Case LawsRecommended by ICAI

for

May and Nov. 2014 Exams

Discussed by

Prof. Tayal

Chapter 1

Basic Concepts

(1)

Commissioner Vs. SAIL (2012) SC, 2102 (SC)

Facts - SAIL mines ores from the mine. The ore was crushed, grinded, washed and

concentrated with the object of removing foreign particles.

The Department contended that the process of crushing and washing carried out

amounts to manufacture.

Decision – Since no new articles comes into process by the activity carried out,

there is no manufacture.

(2)

CCE Vs. Osnar Chemicals Pvt. Ltd. (2012) SC

Facts – Osnar supplies bitumen at the customers’ site. At the site, bitumen is

heated and some polymer is added for improving the utility of bitumen.

Dispute – The Department contents that the process of heating and adding

polymers with bitumen for improving the utility amounts to manufacture.

Decision – The process carried out by the assessee does not result into new

articles. Further, the process carried out by the Assessee is also not specified under

schedule to the CETA. Therefore, the process does not amount to manufacture.

(3)

Grasim Industries Ltd. UOI (2011) SC

Facts – Assessee removed worn out parts of the machine replaced during repairs

without paying duty.

Dispute - The Department contents that the worn out parts replaced during repairs

also attract duty and the goods should have been removed after paying duty.

Decision – Process of repairs does not amount to manufacture. Therefore, worn out

parts replaced during repairs cannot be said to have been manufactured. Therefore,

demand of duty is not justified.

(4)

Medley Pharmaceuticals Ltd. Vs. CCE&C (2011) SC

Facts – Pharmaceutical samples removed without payment of duty.

Dispute – Samples also attract duty?

Decision – Samples given to doctors are not allowed to be sold by law but it does

not mean those samples are not marketable. Since samples given to doctors satisfy

all the requirements of Dutiability, duty is payable on samples also even though

those are not allowed to be sold.

(5)

Usha Rectifier Corpn. (I) Ltd. Vs. CCE (2011) SC

Fact- The assessee assembled some testing instrument within the factory for

captive use but did not pay duty.

Dispute – Duty is payable on goods assembled within the factory, even though not

sold.

Decision – According to submission of the assessee, the testing instruments were

assembled so as to avoid import. This implies that those instruments are

marketable. Duty becomes payable even on equipments assembled within the

factory for captive use.

(6)

Nicholas Piramal India Ltd. Vs. CCEx (2010) SC

Facts – Certain goods manufactured by the assessee are having shelf life of 2-3

days.

Dispute – The assessee claims that due to short shelf life goods are not marketable

and, thus, do not attract duty.

Decision – Short shelf life means the goods are not capable of being brought to the

market and sold. Goods having shelf life of 2-3 days are having sufficient life for

being brought to the market and sold. Goods being marketable, subject to other

requirements of dutiability, are liable to duty.

(7)

Bata India Ltd. Vs. CCEx. (2010) SC

Facts – Certain goods manufactured by the assessee are not sold or marketable

generally.

Dispute – The Revenue contents that the goods generally not marketable but

capable of being sold even in hypothetical conditions are also said to be marketable

and, thus, liable to duty.

Decision – The Apex Court opined that hypothetical possibility of goods being

marketable is not sufficient. The goods should be marketable in the ordinary course

of business. Hypothetical possibility of goods being sold does not make goods

marketable in the real sense. Therefore, duty cannot be levied on such goods.

(8)

CCE Vs. Solid and Correct Engineering Works (2010) SC

Facts – The assessee assembled asphalt batch mixing plant and installed that on a

solid base with nuts and bolts so as to make it immovable.

Dispute – The Revenue contents that the Asphalt batch mixing plant assembled by

assessee is movable and, thus, liable to duty.

Decision – The assessee had accepted that the purpose of fixing the plant on solid

base with nuts and bolts was just to make it wobble free. There is no intention to

make it immovable. The court opined that primarily, the plant is movable and liable

to duty.

(9)

CCE Vs. Tarpauline International (2010)(SC)

Facts – The assessee was engaged in manufacture of tarpaulin made ups by

cutting the tarpaulin in specific size and fixing of eye-lets.

Dispute – The Revenue is having the contention that the activity referred above amounts to manufacturer. Therefore, he is liable to pay duty.

Decision – No new article comes into existence by the process of cutting, stitching

and fixing of eye-lets on the tarpauline. Since, there is no new article, the process

does not amount to manufacture. Therefore, there is no duty liability.

(10)

CCE Vs. GTC Industries Ltd. (2011)(Mumbai)

Facts – Assessee embossed the word “PULL” on the aluminum foil for its being

used in the packing of cigarettes.

Dispute – The Department contends that the process of embossing aluminum foil

amounts to manufacture and attracts duty.

Decision – The court opined that the process of embossing word “PULL” on the

aluminum foil does not result into a new article. Therefore, the process does not

amount to manufacture and, thus, duty is not attracted.

Note- This case has become redundant. Please ignore.

(11)

CCE Vs. Sony Music Entertainment (I) Pvt. Ltd. (2010)SC

Facts – Assessee imported PRE-RECORDED CDs. Those CDs were packed in jewel

box and an inlay card was also inserted.

Dispute – CDs are covered under schedule III of the Central Excise Act. In relation

to all such goods packing amount to manufacture. Therefore, this activity attracts

excise duty.

Decision – In relation to goods covered under Schedule III of the Central Excise Act,

packing becomes manufacture only if because of such activity goods become

marketable to the ultimate consumer directly.

In the given case the assessee has imported pre-recorded CDs. Those are equally

marketable to the ultimate consumer before as well as after packing. No more

marketability has been created. Therefore, in this case, packing of pre-recorded CDs

does not amount to manufacture.

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Chapter 2

Classification of excisable

goods (1)

C.CEx. Vs. Ciens Laboratories, 2013 (SC)

Facts – The assessee is manufacturing ‘Moisturex’ which is sold on prescription of

dermatologist as well as across the counter without subscription. Some of its

ingredients are having medicinal properties. It is having ‘care’ as well as

prophylactic characteristics.

Dispute – Since the product is sold across the counter, the Department is of the

opinion that it shall be classified as Cosmetics.

Observation and decision – The court opined that a product to be considered as

medicament, it should have prophylactic characteristics (Curative nature). It is

immaterial whether it is sold only on the prescription of the doctor or across the

counter, even without such prescription.

Therefore, in the given case, the product shall be classified as Medicament.

(2)

C.CEx., Bhopal Vs. Minwool Rock Fibers Limited, 2012 (SC)

Facts – The goods manufactured by assessee were classified under one particular

heading under which rate of duty is 18%. Subsequently, by amendment one more

specific entry was added in the schedule under which duty is chargeable at the rate

of 8%.

Dispute – Whether goods should continue to be classified under the heading under

which duty was being paid earlier or it shall be changed to more specific entry

under which rate of duty is less.

Decision – The court opined that when a specific entry is included in the schedule

then goods shall be classified under the specific heading and not the general

heading.

Ref – Rule 3(a)of Rules of Classification

(3)

C.CEx. Vs. Wockhardt Life Sciences Limited, 2012 (SC)

Facts – The assessee manufactured Povidone Iodine Cleansing solution USP and

Wokadine Surgical Scrub which is used by the doctors for degerming their hands

and scrubbing the surface of the skin of the patient before operation.

