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The final part – at 0430 hours in morning!!! So I have done my part – leaving it to you

With lots of love and best wishes.

Preliminary Legal Provisions

CCE v. Idea Mobile Communications Ltd. 2010 (19) STR 18 (Ker.)


SIM card is a computer chip necessary for receiving signals and thereby enabling the connectivity through the mobile tower. Hence, it is an integral part required to provide mobile service to the customer. Also, SIM card has no intrinsic value or purpose other than use in mobile phone for receiving mobile telephone service from the service provider like goods sold or intended to be sold to the customer, but supplied as part of service. Consequently, it held that the value of SIM card supplied by the assessee would form part of the value taxable service liable to service tax.

SIM card “service

Not Goods

CCE v. Mahaveer Generics 2010 (17) S.T.R. 225 (Kar.)

 Assessee did not  restrict its activities to business of commission agency, but had also carried on business as consignment agent, HELD  covered under the  statutory definition of ‘clearing and forwarding agent’ Some points were :

· Agreement  termed the assessee as a consignment agent

· Price was mutually decided by the principal and the agent (assessee).

· Had the assessee been merely a commission agent, price determination would not have been within his domain.

· Assessee had been given the authority and power to appoint dealers, stockiest and distributors, it implied that it was not merely a commission agent.

· Mere procurement of purchase orders was not involved, but stored goods were also cleared and forwarded to stockiest and dealers by the assessee.


Commission agent also acting as a consignment agent held clearing and forwarding agent’


Madras Hire Purchase Association v. UOI 2009 (16) S.T.R. 3 (Mad.)

S 65(12) of the Finance Act, 1994 constitutionally valid

Levy of service tax @ 1% on hire purchase and leasing transactions falling under section 65(12) of the Finance Act, 1994 is constitutionally valid after noting that service charge was admitted as collected and service tax was levied on service and not on sale or purchase of goods. Levy of service tax on hire purchase/leasing transaction is NOT per se violative of Art. 14 / 19(1)(g) of the Constitution as  a taxing statute is not  a restriction of the freedom,  though there may be some hardship in some individual cases but that was inevitable.


CCE v. Nahar Industrial Enterprises Ltd. 2010 (19) STR 166 (P & H)

Section 65(105)(zza) of the Finance Act, 1994 –Buffer stock of sugar not warehousing



Service tax NOT chargeable on the buffer subsidy provided by the Government for storage of free sale sugar, under the category of `storage and warehousing services’ because the buffer stock is maintained for specified period at the direction of the government to maintain free sale supply. under the Sugar Development Fund Act, 1982 Therefore what is stored is assessee’s own goods and no one can provide service to himself. Government of India extended subsidy on account of loss of interest, cost of insurance etc. incurred on account of maintenance of stock.

CCE v. Vahoo Colour Lab 2010 (18) S.T.R. 548 (P & H)

Deluxe Colour Lab Pvt. Ltd. 2009 (13) S.T.R. 605 (Tribunal),


[photography a work contract )

Bharat Sanchar Nigam Ltd. v. Union of India followed


Section 65(105)(zb) of the Finance Act, 1994 - no service tax on photography material


5. Is the assessee liable to pay the service tax on the value of goods/material consumed, during the course of processing of photography or not  Held : indisputably, processing of photography could not be completed without the developing and printing process, to provide the service to the recipient. The photography films, printing papers, chemicals and envelopes were the integral and essential ingredients to complete the process of photography. It implied that the components of sale of photography, developing and printing etc. were clearly distinct and discernible than that of photography service. Photography was in the nature of works contract and it involved the elements of both sale and service, therefore, the service tax was not leviable on the sale portion.

CCE v. BSBK Pvt. Ltd. 2010 (18) S.T.R. 555 (Tri. – LB)

advice, consultancy or technical assistance” in the case of turnkey contracts attract service tax and can these turnkey contracts be vivisected

Service provided by way of “advice, consultancy or technical assistance” in the case of turnkey contracts attract service tax and can these turnkey contracts be vivisected to find out goods component and value thereof, remnant part of the contract may be attributable to the scope of service tax under the provisions of the Finance Act, 1994, segregated and valued  and attract service tax liability.


