The Government amended Chapter 15 of the Central Excise Tariff Act with restospective effect to bring one or more of the processes of treatment of crude oil with an alkali, bleaching and deodorisation amounting to ‘manufacture’ to nullify the impact of the Supreme Court judgment in the case of Shyam Oil Cake Ltd. vs. CCE [2004 (174) ELT 148 (SC)]. The restrospective amendment came in force from the 1 March, 1986 till 28 February, 2005.
Whether the processors are liable to pay interest on the duty on deemed manufacture of the refined oil?
The amendment of Chapter 15 came on 13.5.2005 with retrospective effect. In terms of Section 11AB(1) of the Central Excise Act, where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person who is liable to pay duty, is liable to pay interest. In the present case, there is no short levy or short payment of duty prior to 13.5.2005 as the duty was levied with retrospective effect consequent upon amendment by Finance Bill, 2005 as enacted on 13.5.2005.
Therefore, there is no liability to pay interest under Section 11AB(1) of the Excise Act.
Wednesday, March 25, 2009
Lay Flat Tubes
Flexible Ducting and Parts thereof are entitled to exemption under Notification No. 6/2000 dated 1.3.2000 as Lay Flat Tubes classifiable under sub-heading 3917.00 of the Central Excise Tariff.
Wednesday, March 18, 2009
Equalised Freight is not includible in the value
Supreme Court in the case of M/s ACCURATE METERS LTD, recently held that equalised freight and insurance charges don't constitute value of the goods for the purpose of computation of Excise Duty in terms of Central Excise Act, 1944
Tuesday, March 17, 2009
Prosecution
In case where the order confirming demand of duty and penalty do not survive, the criminal proceeding of prosecution cannot be continued as very basis of compliant ceases to exist.
Service Tax on Beauty Parlour
Electro Homeopathy Consultant undertaking activities of hair bonding/wig weaving and sale of wigs and clip is not providing a taxable under under the category of "Beauty Treatment"
Monday, March 16, 2009
Clearing & Forwarding Service
“ Whether a person (agent) who has entered into an agreement with principal (owner) for handling and distribution of the products of the principal and entrusted with the job of receiving, storing and distributing the products of the principal to his authorised stockists and distributing centers is liable to pay Service Tax under the category of 'Clearing and forwarding Agent” when no clearing activity from the manufacturer's (Principal) premises is directly undertaken by the agent or
Service Tax is leviable under the category “Clearing and forwarding” only if an agent renders both clearing forwarding services"
P&H High court has held that it is the context in which the word “and” is positioned, being sandwiched between the words “clearing” and “forwarding” has to be looked into while interpreting the meaning. Like the legendary Trishanku, the word “and” is dangling between “clearing” and “forwarding”- neither divorcing from the Heavens, nor from the Earth. In such a positioning, it is not possible to segregate the holistic concept of 'clearing and forwarding” into divisible activities, either or both of which can be provided for answering the customers'
needs.”
Hence person not engaged in clearing activity is not a C&F Agent.
Service Tax is leviable under the category “Clearing and forwarding” only if an agent renders both clearing forwarding services"
P&H High court has held that it is the context in which the word “and” is positioned, being sandwiched between the words “clearing” and “forwarding” has to be looked into while interpreting the meaning. Like the legendary Trishanku, the word “and” is dangling between “clearing” and “forwarding”- neither divorcing from the Heavens, nor from the Earth. In such a positioning, it is not possible to segregate the holistic concept of 'clearing and forwarding” into divisible activities, either or both of which can be provided for answering the customers'
needs.”
Hence person not engaged in clearing activity is not a C&F Agent.
Penalty under section 11AC
The basic requirement for attracting the provisions of Section 11AC of the Act is that there has to be intention to evade the payment of Excise duty.
Such an intention cannot be presumed because the shortage which was detected during stock verification stood explained as occurred due to clerical mistake, and duty was paid without any protest.No question of law warranting admission of the appeal would arise.
