TIOL-DDT 2647
23 07 2015
Thursday

IN this case, the assessee lost at every stage - the Assistant Commissioner, the Commissioner (Appeals), the CESTAT and the High Court, but finally succeeded in the Supreme Court.

The Department served the Adjudication Order dated 30.3.2012 on the ‘Kitchen boy' of the assessee on 3.4.2012. The assessee came to know about this order only on 26.7.2012, when the Department came calling to recover the ‘arrears'. He filed an appeal with the Commissioner (Appeals) on 22.8.2012, but the Commissioner (Appeals) dismissed the appeal as time barred, as according to him the order was served on 3.4.2012.

The CESTAT accepted the Department's version that the Adjudication Order had been duly served/delivered on the Appellant on 3.4.2012; since the Appeal came to be filed on 22.8.2012, the dismissal on the ground of limitation was held to be in consonance with the Act.

The High Court held that there was no power to condone the delay beyond the statutory period.

And the poor assessee approached the Supreme Court.

The Supreme Court on Monday allowed the appeal, noting at the outset that the Appeal filed by the Appellant has not been considered on merits at all. The Appellate Authorities as well as the High Court failed to keep in perspective the essential issue - namely - to ascertain the date from which limitation was to be calculated.

Section 37C of the Central Excise Act stipulates:

37C. Service of decisions, orders, summons, etc.- (1) Any decision or order passed or any summons or notices issued under this Act or the rules made thereunder, shall be served,-

(a) by tendering the decision, order, summons or notice, or sending it by registered post with acknowledgment due, to the person for whom it is intended or his authorized agent, if any;

(b) if the decision, order, summons or notice cannot be served in the manner provided in clause (a), by affixing a copy thereof to some conspicuous part of the factory or warehouse or other place of business or usual place of residence of the person for whom such decision, order, summons or notice, as the case may be, is intended;

(c) if the decision, order, summons or notice cannot be served in the manner provided in clauses (a) and (b), by affixing a copy thereof on the notice board of the officer or authority who or which passed such decision or order or issued such summons or notice.

The Supreme Court noted that Sub-section (a) of Section 37C (supra) states that any decision, order, summons or notice may either be sent by registered post with acknowledgement due to the person for whom it is intended or his authorized agent. If this mode of service is unsuccessful then service can be effect by affixation.

The Supreme Court made certain vital observations, which every officer of the Department should always keep in mind.

It is an anathema in law to decide a matter without due notice to the concerned party.

Every effort must be taken to meaningfully and realistically serve the affected party so as not merely to ensure that he has knowledge thereof but also to enable him to initiate any permissible action.

The Inspector of the Department should have meticulously followed and obeyed the mandate of the statute and tendered the Adjudication Order either on the party on whom it was intended or on its authorized agent and on one else.

It is in these circumstances that we are of the clear conclusion that a miscarriage of justice has taken place, in that the Authorities/Courts below have failed to notice the specific language of Section 37C(a) of the Act which requires that an Order must be tendered on the concerned person or his authorized agent, in other words, on no other person, to ensure efficaciousness.

It is the basic principle of law long settled that if the manner of doing a particular act is prescribed under any statute, the act must be done in that manner or not at all.

The Inspector who ostensibly served the copy of the Order should have known the requirements of the statute and therefore should have insisted on an acknowledgement either by the Appellant or by its authorized agent.

The Inspector had a statutory function to fulfil, not a mere perfunctory one.

The Supreme Court directed the Commissioner (Appeals) to hear the case on 3.8.2015.

We bring you this Order today. Please see Breaking News.

Service Tax - Wharfage charges collected by Gujarat Maritime Board, not taxable under ‘port services' - SC

SECTION 65(82) defined "port service" as:-

"Port service" means any service rendered by a port or other port or any person authorized by such port or other port, in any manner in relation to a vessel or goods;"

The Supreme Court, yesterday held that the wharfage charges collected by Gujarat Maritime Board, not taxable under ‘port services'.

Gujarat Maritime Board ("GMB") is a statutory body constituted under the Gujarat Maritime Board Act, 1981. This authority administers and operates minor ports in the State of Gujarat. GMB entered into an agreement dated 28.2.2000 with Larsen & Toubro which ultimately became M/s Ultratech Cement Limited ("UCL") whereby a licence was granted to UCL to construct and use a jetty for landing of goods and raw materials manufactured by UCL in their cement factory which was situated close to the said jetty at Pipavav port. The Department alleged that service tax was payable on wharfage charges by GMB collected by them from their licensee UCL under the taxable category of "port services".

The Supreme Court observed,

It is the Board itself that charges or recovers wharfage charges from the licensee, UCL and does not authorize UCL to recover such charges from other persons. This being the position, it is clear that no service is rendered by a port or by any person authorized by such port and, therefore, the very first condition for levy of service tax is absent on the facts of the present case. So far as the direct berthing facilities provided for captive cargo is concerned, the lease rent charged for use of the waterfront also does not include any service in relation to a vessel or goods and cannot be described as "port service".

We bring you this Order today. Please see Breaking News.

Coal Classification - Reference to Larger Bench Stayed

WHEN the then Hon'ble Finance Minister in his budget speech for 2012-13 said "Domestic producers of thermal power have been under stress because of high prices of coal. I propose to ease the situation by providing full exemption from basic customs duty and a concessional CVD of 1 per cent to Steam coal for a period of two years till March 31, 2014. Full exemption from basic duty is also being provided to the following fuels for power generation ", he perhaps might not have realized that he is actually triggering the stress for the Industry in the next few months and " easing the situation" is never going to be a reality.