Dispute – The assessee classified the products as Medicaments but Department

contended that the products shall not be classified as Medicament because, to be

classified as medicament, the goods must be capable of curing or preventing some

disease or ailment.

Decision – The court observed that the product is basically and primarily used for

prophylactic purposes i.e. prevent the infection of disease. Therefore, these

products should be classified, as correctly done by assessee, as ‘Medicament’.

(4)

C.CEx. Vs. Connaught Plaza Restaurant (Pvt) Ltd., 2012 (SC)

Facts – The assessee was selling ‘soft serve’ commonly known as softy, containing

5% milk fats.

Dispute – The assessee classified soft serve under the heading “other Dairy

Products” which attracts duty @ 0% while the Department contended that it should

be classified as “Ice Cream” which attracts duty @ 16%.

The contention of the assessee is based on the definition of ‘Ice-cream’ given under

the Prevention of Food Adulteration Act, 1955. According to it, in ice-cream milk fat

contents shall not be less than 10%.

Decision – The court opined that a common consumer does not rely on definition

under any law. Moreover, the term ‘Soft serve’ is not defined under central excise

law. Therefore, it has to be under stood in common parlance. When a consumer

walks in to buy ‘soft-serve’ he is having intention to buy ice-cream. Therefore, soft

serve has to be classified as ice-cream and accordingly duty is payable thereon.

Chapter 3

Valuation of excisable

goods (1)

C.CEx., Mumbai Vs. Fiat India Pvt. Ltd. 2012 (SC)

Facts – The assessee sold the cars below the cost of production to make entry in

the market.

Dispute – Where the assessee is selling the cars below the cost of production, can

transaction value be regarded as correct value for the purpose of assessment?

Decision – The court opined that where the price is artificially depressed, the price

does not reflect true commercial value of the goods. Therefore, transaction value

cannot be regarded as correct value for assessment.

(2)

Tata Motors Limited Vs. UOI, 2012 (Bom.)

Facts – The petitioner is a manufacturer of cars and sells those cars to its

subsidiary. The subsidiary sells the cars to various dealers. The dealer was required

to sell the cars at the price indicated by the manufacturer. Difference between

buying and selling price of the dealer was his margin.

The manufacturer offered free warranty to the customer provided the customer

opted for pre-delivery inspection of the vehicle by the dealer and subsequently he

submitted the vehicle for free services, as required by manufacturer according to

the terms of sale. The cost of pre-delivery inspection and free services were not

paid by the manufacturer to the dealer separately. These expenses were part of his

margin.

Dispute – Cost of pre-delivery inspection and free services are includible in the

assessable value or not. According to the manufacturer he has already paid duty on

the value at which he had sold the vehicle to the dealer.

Decision – According to PARA 7 of the circular No. 643/34/2002 dated 1st July 2002,

the cost of PDI and free services is included in the dealer’s margin. This is not being

charged by the assessee from the customer. Therefore, these expenses are not

includible in the assessable value.

Note – Subsequent clarification issued by the Department provides that PDI and

after sale service are conditions of sale and governed by Rule 6. Therefore, these

expenses are includible in the assessable value.

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Chapter 4

Cenvat Credit (1)

Sintex Industries Limited Vs. CCEx., 2013 (Guj.)

Facts – Assessee is a company registered under the Companies Act, 1956. It is

having two factories within the same campus but having separate registrations

under the Central Excise Act. One of the units is having power generation plant.

Power so generated is also being supplied to the other unit.

Issue- Whether cenvat credit can be availed for the inputs used for generation of

electricity which is supplied to other unit. The contention of assessee is based on

the fact that it is a company having common PAN number for both the units are

situated within the same campus.

Observation and decision – Cenvat credit is available for inputs used in

generation of electricity which is captively consumed within the factory. Since the

assessee himself has described two factories separately, both are registered

separately, the given case is not a case of captive consumption. Therefore, cenvat

credit is not available for the inputs used in generation of electricity which is

supplied to another unit of the assessee.

(2)

CCE Vs. Prag Bosimi Synthetics Limited, 2013 (Guj.)

Issue – Can CENVAT credit of duties, other than National Calamity Contingency

duty, be used to pay NCCD.

Decision – No. Any credit other than NCCD cannot be used to pay NCCD.

(3)

KCP Limited Vs. CCEx., 2013 (SC)

Facts – The assessee is a manufacturer of various machines which are used in

sugar plant. The assessee was executing a contract in Vietnam for Sugar plant. In

relation to this plant, he procured various equipments from the market and

exported along with its own goods. The assessee claimed CENVAT credit even on

the goods which were procured for being exported to Vietnam.

Issue – Since equipments which were procured by the assessee from outside were

not used in manufacture, Whether CENVAT credit can be claimed on such

equipments.

Observation and decision – Since the procured equipments are not used by the

assessee in manufacture and those are exported even without being opened, those

cannot be treated as Capital Goods for any purpose, and thus, CENVAT credit

cannot be availed.

(4)

Flex Engg. Ltd. Vs. CCEx., 2012 (SC)

Facts – Assessee claimed credit for the material used during testing of machine

manufactured by it. Manufacture of machine is complete only after testing.

Dispute – Credit cannot be claimed for the material used during testing of machine

because it is used after manufacture.

Decision – As per submissions by the assessee the court accepted that the

machine is marketable only after it has been tested and made fit as per customer’s

requirement. It means manufacture is not complete until testing. Therefore,

material used during testing is eligible for credit.

(5)

CCEx. Vs. Tata Advanced Material Limited, 2011 (Kar)

Facts- The assessee claimed CENVAT credit on capital goods and later on those

goods were destroyed by fire. The assessee got insurance claim inclusive of duty.

Dispute – The Department contended that since the assessee got insurance claim

inclusive of duty paid on capital goods, he should reverse the CENVAT credit availed

on those capital goods.

Decision – There is no provision under the CENVAT Credit Rules, 2004 requiring

reversal of credit if assessee received insurance claim inclusive of duty.

(6)

CCus Vs. Prime Health Care Products, 2011 (Guj.)

Facts- The assessee is a manufacturer of tooth paste and procures tooth brushes.

Tooth brushes are offered free with tooth paste.

Dispute – Whether assessee can avail CENVAT credit on the tooth brushes.

Decision – As per the definition of the term ‘Input’ all the goods removed with

finished and value of which is included in the value of finished goods shall be

treated as input. Therefore, in the given case are the inputs and the assess is

entitled to avail credit on inputs.

(7)

Ashok Kumar H. Fulwadhya Vs. UOI, 2010 (Bom)

Issue – Whether penalty can be imposed on the directors of the company for the

wrong CENVAT credit availed by the company?

Observations and decision – According to current CCR, penalty can be imposed

for availing wrong credit only on the person who has availed it. Therefore, petitioner

directors of the company cannot be punished for cenvat credit wrongly availed by

the Company.

(8)

CCEx. Vs. Stelco Strips Limited, 2010 (P&H)

Facts – The assessee availed credit on the basis of private challans.

Dispute – Whether credit can be taken on the basis of private challans.

Decision – As long as document genuine and there is no doubt about the amount

of duty shown therein, the assessee may avail credit even on the basis of private

challans.