Such an intention cannot be presumed because the shortage which was detected during stock verification stood explained as occurred due to clerical mistake, and duty was paid without any protest.No question of law warranting admission of the appeal would arise.
Friday, March 13, 2009
Amendment in the import manifest
Mumbai High Court direct customs authorities to pass appropriate order on application for amendment in the manifest.
Amendment in the import manifest
Mumbai High Court direct customs authorities to pass appropriate order on application for amendment in the manifest.
seizure of documents by customs authorities
In terms of Section 110(4) of the Customs Act 1950, person from whose custody any
documents are seized shall be entitled to make copies thereof or take extract therefrom in the presence of a officer of Customs.
It is not uncommon that investigating authorities deny access to the seized documents during investigation of the case. Bombay High Court held that:
“From the language of the sub-section, it is clear that it is mandatory on the officer of Customs to make available the copies asked for. The choice of either asking for the document or seeking extract is of the party concerned and not that of the officer. In other words, if any document is seized during the course of any action by an officer and relatable to the provisions of the Customs Act, that officer is bound to make available those documents. The action, therefore, of the respondents in communicating to the petitioner that documents would not be available, is clearly an act without jurisdiction. We fail to understand as to why statutory authority failed to discharge the duties according to law and driving the party to this Court for seeking relief.”
documents are seized shall be entitled to make copies thereof or take extract therefrom in the presence of a officer of Customs.
It is not uncommon that investigating authorities deny access to the seized documents during investigation of the case. Bombay High Court held that:
“From the language of the sub-section, it is clear that it is mandatory on the officer of Customs to make available the copies asked for. The choice of either asking for the document or seeking extract is of the party concerned and not that of the officer. In other words, if any document is seized during the course of any action by an officer and relatable to the provisions of the Customs Act, that officer is bound to make available those documents. The action, therefore, of the respondents in communicating to the petitioner that documents would not be available, is clearly an act without jurisdiction. We fail to understand as to why statutory authority failed to discharge the duties according to law and driving the party to this Court for seeking relief.”
seizure of documents by customs authorities
In terms of Section 110(4) of the Customs Act 1950, person from whose custody any
documents are seized shall be entitled to make copies thereof or take extract therefrom in the presence of a officer of Customs.
It is not uncommon that investigating authorities deny access to the seized documents during investigation of the case. Bombay High Court held that:
“From the language of the sub-section, it is clear that it is mandatory on the officer of Customs to make available the copies asked for. The choice of either asking for the document or seeking extract is of the party concerned and not that of the officer. In other words, if any document is seized during the course of any action by an officer and relatable to the provisions of the Customs Act, that officer is bound to make available those documents. The action, therefore, of the respondents in communicating to the petitioner that documents would not be available, is clearly an act without jurisdiction. We fail to understand as to why statutory authority failed to discharge the duties according to law and driving the party to this Court for seeking relief.”
documents are seized shall be entitled to make copies thereof or take extract therefrom in the presence of a officer of Customs.
It is not uncommon that investigating authorities deny access to the seized documents during investigation of the case. Bombay High Court held that:
“From the language of the sub-section, it is clear that it is mandatory on the officer of Customs to make available the copies asked for. The choice of either asking for the document or seeking extract is of the party concerned and not that of the officer. In other words, if any document is seized during the course of any action by an officer and relatable to the provisions of the Customs Act, that officer is bound to make available those documents. The action, therefore, of the respondents in communicating to the petitioner that documents would not be available, is clearly an act without jurisdiction. We fail to understand as to why statutory authority failed to discharge the duties according to law and driving the party to this Court for seeking relief.”
Monday, March 9, 2009
Re-test of samples
Denial of opportunity of rebuttal of the Chemical Laboratory report, which is the basis of SCN and assessee doubts the varacity of the report of chemical laboratory, Revenue should retest the samples to do justice and protect interest of Revenue.
