Violation of rule 8(3A) of CER, 2002; confiscation & penalty upheld
The Taxpayer defaulted in monthly payment of duty, which was not rectified within 30 days. Department issued SCN alleging that as per Rule 8(3A) of the CER, Taxpayer, post the above default, ought to have paid duties for each consignment. The SCN demanded duty along with interest and penalty under Rule 25 of CER read with Section 11AC of CEA.
The CESTAT upholding the demand observed that the Gujarat HC in the case of Indsur Global Limited vs Union of India; 2014-TIOL-2115-HC-CX has only declared the requirement of payment duty without utilizing the CENVAT credit as provided in Rule 8(3A) as unconstitutional. Accordingly, all other provisions of rule 8(3A) are legitimate. On this ground, the CESTAT held that in the present case, after committing the default in payment of duty, the Taxpayer ought to have paid excise duty for each consignment at the time of removal till the date the Taxpayer pays the outstanding amount including interest thereon.
Therefore it was held that the goods cleared during the period, post the default, would be treated as goods cleared without payment of duty and accordingly are liable for confiscation and penalty.
Shivam Pressings vs. CCE; 2015-TIOL-1188- CESTAT-MUM
Charges towards erection, installation and commissioning at the buyers premises not taxable
The Taxpayer is engaged in manufacture of Transformer and Voltage Stabilizer, which are cleared on the payment of duty. These goods are transported by the Taxpayer to the buyers' premises where these are required to be installed/ commissioned. The contract entitles the Taxpayer to receive charges for the said erection and commission. The Department issued a demand notice on the ground that the said charges will form part of assessable value of goods.
The CESTAT observed that the transformer and voltage stabilizer, when cleared from the factory, are ready to use and complete in all respects. Erection, installation and commissioning is a post manufacturing activity and cannot be considered as part of the manufacturing activity. Thus, the above erection and commissioning charges would not form part of their assessable value.
M/s Delta Electrotrade Control Pvt Ltd vs. CCE; 2015-TIOL-1273-CESTAT-MUM
Amount paid under Rule 6(3) of CCR and recovered from the buyer not an additional consideration
The Taxpayer availed CENVAT credit and manufactured both dutiable and exempted final products but did not maintain separate accounts/inventory of inputs. Therefore, in terms of the provisions of Rule 6(3) of the CCR, 2004 they were paying an amount equal to 5%/10% of the value of the exempted final products. However, in the invoices, the amounts of 5%/10% of the sale price was mentioned as CENVAT Credit reversal and being recovered from their customers.
The Department was of the view that the amount being recovered from the customers has to be treated as 'additional consideration' for the goods sold and as such, the same would form part of the sale price and that the Taxpayer should pay 5% or 10% on this additional consideration.
CESTAT, relying upon the decision of the SC in the case of of CCE vs. Kisan Sahkari Chini Mills Ltd.- 2001 (132) ELT 523 (SC) held that the recovery of 5% / 10% amount from the customer which already stand paid to the Department cannot be held to be liable to be added in the assessable value of the goods. Therefore, the demand of duty on the same amount by treating it as part of the assessable value is not in accordance with the said rule.
M/s Bharat Heavy Electrical Ltd vs. CCE & ST; 2015-TIOL-1226-CESTAT-DEL
No service tax on services provided by foreman in business chit fund
Recently, the Hon'ble Supreme Court of India dismissed the Special Leave Petition filed by the Union of India, against the decision of the Hon'ble High Court of Andhra Pradesh in A.P. Federation of Chit Funds v. Union of India [2009 (13) S.T.R. 350 (A.P.)].
The Hon'ble High Court of Andhra Pradesh vide its decision had quashed Circular No. 96/7/2007-ST dt. 23-8-2007 ('Circular') issued by the CBEC, which had confirmed the chargeability of Service Tax on the consideration received by the foreman of chit fund, under the erstwhile taxing entry for 'Banking and Other Financial Services'.
Union of India and Another vs. The Andhra Pradesh Federation of Chit Fund and Others; 2014-TIOL-97-SC-ST
Depreciation method to be applied to determine the value of second hand imports
The issue before the SC was regarding valuation of second hand imported equipment or machinery. SC observed that Section 14 of the Customs Act, 1962 provides that the value of the imported goods is to be arrived at by ascertaining the price at which such or like goods are ordinarily sold or offered for sale for delivery at the time and place of importation. Therefore, the method to be employed, as per the aforesaid provision, is to ascertain as to how much would be the price of such goods if they are to be ordinarily sold or offered for sale.