(9)

CCEx. Vs. Cadila Healthcare Limited, 2010 (Guj.)

Facts – The assessee availing services of the testing laboratory for testing of drugs

before those are manufactured commercially and also services of selling agents.

Both the services are liable to service tax.

Issue –Whether assessee can avail cenvat credit in respect of both of these

services.

Observations and decision – Testing and analysis services, having direct relation

with the manufacture of goods, are certainly covered within the definition of input

services but services of selling agent have nothing to do with the manufacture and

these cervices can be availed only after removal of goods from factory. Therefore,

services of the selling agent cannot treated as input services.

Assessee is entitled for cenvat credit in respect of testing and analysis services but

not in respect of services of the selling agent.

(10)

CCE Vs. Bhuwalka Steel Industries Ltd, 2010 (Tri.)

Facts – Quantity as shown and in the invoice and recorded in the assessee shows

some negligible difference.

Dispute – Whether assessee can avail credit for the quantity mentioned in the

documents or for the quantity actually received.

Decision – Negligible difference in quantity may also be caused because of

different weighing machines. Therefore, credit shall be allowed for the quantity

referred in the documents on the basis on which credit is to be taken.

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Chapter 5

Demand, Adjudication and

Offences (1)

CCEx Vs. Ratnamani Metals and Tubes Limited, 2013 (Guj)

Issue – Can appellate authority or courts permit the assessee to pay reduced

penalty of 25% beyond 30 days of the communication of the order of the

adjudicating authority as prescribed under section 11AC?

Decision – The High Court answered this question in affirmative i.e. appellate

authority or courts can permit the assessee to pay reduced penalty of 25% beyond

30 days of the communication of the order of the adjudicating authority as

prescribed under section 11AC.

(2)

CCEx Vs. Balaji Trading Co., 2013 (Del.)

Facts – Some manufacturer removed his goods from his factory in contravention of

the provisions and those goods were stored with the respondent. The Commissioner

imposed a penalty on the respondent under Rule 25 of the Central Excise Rules,

2002.

Dispute – Whether penalty can be imposed on the respondent under rule 25?

Observation and Decision – According to Rule 25 of the CER, penalty can be

imposed under that Rule only on Producer, Manufacturer, Registered person of the

warehouse and registered dealers.

In the given case, the respondent is neither a manufacturer/producer or registered

for warehouse or as a dealer, no penalty can be imposed on him under Rule 25 of

the CER.

(3)

CCEx Vs. Delphi Automative Systems Limited, 2013 (All)

Issue – Can penalty under section 11AC of the Central Excise Act, 1944 be imposed

in a case where there are divergent judicial pronouncements on the issue and the

assessee chooses to follow one of the pronouncements?

Decision – The Court opined that the mens rea is an essential part for levy of

penalty under section 11AC. Therefore, where divergent judicial pronouncements

are available on the subject and the assessee has decided to follow one of those

pronouncements, it cannot be said that there is mens rea on the part of the

assessee.

(4)

Hans Rolling Mills Vs. CCEx, 2011 (SC)

Dispute – Whether provisions of section 11A are applicable in case of compounded

levy.

Decision – The SC is of the opinion that the Compounded Levy scheme is a

comprehensive scheme providing mechanism for assessment and levy of duty.

Provisions of section 11A are not applicable where an assessee has opted to pay

duty under compounded levy scheme.

(5)

Raghunath International Limited Vs. UOI, 2012 (All.)

Facts – SCN issued by the Additional Director General, Directorate General of

Central Excise Intelligence.

Dispute – Whether Additional Director General, Directorate General of Central

Excise Intelligence is a competent authority to issue the SCN.

Decision – As per section 12E of the CEA, every officer is authorised to exercise the

powers of the officers subordinate to him. Further, vide notification issued in 2001

authorises the Additional Director General, Directorate General of Central Excise

Intelligence to exercise powers of the Commissioner. Therefore, SCN issued by him

is valid.

(6)

CCEx & C Vs. Accrapac India Pvt. Ltd., 2010 (Guj.)

Facts – The assessee did not disclose, at the time of applying for registration that

the process carried out by him includes denaturisation of ethyl alchohol. This

process is required by law.

Dispute – Whether non-disclosure of a process required by law can be considered

as suppression of facts by assessee.

Decision – Since the process of denaturing is required by law, the assessee is not

required to make disclosure thereof. The officer should have known the process.

There is no non-disclosure on the part of assessee.

(7)

Jay Kumar Lohani Vs. CCEx., 2012 (MP)

Facts – A SCN was issued to the issue for confiscation of goods and imposition of

penalty. After submission of reply to this SCN, before any decision was taken,

another SCN was issued for demand of duty and imposition of penalty.

Dispute – The assessee contended that since no decision was taken on a SCN,

second SCN cannot be issued. The assessee further alleged that the Commissioner

had pre-judged the issue.

Observation and decision – There is no restriction under law on issue of another

SCN until decision has been arrived on previous SCN.

(8)

CCEx & C Vs. Gujarat Narmada Fertilizer Co. Limited, 2012 (Guj)

Facts – Assessee voluntarily paid time barred duty but department demanded

interest also.

Dispute – Where the assessee has voluntarily paid time barred duty, whether

Deaprtment can ask for payment of interest?

Observation and decision – The Court observed that the department cannot

recover time barred duty and if the assessee voluntarily pays any such amount then

the assessee cannot be made liable to pay interest also.

(9)

CCEx Vs. Castrol India Limited, 2012 (Bom)

Facts – Penalty was imposed on the assessee under section 11AC. The assessee

paid the duty within 30 days from the date of the order but failed to pay the amount

of penalty and he filed an appeal against order of penalty.

Tribunal confirmed the order of penalty but allowed the assessee to pay 25% of the

duty amount as penalty.

Dispute – Whether Tribunal is empowered to allow extended time to the assessee

to pay reduced penalty i.e. 25%

Observations and decision – The court observed that the powers under section

11AC are exercisable only by the Adjudicating Authority and not the Appellate

Authority. Therefore, in the given case, the Tribunal did not have authority to allow

the assessee to pay reduced penalty after expiry of the prescribed time limit under

section 11AC.

(10)

Nanumal Glass Works Vs. CCEx., Kanpur, 2012 (All.)

Facts – The Tribunal gave an option to the assessee to pay 25% of the duty amount

by way of penalty provided this is paid within 30 days of the date of order. The

option was informed to the Counsel who appeared before the Tribunal on behalf of

the Assessee but, somehow, the assessee was not informed by his counsel of any

such option. The assessee deposited 25% of the duty amount by way of penalty on

39th day after the date of the order. Since the assessee failed to deposit 25% of the

duty by way of penalty within 30 days, the benefit of reduced penalty was denied to

him.

Dispute – The assessee has submitted that the time limit of 30 days begins from

the day he receives the copy of the order. The Department contends that since the

order was given by the Tribunal in presence of the counsel of the Assessee, the

order is deemed to have been communicated to the assessee on the same day.

Decision – According to section 37C, the order is deemed to have been served if it

is tendered to the assessee or his autorized agent. In the given case, since the

decision was given by the Tribunal in presence of the authorized Counsel of the

Assessee, the ordered is deemed to have been served on the assessee on the same

day on which it was announced.

