Used Rails Unfit For Reuse Classifiable As Ferrous Scrap, Not Railway Material For Customs Duty: CESTAT Chennai

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chennai has held that the classification of used railway rails depends on their condition and usability at the time of import, rather than simply on their original identity as railway rails.Where imported material was extensively rusted, cut, damaged and no longer fit for use as railway material, it was classifiable under Heading 7204 as ferrous waste and scrap, the tribunal ruled. Heading 7302 covers railway or tramway track...

CESTAT Mumbai Sets Aside ₹6.01 Crore Duty Demand Against Navayuga Engineering Over Helicopter Parts

On 22 September, the Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) set aside a Rs. 6.01 crore customs duty demand against Navayuga Engineering Company Limited, holding that helicopter parts used to transport personnel for infrastructure projects qualified as “capital goods” eligible for customs duty exemption. A Bench comprising Judicial Member Ajay Sharma and Technical Member M.M. Parthiban also held that Navayuga and Krishnapatnam Port Company Limited (KPCL)...

CESTAT Chennai Quashes Royalty Addition To CET Power Solutions' Import Value, Says Sale Nexus Needed

On 22 September, the Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) set aside the order adding royalty paid by CET Power Solutions India Pvt. Ltd. to its foreign collaborator to the assessable value of imported goods.A Bench comprising Technical Member Vasa Seshagiri Rao and Judicial Member Ajayan T.V. held that royalty paid to a foreign collaborator cannot be added to the assessable value of imported goods merely because the imported components are used to...

Tax On Services From Foreign Providers Based On Receipt Date, Not Payment Date: CESTAT Chennai

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chennai, has held that the rate of service tax applicable to services received from foreign service providers is determined by the date of receipt, and not the subsequent date of paymentThe later date of payment to the foreign service provider does not determine the applicable rate under the reverse charge mechanism.The bench of Judicial Member Ajayan T.V. and Technical Member Vasa Seshagiri Rao observed, “We accordingly do not...

Free Supply Of Drawings Alone No Ground To Add Their Value To Cabin's Assessable Value: CESTAT Chennai

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai has held that drawings and designs supplied free of cost by customers cannot be added to the assessable value of motor cabins merely because they were supplied free of cost.A bench of Judicial Member Ajayan T.V. and Technical Member Vasa Seshagiri Rao observed:“A free supply does not of itself displace the sole consideration condition. It displaces that condition only if it satisfies the conditions stated in Explanation 1...

Brake Hose Bracket Is Motor Vehicle Part, Cannot Be Classified As Metal Bracket For Customs Duty: CESTAT Delhi

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi, has held that a bracket used in brake hose assemblies should be classified as a motor vehicle part based on its principal use for customs duty purposes.It also held that a connector specifically designed for automobile brake systems could not be classified as a generic plumbing fitting.A Bench comprising Officiating President Dr. Rachna Gupta and Technical Member Hemambika R. Priya dismissed the appeal filed by Nichirin...

Ocean Freight Service Tax Refund Claim Filed After One Year Is Time-Barred: CESTAT Delhi

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi, has held that a refund claim for service tax paid on ocean freight was subject to the one-year limitation under Section 11B of the Central Excise Act, as applicable to service tax.Technical Member Hemambika R. Priya ruled that the relevant date for calculating the limitation was the date on which the tax was paid. The subsequent finding by the Gujarat High court that the ocean-freight levy was unconstitutional did not...

Pendency Of Customs Adjudication Process Cannot Justify Provisional Attachment Beyond 12 Months: Madras High Court

The Madras High Court has directed the defreezing of a bullion account belonging to a Chennai-based jewellery exporter.It held that a provisional attachment of a bank account under Section 110(5) of the Customs Act cannot continue beyond the maximum statutory period of 12 months.Justice Hemant Chandangoudar passed the order on a plea filed by Dhruv Jewellers, challenging a communication dated August 4, 2022, issued by the Directorate of Revenue Intelligence (DRI) to the bank directing it to...

Bona Fide Buyer Of Duty-Free Import Licence Not Liable For Exporter's Fraud: Calcutta High Court

The Calcutta High Court has recently held that a bona fide purchaser of a duty-free import licence cannot be made liable for the exporter's fraud when the purchaser had no knowledge of it.It observed that a licence obtained through fraud or misrepresentation is not automatically void or non-existent. Where the licence was genuinely issued by the competent authority and remained uncancelled, it continues to be valid until it is avoided in accordance with law."A bona fide purchaser of a duty-free...

HC Can't Bypass Customs Statutory Appeal Merely Due To Financial Hardship In Making Pre-Deposit: Delhi High Court

The Delhi High Court has held that a taxpayer cannot bypass the statutory appellate mechanism under the Customs Act merely by citing financial hardship in complying with the mandatory pre-deposit requirement.The Division Bench of Justices Anil Kshetarpal and Shail Jain made the observation while dismissing a writ petition challenging ₹3 crore penalty imposed on a man in connection with an alleged attempt to export red sanders wood concealed beneath carpets."However, once the legislature has...

Partial Write-Offs Require CENVAT Credit Reversal From March 1, 2011: CESTAT Chennai

The Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that a provision for partial write-off of inputs made on or after March 1, 2011 requires immediate reversal of the corresponding CENVAT credit. The credit can be re-availed if the inputs are subsequently used in manufacturing, subject to the assessee establishing such use.Technical Member M. Ajit Kumar rejected GE T&D Ltd.'s appeal against a ₹8.57 lakh demand relating to CENVAT credit on...

Processed Milk Used In Sugar Confectionery Not 'Exempted Final Product' For CENVAT Credit: CESTAT Chennai

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chennai, has ruled that 'Processed Milk' emerging during the manufacture of sugar confectionery cannot be treated as an exempted final product merely because the milk itself is exempt from excise duty.The court observed, “An intermediate product captively consumed in, or sent to a job worker for, the manufacture of the dutiable final product cannot be equated with an exempted final product independently cleared from the...