As per the Customs Valuation (Determination of Price of Imported Goods) Rules 1988 where it is not possible to determine the price at which such goods are ordinarily sold or offered for sale, Rule 8 provides for residual method and stipulates that the value shall be determined using reasonable means consistent with the principles and general provisions of the said Rules as well as provisions of sub-section (1) of Section 14 of the Customs Act. Accordingly, the SC held that one of the reasonable method to determine the value of imported second hand goods which is consistent with the principles of valuation would be the depreciation method.
M/s U P State Bridge Corporation Ltd vs. CC; 2015- TIOL-144-SC-CUS
No application to be made for extension of stay after August 7, 2014
CESTAT held that any stay order passed after 07.08.2014 would continue to operate till the final disposal of the appeal since the provisions for stay applications have been omitted and CESTAT has no power for hearing or disposing off stay applications. Hence, there is no need for filing any further application seeking extension.
Rajesh Pokharkar vs. CC; 2015-TIOL-1163- CESTAT-MUM
Higher discount to related party shows that relationship has influenced the price
The Taxpayer imported goods from a related party and contended that the relationship did not influence price of the goods. The Taxpayer further contended that the transaction was on principal to principal basis and was at arm's length and the price at which the goods in question were bought by the Taxpayer was the market price of such goods at which these goods were sold.
CESTAT observed that on comparison, the related party is allowing a 20% discount to independent buyers, whereas the Taxpayers have been charged a lower price after allowing 33.3% discount and accordingly concluded that the relationship has influenced the price.
SC upheld the decision of CESTAT which held that the supplier and the Taxpayer are related and the relationship has influenced the price. Hence, the declared value cannot be accepted and the value has to be determined in accordance with the Valuation rules.
M/s Habasit Lakoka Pvt Ltd vs. CC; 2015-TIOL- 141-SC-CUS
Notification comes into effect on the date it is published and offered for sale
The Taxpayers had imported palmolein and cleared part of the consignment after payment of import duty of 85 per cent of its value on the basis of tariff value stipulated in a notification prevailing on the date of such clearance.
A notification enhancing the tariff value in respect of palmolein oil was issued on 03.08.2001 and was sent for publication late on the said day. Further, since 04.08.2001 and 05.08.2001 was a public holiday, therefore, the notification was made effective only on 06.08.2001.
The Taxpayer had cleared the balance palmolien on 03.08.2001. The Department sought to levy duty on enhanced tariff value on the ground that on the date of clearance of palmolien, the said notification was effective.
The SC held that for bringing the notification into force and making it effective, two conditions are mandatory, viz., (1) Notification should be duly published in the official gazette, (2) it should be offered for sale on the date of its issue by the Directorate of Publicity and Public Relations of the Board, New Delhi.
In the present case, the SC held that the second condition was not satisfied inasmuch as it was made effective only on 06.08.2001. Accordingly, the enhanced tariff value would not be applicable.
UoI vs. M/s Param Industries Ltd; 2015-TIOL-140- SC-CUS
No limitation period for refund of SAD
The Taxpayer had applied for refund of SAD in respect of various imports made by the taxpayer. The refund claims were rejected by the Department on the grounds that they were beyond the period of limitation of 1 year prescribed vide was Notification No. 93/2008-Cus dated 1.8.2008.
The CESTAT held that the notification prescribed under the above notification would not apply in light of the decision of the Delhi HC in the case of Sony India Pvt. Ltd. vs Commissioner of Customs; 2014- TIOL-532-HC-DEL-CUS wherein it was held limitation being a curtailment substantive right could be brought about only by way of substantive legislation and not by way of a notification, which is a subordinate legislation. Further, it was held for refund of SAD no limitation period can possibly be imposed for advancing a refund claim. This is because the right to claim refund only accrues to the importer once sale, an entirely market driven event, is complete.
M/s Dsm Sinochem Pharmaceuticals India Pvt Ltd vs. CC; 2015-TIOL-1051-CESTAT-MUM
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