed of till the Appellate Tribunal comes into operation. As per the Circular, the taxpayer could make a payment of an amount equal to the amount of pre-deposit and file an undertaking/declaration with the jurisdictional proper officer that they will file an appeal against the order of the appellate authority before the Appellate Tribunal, as and when it comes into operation - Considering the guidelines and the Notifications, the petitioner is at liberty to avail the alternative recovery process by complying with the necessary conditions of the circular dated 11.07.2024 and depositing the pre-deposit amount. If the petitioner complies with these requirements, the recovery of the remaining amount shall remain stayed as per the provisions of the CGST Act - The Writ Petition is disposed of [Read less]

Service Tax - Statutory levy by Statutory Authority, Consideration for service - Appellant, a statutory authority, collects auction fee @ 2% as prescribed under the Statutory Regulations for facilitating tobacco auction, grading, classification and marketing under the Tobacco Board Act 1975 - Whether the auction fee collected by the Tobacco Board constitutes consideration for taxable service - HELD – The auction fee collected by the Tobacco Board is a statutory levy prescribed under the Act and not consideration for any service rendered. The activities performed pursuant to statutory mandate do not constitute taxable ser... [Read more]

Service Tax - Statutory levy by Statutory Authority, Consideration for service - Appellant, a statutory authority, collects auction fee @ 2% as prescribed under the Statutory Regulations for facilitating tobacco auction, grading, classification and marketing under the Tobacco Board Act 1975 - Whether the auction fee collected by the Tobacco Board constitutes consideration for taxable service - HELD – The auction fee collected by the Tobacco Board is a statutory levy prescribed under the Act and not consideration for any service rendered. The activities performed pursuant to statutory mandate do not constitute taxable service. The Tobacco Board performs regulatory functions under the statute and the fee collected is a statutory levy. Hence, the auction fee cannot be treated as consideration for taxable service – The impugned order is set aside and the appeal is allowed - Storage of agricultural produce - Whether storage of un-manufactured tobacco attracts service tax under the category of storage and warehousing service - HELD - As per Section 65(102) of the Finance Act, "storage and warehousing" excludes any service provided for storage of agricultural produce. The term 'agricultural produce' includes un-manufactured tobacco as per the CBEC Circular No. 1/2002-ST dated 01.08.2002. Therefore, the storage of un-manufactured tobacco is outside the scope of taxable service - The storage of un-manufactured tobacco is not liable to service tax - Demurrage charges – Appellant collected demurrage charges for delay in lifting of tobacco stocks stored in the godown - Whether demurrage charges collected by the Tobacco Board are liable to service tax - HELD - The demurrage charges are in the nature of penalty charges for delaying in lifting goods, and such penal charges cannot be treated as consideration for any service - The demurrage charges collected by the Tobacco Board are not liable to service tax. [Read less]

GST - Grounds of arrest and reasons to believe – Petitioner was arrested under Section 69 of the CGST Act, 2017 without providing the "grounds of arrest" or the "reasons to believe" prior to his arrest and production before the Magistrate - Whether the absence of providing the "grounds of arrest" and "reasons to believe" to the petitioner at the time of arrest renders the arrest and subsequent remand illegal – HELD - As per the judgment of the Supreme Court in Radhika Agrawal v. Union of India, the "grounds of arrest" and the "reasons to believe" are mandatorily required to be provided to the arrestee. While the "reaso... [Read more]

GST - Grounds of arrest and reasons to believe – Petitioner was arrested under Section 69 of the CGST Act, 2017 without providing the "grounds of arrest" or the "reasons to believe" prior to his arrest and production before the Magistrate - Whether the absence of providing the "grounds of arrest" and "reasons to believe" to the petitioner at the time of arrest renders the arrest and subsequent remand illegal – HELD - As per the judgment of the Supreme Court in Radhika Agrawal v. Union of India, the "grounds of arrest" and the "reasons to believe" are mandatorily required to be provided to the arrestee. While the "reasons to believe" are not required to be provided to the arrestee as per the Supreme Court's decision, the "grounds of arrest" must be explained to the arrested person and furnished to him in writing as an annexure to the arrest memo - In the present case, the arrest memo did not mention any annexure containing the "grounds of arrest", and the "grounds of arrest" were provided to the petitioner only after the remand order was passed. This is in violation of the Supreme Court's guidelines and the department's own circular dated 13.01.2025. Therefore, the remand order was not in accordance with law and set it aside - The petitioner is ordered to be released from custody. The writ petition is allowed [Read less]