Recall of order
Ex-parte orders passed by the Tribunal due to negligence and inaction on the part of the Counsel can be recalled and restored. Refer J.K. Synthetics Ltd. vs. C.C.E. 1996 (86) ELT 472 (SC)
Penalty
Penalty under Section 76 is not imposable when the service tax liability, not paid on the bonafide believe that reimbursement expenses are not includible, is subsequently paid.
manufacturer cum trader of goods
A manufacturer cum trader of goods need not to register the premises for storage of traded goods.
Branded and un-branded goods
Whether a manufacturer engaged in the manufacture of "branded" parts and components of motor vehicles as OEM paying appropriate duty is eligible for concessional rate of duty under notification No. 9/2001 dated 1.3.2001 on parts and components without any brand name?
Matter remanded to the original authority.
Matter remanded to the original authority.
Penalty
In absence of any material that the goods were clandestinely removed, imposition of penalty under Section 11AC of the Act is not warranted.
For imposition of penalty under Section 11AC of the Act, mens rea are to be satisfied. Refer CCE, Ludhiana vs. Omkar Steel Tubes (P) Ltd., reported in 2008(221)ELT200(P&H).
For imposition of penalty under Section 11AC of the Act, mens rea are to be satisfied. Refer CCE, Ludhiana vs. Omkar Steel Tubes (P) Ltd., reported in 2008(221)ELT200(P&H).
Consumables used in capital goods
Consumables used in capital goods for manufacture of excisable goods are input eligible for CENVAT credit
Sunday, March 8, 2009
Board Circular
Where Board issues a circular/clarification clarifying certain doubts regarding leviability of central excise duty, extended period of demand is not invokable.
Intermediate products cleared for Captive consumption
Concessional rate of excise duty on final products is available on the condition that no credit of duty paid on inputs used in the manufacture of goods was taken under the CENVAT Credit Rules. Manufacturer availed CENVAT credit on inputs used in the intermediate products, cleared captively for use in the manufacture of final products. As intermediate product consumed captively were exempted, the assessee paid 8% of the value of intermediate products in as much as they have taken Cenvat credit on common inputs but have not maintained separate accounts.
It cannot be held that the intermediate products are not excisable goods and that they are not exempted. As the manufactuere have not taken credit on other inputs used in the final products, the condition of notification has been fulfilled.
It cannot be held that the intermediate products are not excisable goods and that they are not exempted. As the manufactuere have not taken credit on other inputs used in the final products, the condition of notification has been fulfilled.
Discount
Documentary evidence for discount prevailing at the time of removal of goods can be produced even before Commissioner (Appeal)
Commissioner (Appeals) has inherent powers to remand the case in appeal to the original authority. Refer MIL India Ltd. vs. CCE, Noida [2007 (210) ELT 188 (SC)].
Commissioner (Appeals) has inherent powers to remand the case in appeal to the original authority. Refer MIL India Ltd. vs. CCE, Noida [2007 (210) ELT 188 (SC)].
Saturday, March 7, 2009
Blending of MS & HSD with additives
whether blending of duty paid branded motor spirit (MS) and duty paid branded HSD with multifunctional additives would amount to manufacture under the Central Excise Act, 1944.
The process of treatment to enhance the marketability of a product or to improve the value addition does not amount to manufacture. Hon ble Supreme Court in the case of CCE v. Sudarshan Chemical Industries (Supra) and Tribunal in the case of Lakme Lever Ltd. vs. CCE and CCE v. Mysore Ammonia Pvt. Ltd., and Hindustan Petroleum Corporation Ltd. vs. CCE, [2009 (162) ECR 0016 (Tri-New Delhi) held, that a process or treatment to enhance the marketability of a product or improve the value addition does not amount to manufacture.
The MS and HSD after being blended with small quantity of MFAs remain MS and HSD only, conforming to ISI specifications IS:2796 -2000 and IS: 1460 -2000 respectively. Hence, just because blending improves their quality and after blending they are sold under different brandnames, they do not become products different from unblended MS/ HSD, with different characteristics and usages.