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Chapter 6

Refunds (1)

UM Cables Limited Vs. UOI 2013 (Bom)

Issue – Can export rebate be denied only on the ground of non-production of

original and duplicate copies of ARE-1 when other evidences for export are

available?

Observations and Decision – The procedure laid down in Notification No. 19/2004

is only to facilitate processing of the rebate claim by the authorities. The Court

stated that it is erroneous to attach equal importance to all the conditions

irrespective of the purpose for which those are prescribed. Therefore, where the

exporter can establish through number of other evidences that the goods have

been exported, rebate claim cannot be denied.

(2)

Swastik Sanitarywares Limited Vs. UOI 2013 (Guj)

Facts – The assessee deposited the duty twice by mistake but the burden of duty

paid for the second time was not passed on to the assessee. The assessee applied

for refund but his refund claim was rejected under section 11B, as time barred.

Issue – Can refund of an amount mistakenly paid as excise duty be rejected on the

ground of limitation under section 11B of the Central Excise Act, 1944.

Decision – The refund of amount paid as duty by mistake cannot be treated at par

with the amount of duty. Therefore, provisions of section 11B will not be applicable

in this case.

(3)

CCEx., Mumbai III Vs. Titkitar Industries, 2012 (SC)

Facts – The process carried out by the assessee was declared by the Commissioner

(Appeals) as not a Manufacture. The decision of the Commissioner (Appeals) was

not challenged by the Department but issued another SCN on the same issue.

Dispute – Where department has already accepted decision of the Commissioner

(Appeals), can SCN be issued for another period on the same issue.

Decision – The SC opined that where the Department did not questioned the

correctness of the order passed by the Commissioner (Appeals) then it cannot issue

on the same ground for another period.

(4)

CCEx. Vs. Techno Rubber Industries Pvt. Ltd., 2011 (Kar)

Facts – The assessee claimed refund of duty on the basis of debit note issued by

the customer.

Dispute – Whether debit note issued by the customer is a sufficient evidence to

establish that the burden of excess duty has been borne by the assessee and it has

not been passed on to the customer.

Decision - Excess amount of duty is refundable. Debit note issued by the customer

is admissible as an evidence of the fact that the burden of excess duty is borne by

the assessee and it has not been passed on to the customer.

(5)

CCE Vs. Gem Properties (P) Ltd., 2010 (Kar)

Facts – The assessee had, as shown in the certificate issued by the CA, included

amount of duty in the cost of production and he suffered loss during the financial

year.

Question – Can assessee claim refund of duty only because he had suffered loss

during the financial year.

Decision – Since the assessee had already passed on the burden of duty to the

customer, he cannot be allowed refund only because he had suffered loss during

the financial year.

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Chapter 7

Appeals (1)

Texellence Overseas Vs. UOI, 2013 (Guj)

Facts – A refund order was granted to the assessee. After the refund a show cause

notice was issued to the assessee on the ground that the refund was granted

erroneously and it was held to be in favour of the Department. The assessee

challenged validity of the order before the Commissioner (Appeals) after expiry of

five months. The appeal was rejected since the appeal was filed after the expiry of

the prescribed time limit. Assessee’s next appeal was also rejected on the same

ground.

Issue – Can the High-court condone the delay beyond the statutory period

prescribed under section 35 of the Central Excise Act, 1944, in filing the appeal

before the Commissioner (appeals)

Decision – The court concluded that the appellate authorities had ignored the

merits of the and the case was rejected. Therefore, in case of valid reasons delays

shall be condoned.

(2)

Habib Agro Industries Vs. CCEx., 2013 (Kar)

Facts – There was delay of more than 45 days in filing before the CESTAT because

the authorized representative, who was supposed to appear before the CESTAT, had

gone abroad and when he returned, his mother expired. The appeal was rejected by

the CESTAT.

Issue – Can delay in filing appeal to CESTAT for the reason that the person dealing

with the case went on a foreign trip and on his return his mother expired, be

condoned?

Decision – The High court that there seems to be no deliberate on the part of

authorized representative. The reasons for delay can be considered to be

easonable.

(3)

Raja Mechanical Company (P) Limited Vs. CCEx, 2012 (SC)

Facts - The assessee’s appeal filed after expiry of the time limit for which delay

can be condoned by the Commissioner (Appeals), was rejected. The assessee filed

next appeal before the Tribunal against the order of rejection passed by the

Commissioner (appeals) and merged the grounds of appeal.

Dispute – Where the first appellate authority had rejected the appeal on the

ground of limitation, whether the order passed by the adjudicating authority would

merge with the order passed by the Commissioner (appeals).

Decision – If the Commissioner Appeals had rejected the appeal on the ground of

limitation and not on merits, then the order of the adjudicating authority would not

merge with the order of Commissioner (appeals) against which appeal is filed in the

Tribunal.

(4)

CCE Vs. RDC Concrete India Pvt. Ltd., 2011 (SC)

Facts – The Appellate Tribunal is empowered to rectify any error in its order within

two years from the date on which order is passed.

Dispute – During the process of rectifying the error, the AT reheard the whole case,

including evidences, again and arrived at a different decision. Whether action taken

by the AT is valid.

Decision- The power of AT to rectify the error does not empower the AT to hear the

whole case again and to give a new judgment. The scope of rectification is limited

to minor error provided the emphasis of decision remains same.

(5)

CCE Vs. Gujchem Distilleries, 2011 (Bom)

Facts – The AT is empowered to allow the appellant to raise new grounds of appeal.

Dispute – Where appellant is allowed to raise new grounds of appeal, is it possible

to ignore all previous proceedings and to give a decision only on the basis of new

grounds.

Decision – During the process of appeal, all previous proceedings cannot be

ignored. In other words, decision cannot be based on new ground of appeal only.

(6)

CCE Vs. Rajendra Narayan, 2012 (Del.)

Facts – Notification number 1/2011 exempts goods manufactured at site for use in

construction from duty. The assessee manufactures concrete blocks at one site and

those are distributed to various sites of Metro railway throughout Delhi.

Dispute – The concrete blocks prepared at one site and distributed throughout

Delhi cannot be said to be have been constructed at site.

Decision – Since the Metro project is all over Delhi, therefore, whole Delhi is to be

considered as site and the assessee is entitled for exemption notification.

(7)

Mihani Networks Vs. C.Cus& CEx, 2012 (MP)

Facts – The assessee filed an appeal before the Tribunal for stay. Since the appeal

was filed after expiry of the prescribed time limit, the assessee also applied for

condonation of delay. The Tribunal passed an order that the delay would be

condoned if the assessee deposited 50% of the tax amount.

Dispute – Whether tribunal is empowered to impose a condition to pay 50% of the

tax amount before condoning any delay.

Decision – The court opined that the condition of depositing 50% of tax amount for

condoning the delay is illegal.

=======

Chapter 8

SSI Exemption (1)

CCEx Vs. Xenon, 2013 (Jhar)

Facts – The Department discovered that the assessee was having a fictitious

company to mis-utilise the benefit of SSI exemption. The goods manufactured by

one unit were removed in the name of another unit. The department clubbed the

clearances of two units for determining SSI exemption benefit to the assessee and

accordingly differential amount of duty was computed and penalty was imposed on

original company as well as dubious company.

