Case Laws

Recommended 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 1
st
July 2002,
the cost of PDI and free services is included in the dealers 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 customers 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 39
th
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. Assessees 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 assessees 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.
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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 assessees 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 Assessees 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.



CUSTOMS
Chapter 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 1
st
March 2002 regarding classification
of Automatic Electronic Regulator. On 1
st
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 2
nd
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