The Tribunal held that blending of duty paid branded motor spirit (MS) and duty paid branded HSD with multifunctional additives does not amount to manufacture under the Central Excise Act, 1944
The process of treatment to enhance the marketability of a product or to improve the value addition does not amount to manufacture. Hon ble Supreme Court in the case of CCE v. Sudarshan Chemical Industries (Supra) and Tribunal in the case of Lakme Lever Ltd. vs. CCE and CCE v. Mysore Ammonia Pvt. Ltd., and Hindustan Petroleum Corporation Ltd. vs. CCE, [2009 (162) ECR 0016 (Tri-New Delhi) held, that a process or treatment to enhance the marketability of a product or improve the value addition does not amount to manufacture.
The MS and HSD after being blended with small quantity of MFAs remain MS and HSD only, conforming to ISI specifications IS:2796 -2000 and IS: 1460 -2000 respectively. Hence, just because blending improves their quality and after blending they are sold under different brandnames, they do not become products different from unblended MS/ HSD, with different characteristics and usages.
The Tribunal held that blending of duty paid branded motor spirit (MS) and duty paid branded HSD with multifunctional additives does not amount to manufacture under the Central Excise Act, 1944
Buyer paying duty under protest
Buyer, a manufacture of Fertilizers i.e. Ammonia & Urea of naptha applied for registration under Rule 192 of the erstwhile Central Excise Rules, 1944 to procure Naptha for use in the manufacture of Fertilizers without payment of duty under notification No. 75/84-CE dated 1.3.84. The Asst. Commissioner of Central Excise rejected the application to issue CT-2 certificate for procuring duty free Raw Naptha. Buyer procured naptha on payment of duty under protest and filed appeal before the Commissioner (Appeals.) who held that the buyer are eligible to avail the benefit of exemption notification and to procure duty free Raw Naptha under CT-2 certificate under Chapter 10 procedure of the erstwhile Rules.
Refund claim of duty paid on naptha filed by the buyer was rejected on the grond that that refund is barred by limitation as refund claim is to be filed as provided under clause (B)(e) of Explanation to Section 11B of Central Excise Act, 1944 and as the buyer has not paid duty, notion of the payment of duty under protest is misplaced.
The Tribunal held that filing of appeal by the appellant has to be treated as protest, especially when there is no separate provision in the law to file protest by the buyer of the good.
The tribunal further held that the claim of the appellant for refund of excess duty paid is as a consequence of passing of the appellate order in their favour and is basically implementation of the order of the Commissioner (Appeals). The success of their appeal is not an empty formality and the appellate order is required to be implemented, as a result of which CT-2 certificate is required to be issued right from the date of their first claim and the benefit of concessional rate has to be extended from that date onwards.
The Tribunal also held that the buyer cannot be treated as purchaser as mentioned in clause (e) of Explanation (B) of Section 11B(5) of the Act but would come within the purview of Second proviso to Section 11B(1) of the Act.
Refund claim of duty paid on naptha filed by the buyer was rejected on the grond that that refund is barred by limitation as refund claim is to be filed as provided under clause (B)(e) of Explanation to Section 11B of Central Excise Act, 1944 and as the buyer has not paid duty, notion of the payment of duty under protest is misplaced.
The Tribunal held that filing of appeal by the appellant has to be treated as protest, especially when there is no separate provision in the law to file protest by the buyer of the good.
The tribunal further held that the claim of the appellant for refund of excess duty paid is as a consequence of passing of the appellate order in their favour and is basically implementation of the order of the Commissioner (Appeals). The success of their appeal is not an empty formality and the appellate order is required to be implemented, as a result of which CT-2 certificate is required to be issued right from the date of their first claim and the benefit of concessional rate has to be extended from that date onwards.
The Tribunal also held that the buyer cannot be treated as purchaser as mentioned in clause (e) of Explanation (B) of Section 11B(5) of the Act but would come within the purview of Second proviso to Section 11B(1) of the Act.
Natural Justice
Failure to grant extension of the personal hearing with sufficient time, even though the law provides three adjournments during the proceeding, is clear cut violation of the principles of natural justice.
Undervaluation of goods
The importer has imported 18 consignments of plastic sheets over a period of three yeras. On investigation, documents evidencing gross undervaluation of sheets in respect of 8 consignments were found. Based on the gathered evidence, undervaluation in the case of other imports were also alleged and confimed.