Issue – Where clearances of a dubious company are clubbed with clearances of the

original company, whether penalty can be imposed on such dubious company if all

the clearances are made by the original company?

Observations and decision – Where all the transactions of the dubious company

are actually the transactions of the original and those have been treated

accordingly, then penalty cannot imposed on company which has not undertaken

any transaction.

(2)

Bonanzo Engg and Chemicals Pvt. Ltd. Vs. CCE, 2012 (SC)

Facts – By mistake duty has been paid by the assessee on wholly exempted goods.

Dispute - Whether value of goods on which duty has been so paid is to be excluded

for computing turnover for the purpose of SSI exemption.

Decision – If goods are wholly exempted, the amount paid by mistake does not

become amount of duty and the exempted goods do not become dutiable goods.

Therefore, value of exempted goods should be excluded while computing the

turnover for the purpose of SSI exemption.

(3)

CCE Vs. Elex Knitting Machnery, 2010 (P&H)

Facts – The assessee is manufacturing knitting machines under the brand name of

ELEX. The brand is said to be owned by the partnership firm in which the assessee

is also a partner.

Dispute – The Department contents that the brand being used by the assessee is

the brand of another manufacturer. Therefore, the assessee is not entitled to avail

SSI exemption for the goods manufactured under that brand.

Decision – The assessee is a partner in the firm which is said to be owner of the

brand ELEX. Being the partner in the said firm, he becomes part owner of the said

brand also. Therefore, goods manufactured under the brand ELEX are being

manufactured by the assessee under his own brand. Thus, SSI exemption cannot be

denied.

(4)

CCE Vs. Deora Engg Works, 2010 (P&H)

Facts – Goods removed under the invoice of two separate firm, having common

factory and brand name etc.

Dispute – For the purpose of SSI exemption, whether goods removed from the

same factory under the invoice of two firms can be clubbed.

Decision – Where goods are manufactured within the same factory under the same

brand name are removed under invoice of two firms, then value of all the goods

removed from the factory shall be clubbed for determining eligibility to claim SSI

exemption.

(5)

CCEx Vs. Australian Foods India (P) Limited, 2013 (SC)

Facts – The assessee is engaged in manufacture of cookies and those are sold

under the brand name ‘Cookie Man’. Excise duty was being paid by the assessee on

the cookies sold in package with a brand name on it.

Cookies were also sold in loose at retail outlets. Brand name was not shown on the

cookies sold in retail.

Dispute – Since assessee’s brand was not shown on the cookies sold in loose,

value thereof shall be excluded for computation of the exemption limit of SSI.

Observations and conclusion – Physical manifestation of the brand name on the

goods is not essential for goods being considered as branded goods. If the customer

is buying the goods from specific shop under the assumption that those are branded

goods, then in the given case, goods are to be treated as Branded Goods.

=========

Chapter 9

Notifications, Clarifications Etc. (1)

Darshan Broadlam Limited Vs. UOI (2013) (Guj)

Where a direction is issued by the CBEC, if equally binding on all the officer of the

Department irrespective of the fact that whether section 37B is referred in the

direction or not.

(2)

S and S Power Swith Gear Limited Vs. CCEx., Chennai II, 2013 (Mad)

Issue – Where a circular issued under section 37B of the Central Excise Act, 1944

clarifies a classification issue, can a demand alleging misclassification be raised

under section 11A of the Act for a period prior to that circular?

Decision – The High Court held that once a reclassification circular/notification is

issued, the Revenue cannot invoke section 11A of the Act to make demand for a

period prior to the date of the said classification notification/circular.

==========

Chapter 10

Settlement Commission (1)

Maruti Tax Print and Processors Pvt. Ltd. Vs. CCEx, Settlement Comm.

2012 (Mad)

Facts – The Assessee applied for settlement. The Settlement commission confirmed

the demand and refused to grant immunity.

Dispute – Whether settlement commission can refuse to grant immunity after

settlement.

Decision - The Settlement commission confirmed demand without putting onus on

the department to prove allegation of illegal removal. Where Settlement

commission confirms the demand, immunity should have been granted against

prosecution and penalty.

(2)

Icon Industries Vs. UOI, 2011 (Del)

Facts – The appellant carried on process, which amount to manufacture, without

registration. No duty has ever been paid by him. His premises was raided. After the

raid, he obtained registration, filed a consolidated return for the past.

In respect of his duty liability he applied for settlement but the settlement

commission rejected his application.

Dispute – Since the assessee had filed consolidated return and the demand of duty

relates to the period even prior to the registration, whether settlement commission

is justified in rejecting the application.

Decision – One of the most essential requirements for submission of application for

settlement is that the assessee should have filed returns within the meaning of Rule

12 of the Central Excise Rules. The consolidated return filed by the assessee is not

a return within the meaning of Rule 12 of the CER. Therefore, the Settlement

Commission is justified to have rejected the application.

(3)

Ashwani Tobacco Co. Pvt. Ltd. Vs. UOI, 2010 (Del)

Question – Whether power given to Central Excise Officers under section 11AC are

exercisable by the Settlement Commission also.

Answer – The powers given under section 11AC are exercisable by the Central

Excise Officers only and not by the Settlement commission.

==============

Additional Case Laws for reference

Maruti Suzuki India Ltd. Vs. CCE (Tri)

Facts – The dealers were adding pre-delivery charges and after-sale service

charges in addition to their own margin.

Dispute - The department contended that pre-delivery inspection charges as well

as after-sale service charges should form part of the assessable value.

Decision – After this decision the CBEC has issued a circular No. 936/26/2010

stating that pre-delivery inspection charges and after-sale service charges are

includible in the assessable value.

Amidev Agro Care Pvt. Ltd. Vs. UOI

Facts- Assessee got the know that there is some duty liability only when recovery

proceedings started.

Dispute – Whether service of order on the assessee is required to be done by

registered post only.

Decision – The original order of duty liability of the assessee was, as per

Department submission, sent by speed post. Speed post is not a valid mode of

delivery of order. Therefore, order is to be sent by registered post only. The time for

filing the appeal begins only when order sent by registered post is received by

assessee.

Kanyaka Parmeshwari Engg. Ltd. Vs. CCEx&C

Ranbaxy Laboratories Ltd. Vs. UOI

Question – In case of refund under section 11B, when the period begins for which

interest is payable by the Department.

Answer – Provisions of section 11BB are very clear. Interest is to be paid by the

department only where refund is not allowed within three months since submission

of application, for the period exceeding three months. The period for interest is

payable does not commence since duty is paid or since application for refund is

submitted.

Raj Mechanical Co. Pvt. Ltd. Vs. CCE

Facts – Assessee’s appeal rejected by the Tribunal because of being time barred.

The assessee filed an appeal before the High Court against the rejection of appeal

and he also clubbed the order against which appeal was filed before the Tribunal in

the appeal before High Court.

Dispute - Whether doctrine of merger is applicable where appeal is dismissed not

on merits but because of limitation of time.

Decision – Where appeal is dismissed because of limitation of time, doctrine of

merger does not apply.

CUSTOMSChapter 1

Basic Concepts(1)

Commissioner of customs (Imports) Vs. Konkan Synthetic Fibers

Facts – There was an exemption notification for import of some kind of machine.