CCE v. P. C. Paulose 2010 (19) STR 487 (Ker.)

Collect entrance fee from visitors to airport

S 65(105)(zzm) of the Finance Act, 1994

Assessee, under a licence given by the Calicut Airport Authority to collect entrance fee from visitors to airport became the service provider, though he was only acting as an agent under the licence agreement with the Airport Authority. And was liable to pay service tax

Nagarjuna Construction Company Ltd v GOI 2010 (19) STR 321 (A.P.)


Rule 3(3) of the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007

Under rule 3(3) of the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 , the option for composition scheme under works contract service CAN NOT be exercised after payment of service tax on a particular works contract.

In other words, where service tax has been paid in respect of a works contract, the eligibility to exercise an option to avail the benefits of the composition scheme is excluded.

The benefit of the composition scheme is available [subject to the exercise of option and the conditions of eligibility for exercise of such option as spelt out in rule 3(3)] only in relation to “works contract service”, as defined in rule 2(c) read with S 65(105)(zzzza) of Finance Act,1994.

CCE v. Reliance Industries Ltd. 2010 (19) STR 807 (Guj.)


Service tax is payable at the rate prevailing on the date of entry in service NOT  at the rate prevailing at the time of billing and receipt of payment

Infotech Software Dealers Association (ISODA) v. Union of India 2010 (20) STR 289 (Mad.)

TCS case [2004 (178) ELT 22 (SC)]. Followed

Tamil Nadu Kalyana Mandapam Association v. Union Of India 2006 (3) STR 260 (SC) followed on constitutional validity.

Section 65(105)(zzzze) of the Finance Act, 1994

EULA software NOT sales but service

 A software be treated as goods as per Article 366(12) of the Constitution. Software programme may consist of various commands which enable the computer to perform a designated task. The copyright in that programme may remain with the originator of the programme. Goods could be tangible property or an intangible one. A software, whether customized or non-customised, would become goods provided it has the attributes thereof having regard to (a) utility (b) capable of being bought and sold (c) capable of transmitted, transferred, delivered, stored and possessed.  

Taxability will depend upon the facts of each case whether it exclusive sale or exclusive service or composite one i.e., where the element of sales and service both are involved .  and if so, whether its supply to a customer as per an "End User Licence Agreement" (EULA) would be treated as sale or service whereby  the developer retained the copyright of each software, be it canned, packaged or customised, and only the right to use with copyright protection was transferred to the subscribers or the members. Held in the transactions taking place between the members of ISODA with its customers, the software is not sold as such, but only the contents of the data stored in the software are sold which would only amount to service and not sale or deemed sale under Article 366(29A)(d) of the Constitution of India as that requires a transfer of right to use any goods and in the instant case, the goods as such are not transferred.

As Software is goods but

The transaction may not amount to sale in all cases and it may vary depending upon the terms of EULA.; Hence within the legislative competence of parliament


Karamchand Thapar & Bros. (Coal Sales) Ltd. v. UOI 2010 (20) STR 3 (Cal.)

 Deemed time limit  under Rule 4(5) of the Service Tax Rules, 1994 not applicable to centralized registration

Normal Registration Application lies in Form St-!  Superintendent of Central Excise –Rule 4(1) and if the registration is not granted within seven days registration is deemed to be granted.

 But application for centralised registration under rule 4(2) lies with  the  jurisdictional Commissioner of Central Excise or the Chief Commissioner of Central Excise . But there is no mandatory time stipulation for granting deemed registration under rule 4(5), though registration cannot be indefinitely delayed.



An Exam-Eve Quick summary of Case Laws- Customs Act, 1962

At 2.00 AM, somewhat relieved that, somehow I did meet the date to give you summary of important case laws in  less than five pages and not more than 1500 words ,Every  every very briefly  but succinctly spells out the law and facts . However, be careful and refer to the main material  in case of any doubts. Meanwhile let me make the last ditch effort to make the summary of service tax cases before the night is out. Who says insomnia is not advantageous. !!  I want it to be last CA exam for all those who read these notes. May God Bless YOU !! Amen !!


Remission of Duty possible only if goods destroyed -Section 23

CCE v. Decorative Laminates (I) Pvt. Ltd. 2010 (257) E.L.T. 61 (Kar.)