The Tribunal held that as regards to balance 10 consignments, case has been made on the basis of conjectures on the ground that once under valuation was resorted to in respect of the 8 consignments the same must have been resorted to in respect of earlier consignments also. This was not acceptable as the two periods were different. There was not a single iota of evidence in respect of these consignments. The entire enquiry was limited to 8 consignments only. There was no reference to any contemporaneous imports during the relevant period nor any assertion that the international price remained the same during both the periods.
The Tribunal held that duty cannot be demanded on the basis of the presumptions and conjectures in the absence of any evidence of any nature.
The Tribunal held that as regards to balance 10 consignments, case has been made on the basis of conjectures on the ground that once under valuation was resorted to in respect of the 8 consignments the same must have been resorted to in respect of earlier consignments also. This was not acceptable as the two periods were different. There was not a single iota of evidence in respect of these consignments. The entire enquiry was limited to 8 consignments only. There was no reference to any contemporaneous imports during the relevant period nor any assertion that the international price remained the same during both the periods.
The Tribunal held that duty cannot be demanded on the basis of the presumptions and conjectures in the absence of any evidence of any nature.
Undervaluation of goods
The importer has imported 18 consignments of plastic sheets over a period of three yeras. On investigation, documents evidencing gross undervaluation of sheets in respect of 8 consignments were found. Based on the gathered evidence, undervaluation in the case of other imports were also alleged and confimed.
The Tribunal held that as regards to balance 10 consignments, case has been made on the basis of conjectures on the ground that once under valuation was resorted to in respect of the 8 consignments the same must have been resorted to in respect of earlier consignments also. This was not acceptable as the two periods were different. There was not a single iota of evidence in respect of these consignments. The entire enquiry was limited to 8 consignments only. There was no reference to any contemporaneous imports during the relevant period nor any assertion that the international price remained the same during both the periods.
The Tribunal held that duty cannot be demanded on the basis of the presumptions and conjectures in the absence of any evidence of any nature.
The Tribunal held that as regards to balance 10 consignments, case has been made on the basis of conjectures on the ground that once under valuation was resorted to in respect of the 8 consignments the same must have been resorted to in respect of earlier consignments also. This was not acceptable as the two periods were different. There was not a single iota of evidence in respect of these consignments. The entire enquiry was limited to 8 consignments only. There was no reference to any contemporaneous imports during the relevant period nor any assertion that the international price remained the same during both the periods.
The Tribunal held that duty cannot be demanded on the basis of the presumptions and conjectures in the absence of any evidence of any nature.
Proof of export
Duty is not payable on the P.P. bags cleared by the manufacturer to rice exporters who used the same for packing rice which was exported without following the procedure prescribed under Chapter X of CER, 1944 provided that ample evidence is produced before the authorities such as copies of AR4, duly certified by the Customs officer in charge of Port certifying the shipment of consignment, Shipping Bills, copies of letters to prove the export of their goods i.e. P.P. bags/sacks.
Proof of export in respect of P.P. Bags not exported directly but used for packing of rice, was held to be inadmissible in the case of M/s Chittor Polyfab (P) Ltd. Vs. CCE Jaipur [2003 (151) ELT 473 (Tri-Del.)] on the ground that in the relevant invoices issued at the time of clearance for P.P. bags, addresses of the consignees and addresses where the goods were to be delivered were different.
Proof of export in respect of P.P. Bags not exported directly but used for packing of rice, was held to be inadmissible in the case of M/s Chittor Polyfab (P) Ltd. Vs. CCE Jaipur [2003 (151) ELT 473 (Tri-Del.)] on the ground that in the relevant invoices issued at the time of clearance for P.P. bags, addresses of the consignees and addresses where the goods were to be delivered were different.
freight and insurance charges
Excess freight and insurance charges are not includible in the assessable value of the excisable goods for levy of excise duty as held in M/s Baroda Electric Motors Ltd. Vs. CCE [1997 (94) ELT 13 (SC)] and CCE Meerut Vs. M/s Majestic Auto Ltd. [2005 (184) ELT 130 (SC)].