The textile commissioner confirmed that the machine imported by the importer is

certainly covered under the exemption notification.

Dispute – The machine imported by the imported did not confirm to the exemption

notification word by word. The Department denied the exemption to the importer.

Since the textile commissioner confirmed that the imported machinery is covered

within the scope of exemption notification, the importer claimed that the importer

is entitled to avail the exemption.

Question – If statutory definition is not available, whether experts’ opinion can be

considered for determining any issue?

Answer: The Apex court confirmed that where statutory definition is not available

under the Customs act or Central Excise Act, the safest way to resolve the issue is

to adopt the opinion given by the experts who deal with the same kind of

goods/issues.

(2)

Tirupati Udyog Limited Vs. UOI

Question: Whether any duty is leviable under the Customs Act or SEZ Act on

supply of goods from DTA to SEZ.

Answer: Supply of goods from DTA to SEZ is deemed export for the purpose of

Central Excise as well as Customs Act and it is exempt from excise as well as

custom duty.

There is no provision for levy of any duty under the SEZ Act.

===============

Chapter 2

Levy and Exemption

(1)

CCE Vs. Decorative Laminates India Pvt. Ltd.

Facts – Imported wanted to transfer title of the warehoused goods in favour of the

Commissioner after the expiry of the period of warehousing.

Question – Whether owner of the imported goods can transfer the title of goods in

favour of commissioner even after expiry of the period of warehousing and claim

remission of duty.

Decision – In accordance with the provisions of section 23 and 68 of the Customs

Act, title of the goods can be transferred in favour of the provided any offence has

not been committed in relation to those goods under any of the law.

Since goods have not been removed from the warehouse within the prescribed, an

offence has already been committed under section 61 read with section 72. Such

goods cannot be transferred in favour of the Commissioner. Therefore, remission of

duty cannot be allowed.

==================

Chapter 3

Classification of goods

(1)

Keihin Penalfa Limited Vs. Commissioner of Customs

Facts - The dispute relates to a period prior to 1st March 2002 regarding

classification of Automatic Electronic Regulator. On 1st March 2002, a notification

issued by the Government classified Automatic Electronic Regulator under specific

heading.

Question – Whether classification given by the government can be applied for the

dispute relating a period prior to issue of notification.

Answer – Classification given by the Government should be applied even in

relation to the disputes relating to period prior to issue of notification.

(2)

Atherton Engg Co. Pvt. Ltd. Vs. UOI

Facts – Whether classification of the goods will change if characteristics of the

goods change after importation but before being used?

Decision – If product undergoes a change after importation and before being

actually used and if the goods are used for the purpose those are imported, then

any change after importation but before use becomes immaterial for the purpose of

classification.

(3)

CPS Textiles Pvt. Ltd. Vs. Joint Secretary

There are many important issues in this case.

1. The classification as per the documents submitted along with the shipping bill

is acceptable if there is no dispute regarding on the basis of technical details.

2. Where exporter has already classified goods and that has been accepted, the

exporter cannot dispute classification

3. The exporter is liable to pay interest on refund of duty drawback allowed

erroneously under section 75A, even if it is not mentioned in the notice or

order.

===============

Chapter 4

Valuation

(1)

Commissioner of Customs Vs. Aggarwal Industries Limited

Facts – The importer had some long term agreement with the supplier of goods for

supply of goods at a fixed price even if the price increases in the market.

Dispute – Whether price as per the agreement can be accepted for assessment

when value of similar goods has gone up.

Decision – Since it cannot be proved that there is any kind of under valuation of

goods due to collusion between the supplier overseas and the importer in India and

the price of the goods imported is as per the agreement, it should be accepted for

assessment.

================

Chapter 5

Importation, Exportation CCus Vs. Shreeji Overseas (I) Pvt. Ltd. 2013 (Guj)

Facts – No time limit has been prescribed under section 46 for filing of Bill of Entry

after arrival of the goods. But section 48 provides that, unless extension is allowed

by the Commissioner, goods brought in custom area shall be removed therefrom

within 30 days.

Issue – Whether the time limit prescribed under section 48 can be considered as

time limit for filing of Bill of Entry under section 46.

Decision - Time limit prescribed under section 48 cannot be applied for filing of Bill

of Entry under section 46.

================

Chapter 6

Warehousing

Paras Fab International Vs. CCE

Facts – The appellant is a 100% EOU. The goods imported and removed without

payment of duty are kept in the storeroom within the 100% EOU. As and when

required, these goods are released for being used in manufacture.

Dispute – whether removal of such goods from storeroom for being used in

manufacture amounts to removal for home consumption?

Decision – The unit, as a whole, is registered as 100% EOU and its store room

only. As long as goods are within the unit, those cannot be considered to have been

removed for home consumption.

=============

Chapter 7

Demand and Appeal (1)

Kemtech International Pvt. Ltd. Vs. CCus, 2013, (SC)

Issue – Is Adjudicating Authority required to supply to the assessee copies of the documents on which it proposes to place reliance for the purpose of re-quantification of short levy of custom duty?Decision – The SC stated that the adjudicating authority should supply to the assessee all the documents on which it proposes to place reliance so that the assessee might furnish their explanation thereon and might provide additional evidence, in support of their claim.

(2)Margara Industries Limited Vs. Comm of Cus and CE (Appeals), 2013, (All)

Facts – Filing of appeal was delayed. The counsel filed his declaration that the delay in filing was because of his mistake. But CESTAT rejected the appeal. The Tribunal stated that the reason for delay was not convincing.Issue – Can delay in filing appeal to the CESTAT due to mistake of the counsel of the appellant be condoned?Decision – The High court opined that in such a case, the Tribunal should have taken a lenient view because the appellant was not going to gain any benefit by delaying the filing of appeal.

(3)Rishiroop Polymers Private Limited Vs. Designated Authority, 2013, (Bom)

Facts – The CESTAT confirmed a notification issued by the Central Government imposing Anti-Dumping duty. The assessee filed a writ petition under Article 226 of the Constitution against the confirmation of the Notification by the Tribunal.Issue – The Department contested that a writ petition cannot be filed against the order but only an appeal can be filed.Decision – The High Court stated that the Act provides for filing of an appeal against the order of CESTAT. Therefore, Constitutional remedy of filing the writ is not available.

(4)KSJ Metal Impex (P) Limited Vs. Under Secretary (Cus.), 2013, (Mad)

Facts – The department refused to pay interest on delayed refund of Special CVD stating that the refund is in pursuance of a notification and, thus, it is not a refund under section 27 of the Custom Act, 1962.Issue – Whether interest is liable to be paid on delayed refund of Special CVD arising in pursuance of the exemption granted vide notification No. 102/2007 issued under section 25 of the Act.Decision – When section 27A of the Act provides for interest for delayed refunds the department cannot override the provisions of the Act regarding payment of interest on delayed refund only by issuing a notification or circular.

Other Cases

(1A)Thakkar Shipping Pvt. Limited Vs. CCus (G), 2012 (SC)

Facts –The Commissioner made an application before the Tribunal after expiry of

the prescribed time limit and also applied for condonation of delay.