 Imported resin impregnated paper and plywood for manufacture of furniture warehoused from the date of its import and the time of warehousing was extended.  Application for Remission of duty not allowed as u/s  23 as the  goods have neither been: [i]   lost nor [ii] destroyed  nor[iii] title to the goods has been relinquished at any time before clearance for home consumption. There will be no remission of duty if the goods had become unfit for use on account of non-availability of orders for clearance within the period or extended period as given by the authorities, their continuance in the warehouse will not attract section 23 of the Act.

Classification of Goods

Atherton Engineering Co. Pvt. Ltd. v. UOI 2010 (256) E.L.T. 358 (Cal.)


The Case of hatched Eggs converted into larva after incubation remains egg if fed to prawns as classified originally!!

 If a product undergoes some change after importation and before being actually used, but if the use remains the same as specified in classification, such change is immaterial.

CPS Textiles P Ltd. v. Joint Secretary 2010 (255) ELT 228 (Mad.)



1 Classification of Goods in import documents must remain same when they are exported unless otherwise disputed on the basis of any technical opinion or test in a different headings contrary to the description given in the invoice and the Shipping Bill which had been assessed and cleared for export.

Moreover, u/s 75A(2) the excess amount of drawback claimed is repayable with interest  automatically along with excess drawback without issue of a notice.


Paras Fab International v. CCE 2010 (256) E.L.T. 556 (Tri. – LB)


A 100% EOU in Alwar imported the impugned goods - HSD oil through Kandla Port and filed ‘into Bond Bill of Entry’ and warehoused goods in their 100% EOU in Alwar and subsequently used in the factory within the premises of the 100% EOU for manufacture of the finished goods. HELD:

(a)  The entire premises of a 100% EOU has to be treated as a Customs bonded warehouse if the licence granted u/s 58  is in respect of the entire premises AND  

(b)  Imported goods warehoused therein and used for the purpose of manufacturing manufacture/production/processing by the 100% EOU in bond as authorized u/s 65 cannot be treated to have been removed for home consumption accordingly , filing or  non-filing of ex-bond bill of entry before using the goods by the 100% EOU is not relevant.


CCus v. Trilux Electronics 2010 (253) E.L.T. 367 (Kar.)


 Stand  by  your word- The Case of Consent  Order

Revenue can NOT prefer an appeal in case of an order passed by CESTAT remanding back the matter to revenue for recomputation of duty based on consent and the matter was remanded at the instance of Revenue, then Revenue could not pursue an appeal against such order in a higher forum.

REFUND of excess duty paid

Aman Medical products Ltd. v. CCus., Delhi 2010 (250) ELT 30 (Del.)


1.  A refund claim can be made u/s 27 if the payment of higher duty and interest in ignorance of a notification which allowed payment of duty at a concessional rate even if there was no assessment order and the payment u/s 27(i) has not been made pursuant to an assessment order. Section 27(ii) is covers those classes of case where the duty is paid by a person without an order of assessment.

Narayan Nambiar Meloths v. CCus. 2010 (251) E.L.T. 57 (Ker.)


Refund claim CAN NOT BE DENIED purely on a technical contention that the assessee   had produced the attested copy of TR-6 challan and not the original of the TR-6 challan( Now GAR-7 challan ) Also  as per clarification issued vide F.No. 275/37/2K-CX. 8A dated 2-1-2002, a simple letter from the person who made the deposit, requesting for return of the amount, along with the appellate order and attested Xerox copy of the Challan in Form TR-6* would suffice for processing the refund application.

 Illegal Import/ Export, Confiscation, Penalty  etc

CCus v. Alfred Menezes 2009 (242) E.L.T. 334 (Bom.)


U/s 125, Adjudicating Authority is vested with the discretion to give option to either to confiscate  or redeem the prohibited goods imported/exported even though the  goods are liable to absolute confiscation but in case of other goods ,  the officer is bound to release the goods.

Poona Health Services v. CCus. 2009 (242) E.L.T. 335 (Bom.)


Redemption fine s 125 :


Where the imported goods are confiscated, u/s 125 and goods but not redeemed by paying fine,  the importer is bound to pay the customs duty.