Cutting/slitting of jumbo rolls
The activity of slitting up of thermal paper roll for use in fax machine from jumbo roll would not amount to manufacture. The issue is no more res integra and stand decided by Larger Bench of the Tribunal in case of:
i)M/s Anil Dang Vs. CCE, Vapi [2007 (213) ELT 29 (Tri-LB)],
ii)CCE Vapi Vs. M/s Garware Polyesters Ltd.
The process of cutting and slitting of jumbo rolls of insulated tape does not amounts to manufacture as held in:
i) CCE Vs. Bakelite Hylam Ltd. 1997 (91) ELT 13 (SC)
ii) S.R.Foils Vs. CCE 2001 (138) ELT 719 upheld by SC,
iii) S.R. Tissues Vs. CCE 2001 (136) ELT 367 approved by SC,
iv) Computer Graphics Vs. UOI 1991 (52) ELT 491,
v) CCE Vs. Bloom Product 2002 (144) ELT 132,
vi) Premier Aryco Vs. CCE 2002 (142) ELT 595,
vii) Hindustan Photo Film Vs. CCE 2001 (136) ELT 619,
viii) Gurdian Controls Vs. CCE 2003 (157) ELT 39.
i)M/s Anil Dang Vs. CCE, Vapi [2007 (213) ELT 29 (Tri-LB)],
ii)CCE Vapi Vs. M/s Garware Polyesters Ltd.
The process of cutting and slitting of jumbo rolls of insulated tape does not amounts to manufacture as held in:
i) CCE Vs. Bakelite Hylam Ltd. 1997 (91) ELT 13 (SC)
ii) S.R.Foils Vs. CCE 2001 (138) ELT 719 upheld by SC,
iii) S.R. Tissues Vs. CCE 2001 (136) ELT 367 approved by SC,
iv) Computer Graphics Vs. UOI 1991 (52) ELT 491,
v) CCE Vs. Bloom Product 2002 (144) ELT 132,
vi) Premier Aryco Vs. CCE 2002 (142) ELT 595,
vii) Hindustan Photo Film Vs. CCE 2001 (136) ELT 619,
viii) Gurdian Controls Vs. CCE 2003 (157) ELT 39.
Board’s Circular No.206/40/96-CX, dt.1.5.96, clarifying that the credit for inputs against an invoice received in piecemeal was required to be taken only when the entire inputs were received inside the factory and not relevant for imported inputs where credit of CVD is taken against a bill of entry.
Printed Plastic Sheets
Printed plastic sheets, used in indoor and outdoor advertising, is classifiable under Heading 49.01 of the First Schedule to the Central Excise Tariff Act as products of printing industry and not under under Heading 94.05as parts of illuminated signs.
Tribunal followed earlier judgments in the case of Sri Kumar Agencies Vs. CCE, (2000 (116) ELT 483 (Tri-Chennai) and Tanzeem Screenarts Vs. CCE, Mumbai (2001 (131) ELT 656 (Tri-Mumbai.
Appeal filed by revenue in the above two case has been referred by Supreme Court to a Larger Bench vide Commissioner Vs. Sri Kumar Agencies (2007 (216) ELT A24 (SC).
Precedents were followed in absence of stay by the apex court.
Tribunal followed earlier judgments in the case of Sri Kumar Agencies Vs. CCE, (2000 (116) ELT 483 (Tri-Chennai) and Tanzeem Screenarts Vs. CCE, Mumbai (2001 (131) ELT 656 (Tri-Mumbai.
Appeal filed by revenue in the above two case has been referred by Supreme Court to a Larger Bench vide Commissioner Vs. Sri Kumar Agencies (2007 (216) ELT A24 (SC).
Precedents were followed in absence of stay by the apex court.
Retraction of statement
A retraction of the statement recorded under section 14 of the Centarl Excise Act in the form of reply to the show-cause notice is not legally sustainable.
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