Issue – Applicable provisions specifically provides for condonation of delay by the

Tribunal when an appeal is filed by the assessee but similar provisions are not

incorporated for appeal by the Commissioner. [Section 129A and 129D]

Decision – The court opined that provisions of section 129A are equally empowered

to condon delay in filing of appeal on reasonable cause being shown.

(2)Uniworth Textiles Limited Vs. CCex., 2013, (SC)

Facts – The assessee, a 100% EOU, sought a clarification regarding exemption and

dutiability from the Development Commissioner. A SCN was issued within extended

period, to the assessee.

Issue – Where a mistake has been committed by the assessee due to incorrect

advice given by an authority, can SCN be issued under extended period under

section 28.

Decision – Provisions of extended period under section 28 become applicable in

case of deliberate defaults by the assessee. In the given case, the assessee did not

make any misrepresentation or tries to suppress the facts. In such a situation SCN

cannot be issued using extended period of time.

(3)DBOI Global Services Pvt. Ltd. Vs. UOI, 2013, (SC)

Facts – The assessee applied for refund along with documents that he had been

filing with the refund applications in the past. The officer for additional documents,

which were not provided by the assessee. Consequently, the officer rejected refund

claim without giving any reason.

Issue – Can refund application be rejected without stating any reason.

Observations and decision – When assessee was getting refund on the basis of

documents that he filed along with the application, the officer has to state the

reason for demanding additional documents. Rejection of application without stating

the reason is invalid.

Chapter 8

Refund (1)

CCus Vs. BPL Limited

Facts – The assessee made an application for refund along with a certificate issued

by the chartered accountant in support of the claim of the applicant. Refund is

refused.

Decision – The certificate issued by the Chartered Accountant is one of the

evidences for claiming refund but it is not a conclusive evidence for allowing refund.

(2)

Narayan Nambiar Meloths Vs. CCus.

Question: Whether refund claim can be denied only on the basis of the fact that

the applicant has filed certified copy of the challan and not the challan in original.

Answer: Section 27 dealing with the refund application does not require filing of

original documents.

Clarification No. 275/37/2K-CX.8A dated 2nd January 2002 clarifies that a simple

letter along with certified copy of TR6 is sufficient for claiming refund. Therefore

refund claim cannot rejected in the given case.

Chapter 9

Illegal imports, exports etc.

(1)

Caravel Logistics Pvt. Ltd. Vs. Joint Secretary (RA), 2013, (Mad)

Facts – The steamer agent (assessee) acted on behalf of the master of the vessel.

He represented the master of the vessel before custom authorities. Penalty under

section 116 was imposed on steamer agent for short lending of the goods.

Issue – Can penalty for short-lending of goods be imposed on the steamer agent of

a vessel if he files the IGM, deals with the goods at different stages of shipment and

conducts the affairs in compliance with the provisions of the Customs Act, 1962?

Decision – According to section 116, penalty can be imposed for short lending of

the goods on the person-in-charge who is captain or master, in case of a vessel.

According to section 148, if any person represents himself to be an agent of the

master or captain of the vessel, he is required to comply with all the obligations of

the master/vessel. Therefore, in case of short landing of goods, he is punishable

also.

(1A)

CCus. Vs. M Ambalal & Co.

Imported goods and smuggled goods have been defined separately. Under any

condition and for any purpose, imported goods and smuggled goods cannot be

treated equally under the Custom Act.

(2)

Wringly India Pvt Ltd. Vs. CCus.

Facts – The importer declared value of the imported goods much lower than the

actual value. The Department got the goods valued by the local valuer. That

valuation was accepted by the importer and duty was paid accordingly.

Dispute – Even after payment of duty on the value determined by the local valuer,

whether goods can be confiscated.

Decision – Since the importer made a mis-declaration regarding the value, those

goods are liable to be confiscated under section 111 even after he has paid duty on

the value determined by the valuer appointed by the Department.

(3)

Manish Lalit Kumar Bhavishi Vs. Addl Director General - DRI

Language of section 110 clearly indicates that where any documents are sized from

any person during any action taken by the officer, the person from whom such

documents are seized is having a right to claim copies of such documents. The

officers cannot deny copy of the documents to the person concerned.

(4)

O T Enashu Vs. UOI

Provisions of section 112 become applicable only when there is intentional effort by

any person to evade the duty. Therefore, unless it is established that the person

has, by omission or commission, sought to evade duty, no penalty can be imposed

under section 112.

(5)

Texoplast Industries Vs. Addl CCus.

Section 140 provides that the term company includes partnership firm and the term

director includes partners of the firm.

In case of any civil as well as criminal prosecution, the company as well as it

directors are liable to be prosecuted.

(6)

CCus. Vs. Jaya Singh Vijaya Jhaveri

Confiscated order cannot be cancelled only for want of evidence from the foreign

supplier.

(7)

In Re – Hemal K Shah

The applicant brought in various dutiable articles in his baggage and the value

declared by him was substantially low. Those goods were confiscated and penalty

was imposed. The applicant proposed to export those goods.

Question – Whether smuggled goods can be re-exported without being released

from confiscation.

Answer – Since goods have been confiscated, those cannot be exported unless

those are released from confiscation.

Chapter 10

Settlement Commission (1)

CCus Vs. Ashok Kr Jain, 2013, (Del)

Issue – Whether Settlement Commission is having any jurisdiction to entertain the

baggage cases?

Decision – The High Court stated that a combined reading of section 127A and

127B clearly indicates that there is no bar on the BAGGAGE related issue. Therefore

such issues can also be handled by the settlement commission.

(2)

Saurashtra Cement Limited Vs. CCus, 2013, (Guj)

Issue – Is judicial review of the order passed by the Settlement Commission by the

High Court or Supreme Court under writ petition/special leave petition, permissible.

Decision – The court stated that the Court may review only the process of the

settlement commission and not the decision of the Settlement Commission.

(2A)

Sanghavi Reconditioners Pvt. LTd. Vs. UOI

In case of settlement order, the assessee does not have option to accept part of the

order and not to accept remaining part. (Settlement orders are binding)

(2)

UOI Vs. Cus and CE Settlement Commission

Duty drawback is a subject matter related to duty. Duty drawback is allowed as a

matter of incentive for promoting export. Where duty drawback has been allowed

erroneously, it can be recovered back by the Department under section 75A.

Recovery of duty drawback allowed erroneously is a subject matter related to duty.

The Settlement commission is authorised to handle subject matters related to

recovery of duty drawback.

Chapter 11

Miscellaneous(1)

Vishnu M Harlalka Vs. UOI, 2013, (Bom)

Issue – Whether any interest is payable on delayed refund of sale proceeds of auction of seized goods after adjustment of expenses and charges in terms of section 150 of the Customs Act, 1962?Dispute – Department contended that interest is payable only under section 27A for delay in refund of duty and not under section 150.Decision – The court stated that such interpretation of law will means that the department may cause inordinate delay in refunds even after order of competent authority without any liability of interest. It is not correct.

(2)Anita Grover Vs. CCex., 2013, (Del)

Vandana Vidhyut Chatterjee Vs. UOI, 2013 (Bom)

Facts – There was a case of evasion of custom duty by a company and the

petitioner was a former director of the company. With a view to recover the amount

of duty, the department intended to attach personal property of the former director.

Issue – Whether property of the former director can be attached for recovery of

duty?

