The appellant were selling the sim cards to their franchisee and was paying sales tax to the State and activating the sim cards in the hands of subscribers at a valuable consideration and paying sales tax on the activation charges.
CESTAT, Mumbai held that reimbursement of the cost of obtaining and employing resources/certain expenses incurred by the Appellant on the behalf of the Group Companies cannot be regarded as consideration flowing to the Appellant towards the taxable service provided by the Appellant rather the receipts are towards the reimbursements of the cost/expenses incurred by the assessee in terms of the cost sharing agreement with the Group Companies.
In this case in the show-cause notice the allegation is that the appellant availed input service credit on construction of shopping complex outside the factory premises whereas in the impugned order, the demand has been confirmed on the ground that the service provided and credit availed was not either directly or indirectly in relation to the manufacture of the appellant’s final product.
It was held that it is a common knowledge that any insurance company is required to have chairs and tables to render services to their clients. The said tables and chairs are used for rendering services of general insurance, accordingly CENVAT credit availed on such furniture & fittings is allowed.
In the case of Nirlon Ltd. Vs. Commissioner of Central Excise,Mumbai, it was held that CENVAT credit of goods and services used to build an immovable property can be availed when such property has been given on rent and service tax liability is discharged on such rent received.
In the case of Commissioner of Central Excise, Aurangabad Vs. Chandan Milk & Agro Products Pvt. LTD, it was held that the benefit of payment of penalty of 25% of tax liability cannot be extended if the assessee has not paid the amount of tax, interest and 25% of the penalty within 30 days from the receipt of the order.
In the case of Namrata Advertising Vs. Commissioner of Central Excise, Nasik, it was held that creating infrastructure, displaying the advertisement and collecting rent for such display will not fall under the activity of advertising agency.
It was held that that unless cost of advertising is recovered from the dealers mandatorily as a condition of dealership, the same cannot be added to the assessable value.
The appellants are manufacturer of excisable goods and were selling the products to various distributors and dealers. The appellants had agreement with some of the dealers and distributors in which they were sharing the cost of advertisement on optional basis.
The CESTAT Mumbai in the case of Vipul-S Plasticrafts P. Ltd. vs. Commissioner of Central Excise held that when the rule under which duty is sought to be demanded itself has been struck down as unconstitutional by various High Courts, the show-cause notice which are based upon rule 8(3A) cannot survive and are liable to be set aside.