Note : The Court distinguished various sections :

U/s 23, The person who imports the goods, surrenders his title in the goods and thereby the owner of the goods ceases to have a right to claim the goods. Here the person has title , which is surrendered

U/s 125, the order of confiscation is passed in respect of the person who has claimed to import or export the goods. It implies that he claims title or right in the property. The fine u/s 125 is payable by the person who seeks redemption of the goods. If the goods are not redeemed, then they vest in the State. This fine is different from the duty on goods imported/exported. Redemption penalty is to get the goods back from the state .

The person, who had imported the goods, does not cease to have liability for payment of duty because he continues to be the person who had imported the goods and claims title of the goods.

S 111 confers the power to confiscate and applies only when the goods are improperly imported but the other provisions are satisfied.

CCus v. Finesse Creation Inc. 2009 (248) E.L.T. 122 (Bom.)


When the goods held to be improperly imported are liable for confiscation u/s 111 even though the same are cleared and not available for seizure. Held : that the concept of redemption fine arises in the event when the goods are available and are to be redeemed. If the goods are not available, there is no question of redemption of the goods u/s 125.

Gawar Construction Ltd. v. UOI 2009 (243) E.L.T. 484 (Bom.)


Customs authorities are empowered to seize goods[S 110] in custody of person other than importer without notice, but show cause notice proposing confiscation u/s125 is required to be issued  U/s 124 within 6 months or extended period to “the owner of the goods or such person” , which are used  conjunctively and not disjunctively. Hence, the notice for confiscation is required to be issued to owner when owner is in possession of goods and goods are seized from his custody. In case of seizure of goods from the custody of person other than importer, notice must also be given to person from whose custody goods were seized. Because confiscation would affect his civil right to possess the goods which were seized from his custody.

CCus. v. Jaya Singh Vijaya Jhaveri 2010 (251) E.L.T. 38 (Ker.)


Confiscation of goods  because of their undervaluation UPHELD & held that Tribunal could not cancel the confiscation order for the want of evidence from the foreign supplier as  a person who was a party to undervaluation would be unlikely to give evidence against himself he raised a bogus invoice and  received underhand payment of the differential price.!!

Settlement Commission

Sanghvi Reconditioners Pvt. Ltd. V. UOI 2010 (251) ELT 3 (SC)


Application u/s 127B is maintainable only if the duty liability is disclosed. The disclosure contemplated is in the nature of voluntary disclosure of concealed additional customs duty. Hence, having opted to get their customs duty liability settled by the Settlement Commission, the appellant could not be permitted to dissect the Settlement Commission's order with a view to accept what is favourable to them and reject what is not..

UOI v. East and West Shipping Agency 2010 (253) E.L.T. 12 (Bom.)


The order of the Settlement Commissioner u/s 127M is a judicial order.. Hence, the order, which will hold good  and binding till set aside by a competent authority considering the scheme of Chapter XVIA. Also, UOI did not challenge the order.

Note; UOI challenged the order passed by the Settlement Commission as null and void ab initio and being without jurisdiction. The Settlement Commission after hearing all the parties held that Revenue had failed to prove that the authorised agent of the respondent Custom House Agent (CHA) had a conscious knowledge of mis-declaration of goods.  On the basis of this order, the Tribunal dropped misconduct proceedings against the Custom House Agent for taking active part in the act of smuggling and thereby violating CHA  Licensing Regulations, 2004.

Union of India v. Cus. & C. Ex. Settlement Commission 2010 (258) ELT 476 (Bom.)

Liberty India v. Commissioner of Income Tax (2009) 317 ITR 218 (SC) followed


Section 127A of the Customs Act, 1962

The Settlement Commission have jurisdiction to settle cases relating to the recovery of drawback erroneously paid by the revenue as the claim for duty drawback is nothing but a claim for refund of duty as per the statutory scheme framed by the Government of India or in exercise of statutory powers under the provisions of the Act. The contention that recovery of duty drawback does not involve levy, assessment and collection of customs duty as envisaged under section 127A(b)was not accepted .. 


Published by

Dr. Paras Jain
(Chartered Accountant)
Category Students   Report

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