Observation and decision – Provisions of the Custom Act are not similar to the

provisions of the Income Tax Act. Therefore, property of the directors cannot be

attached for recovering any amount of duty due from the company and specially

when the company is not being wound up.

Additional Cases in Custom

S J Fabrics India Pvt. Ltd. Vs. UOI

Where goods are seized under section 110 and a notice is not issued to the person

concerned within 6 month since goods are seized then such goods shall be

returned.

UOI Vs. East and West Shipping Co.

For all the purposes, proceedings before the Settlement Commission are judicial

proceedings. This is further supported by section 127M.

CCus Vs. Trilux Electronics

In case of consent orders (generally passed in settlement) neither assessee not the

department can file appeal against such order.

Aman Medical Products Limited Vs. C. Cus.

Facts – Can refund application under section 27 be made only if duty has been

pursuant to an assessment order.

Decision - Section 27 authorises for refund not only a person who has paid the

duty but it section also authorises a person to apply for refund where a duty has

been borne by a person. For claiming refund Section 27 deals with all types of

refund under section 27 it is immaterial whether duty has been paid against the

assessment order or not.

Service Tax

Chapter 1

Basic Concepts (1)

Rashtriya Ispat Nigam Limited Vs. Dewan Chand Ram Sharan

Facts – The appellant appointed the respondent as Clearing and forwarding

contractor under an agreement. Agreement between the parties provided that the

all the taxes shall be borne by the contractor and all such taxes shall be deducted

by the recipient of service i.e. RINL, paid to the government and accordingly

certificate will be issued to the contractor.

Due to amendment in statutory provisions, service tax liability was shifted to

receiver of service.

The recipient of service continues to deduct amount of service tax from the

contractor.

The respondent was not willing to accept liability of service tax when the receiver of

service is liable to pay.

Question – Whether liability to pay service tax can be shifted by an agreement.

Decision – Being an indirect tax, the liability to pay service tax can be shifted

under an agreement.

(2)

Commissioner of Service Tax Vs. Lincoln Helios (I) Ltd.

Service tax and central excise duty are governed by different statutes. Both are

required to be paid separately. It is immaterial that both the taxes are payable at

the same rate and both are payable to central government.

(3)

Kishore K S Vs. cherthala Municipality

Facts – The appellant had hired certain immovable property from the municipality

under an agreement. The agreement had no mention of service tax. When the

tenant was called upon to pay service tax, he contended that it was the

responsibility of the municipality.

Dispute – Can liability to pay service tax be shifted by an agreement?

Service tax is a statutory liability. It exists even if not provided in the agreement.

Being indirect tax, the responsibility to pay service tax can be

(4)

Tirumala Tirupati Devsthanam Vs. Superintendent of Custom, Central

Excise and Service Tax

Facts – Residential premises rented out to devotees on temporary basis.

Dispute – Whether service tax applicable where residential premises is rented out

on temporary basis without any profit motive.

Decision – For service tax liability, there is no difference of profit motive or no

profit motive. Therefore, petitioner is liable to pay service tax.

(5)

Infotech Software Dealers Association Vs. Union of India

Question – Whether software provided on end user license basis amount to

service?

Decision – Whether software amount to goods or service or combination of both,

depends on case to case basis. Where it involves modification, alteration,

adaptation etc, such activities amount to service and thus, liable to service tax.

(6)

CCE Vs. Nahar Industrial Enterprises Limited

Question - Whether Buffer stock subsidy provided by the government to sugar

manufacturers is chargeable to service tax?

Decision – The buffer stock subsidy is provided by the government to the sugar

manufacturers for maintaining free stock of the sugar. Against this subsidy no

service is being provided by the manufacturer to the government. Therefore,

subsidy so provided cannot be treated as a consideration for service. Not being a

service charge, subsidy is not chargeable to service tax.

(7)

Delhi Chit Fund Association Vs. UOI, 2013 (Del)

Facts – The petitioner is an association of chit fund companies based in Delhi and

according to it, since chit fund services are transactions in money only, these

services are not taxable.

Further, explanation to Section 65B(44) indicates that only currency exchange

services for which extra remuneration are charged, are the taxable services.

Therefore, services of a foreman of a chit business are not taxable services.

The High Court also quashed Notification No. 26/2012 dated 20.06.2012 to the

extent of entry No. 8.

(8)

CIT Vs. Rajasthan Urban Infrastructure 2013, (Raj)

Issue – Whether tax is to be deducted at source under section 194J of the Income

Tax Act, 1961 on the amount of service tax if it is paid separately and is not

included in the fee for professional services?

Decision – The High Court held that tax cannot be deducted on the amount of

service tax where service tax is charged separately.

(9)

Chitra Builders Private Limited Vs. Addl Coomn of EX and ST, 2013 (Mad)

Facts – A search was conducted at a branch officer of the petitioner and at the

residence of the director wherein a sum of Rs. 2.00 Cr was collected by the

Department from the petitioner. The Petitioner filed a petition requesting the court

to issue directions to the Department to repay the money so collected.

The amount was paid by the petitioner to the Department under coercion when the

petitioner was not liable to pay service tax.

Decision – Since the department failed to prove that the petitioner was liable to

pay service tax and that the amount was paid by his voluntarily, the court observed

that no tax can be collected. Therefore, the department was directed to repay

amount to the petitioner.

(10)

Infinity Infotech Parks Limited Vs. UOI 2013, (Cal)

Issue – Can extended period of limitation be invoked for mere contravention of

statutory provisions without the intent to evade service tax being proved.

Observations – The High Court observed that according to section 73, extended

period of limitation can be invoked if the service tax has not levied or paid or it has

been short levied or short paid or erroneously refunded by reason of fraud,

misrepresentation or suppression of facts or contravention of provisions with the

intent to evade the tax.

Decision – Mere contravention of provisions of Chapter V of the Finance Act, 1994

and the Rules made thereunder does not authorize the authorities to invoke the

extended period unless it is proved that the contravention was with the intention to

evade the tax.

Other cases

CCE(A) Vs. K V R Constructions

Facts – The assessee was providing construction services. Services provided to

charitable institutions were exempt from service tax liability. However, by mistake

the assessee paid service tax on such exempt services also.

The assessee applied for refund of such amount after expiry of the time limit

specified under section 11B.

Dispute – Whether the time limit specified under section 11B of the Central Excise

Act is applicable for refund of amount of service tax paid by mistake.

Decision – Payment of service tax on exempt service does not make the service

taxable.

Service tax paid on exempt service cannot be considered as service tax but it is

only excess deposit.

Time limit specified under section 11B does not apply for the amount of excess

deposit.

CCE & ST Vs. Adecco Flexione Workforce Solutions Ltd.

Question – Whether penalty is payable even where the assessee has paid the

service tax along with interest even before issue of Show Cause Notice?

Answer – It is very clearly provided that where the assessee has paid amount of

service tax along with interest even before issue of SCN and if it is not a case of

fraud, misrepresentation, suppression of facts, etc, then no penalty can be imposed.

CCEx. & ST Vs. Volvo India Limited

Question – Can appeal be filed in the High Court regarding taxability of service?

Answer – The High Court does not have jurisdiction to decide the question of

taxability of any service. Exclusive jurisdiction on this issue is vested with the

Supreme Court.

The End