The premier investigating agencies started to believe that the thermal power producers of this country, both in public and private sector have been evading crores of Rupees of customs duty by irregularly taking benefit of the exemption announced by the Finance Minister by mis-classifying their coal as Steam coal while it merits classification as Bituminous coal. They started protecting the revenue for the Government.

When the matter reached Tribunal, the Bangalore Bench in Coastal Energy Pvt Ltd & Others Vs CCE 2014-TIOL-1157-CESTAT-BANG upheld the demand on coal imported by classifying the same as Bituminous Coal under Customs Tariff 2701 1200 and rejected the contention of the importers that it is classifiable as Steam Coal. In subsequent order in case of Maheswari Brothers Vs CCE - 2014-TIOL-2502-CESTAT-BANG, the Tribunal ordered pre-deposit of duty and interest.

The Ahmedabad Bench of the Tribunal had also ordered pre-deposit - 2014-TIOL-2492-CESTAT-AHM and even an appeal by one of the parties to the High Court was not successful. - 2014-TIOL-2204-HC-AHM-CUS.

When the issue came up before the Chennai Bench of the Tribunal disposing the stay applications filed by a large number of appellants, the Bench observed that there is a conflict between decisions in case of Tamil Nadu Newsprint & Papers Ltd. Vs Commissioner of Customs, Tuticorin - 2009-TIOL-1851-CESTAT-MAD and Maheswari Brothers 2014-TIOL-2502-CESTAT-BANG and placed the matter before the President for constitution of Larger Bench. (2014-TIOL-2503-CESTAT-MAD)

Now that Chennai Bench has referred the matter to the Larger Bench, will other appellants in the queue get waiver of pre-deposit?

Not exactly that happened.

The Bangalore Bench of the CESTAT in a recent order, (2015-TIOL-1507-CESTAT-HYD) observed, "it can be seen that there is a High Court decision, two final orders of the Tribunal and the decisions of the Mumbai Bench ordering pre-deposit and also observations in paragraph 7.3 based on standard text which show residual moisture as well as inherent moisture are determined and only difference is in temperature and both are different.", and the tribunal ordered pre-deposit of 50% of the duty demanded.

In the meanwhile, recently the Madras High Court stayed the Chennai CESTAT order referring the issue to the Larger Bench. The High Court observed, "We are inclined to accept the prima facie case of the appellant that there is no need for the Tribunal to refer the matter to the Larger Bench in the light of the two decisions referred to by the Tribunal. Hence, there will be an order of interim stay of reference to the Larger Bench."

We bring you this Madras High Court order today. Please see 2015-TIOL-1659-HC-MAD-CUS

When duty Drawback given is less than applied for, is an adjudication order given?

IN a recent meeting of the Permanent Trade Facilitation Committee (PTFC) meeting of the JN Customs, the President of All India Importers & Exporters Association asked,

When duty Drawback given is less than applied for, is any detailed calculation along with reasons given to the exporter? This is required both from the point of good order and also from the point of the audit requirements of the Exporters.

The Department replied,

"The duty drawback claimed by the exporter is scrutinised as per the exporter's declaration made in the Shipping Bill, examination report, sample test result and departmental comments entered by the shed officers. In respect of the Shipping Bills wherein the drawback claimed appears to be higher/in-admissible, specific and detailed queries are raised to the exporter for modifying the drawback amount and the query text is available on the http://icegate.gov.in website. Further, based on the submission/reply made by the exporter/CHA, the admissible drawback is released thereby ensuring that the principles of natural justice are followed."

He asked another question,

If any deficiency is found in the Duty Drawback application, is any proper written communication made to the Exporter? Communication on the customs website is not legal communication. We have been agitating about the aspect for a long time but the ball is lobbed in the court of your systems directorate. Any progress in this matter?

The Department replied:

It may be noted that the electronic drawback shipping bill is itself considered as claim for the duty drawback. Thus, if any deficiency is found in the duty drawback claimed by the exporter, specific and detailed queries are raised to the exporter and communicated in electronic mode to the exporter. Further, the query text is available on the http://icegate.gov.in website. As a measure of trade facilitation, the details of Drawback Shipping Bills wherein query has been raised is also made available in the JNCH website (http://www.jawaharcustoms.gov.in/).

Confusing, Complicated and Controversial Notifications - Storm in Teacup blows over - Really?

TRYING to deny exemption to imported goods, the Board ended up denying the benefit to domestic manufacturers and hastily amended the notifications and issued a clarification that the domestically manufactured goods covered under these notifications / entries continue to be exempt from excise duty or subject to concessional rate of excise duty, as the case may be as they were prior to 17th July, 2015.

But will the notifications deny the benefit to the imported goods? The notifications are so badly drafted that they will only strengthen the claim of the imported goods for exemption.

The Board should immediately withdraw all the six notifications and draft them afresh clearly stating its intention. Otherwise they will not get any revenue, nor will they remove the advantage the importers will have over domestic manufacturers, but they will flood the courts with unwanted litigation.

While on it, Board may be pleased to consider issuing a clarification on that accumulated Education Cess Credit.

Until Tomorrow with more DDT

Have a nice day.

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