Appeal before CESTAT: Pre-deposit - From the perusal of the observations made by Adjudicating Authority in para- 6 of the order, it appears that the entire amount has been deposited, though, it is true that there is contravention of the provisions of Rule 8(3-A) of the Central Excise Rules. However, prima-facie, it appears that for the period in dispute, entire amount of duty stand deposited and Tribunal in the case of appellant itself in appeal Nos. 168-169/ 2008-SM has waived the requirement of pre-deposit. The order of the Tribunal dated 28.8.2009 requires modification. Accordingly, we reduce the amount to be deposited from Rs.25 Lacs to 5 Lac which the appellant will deposit within 30 days. (para 7)

The Tribunal is directed to decide the appeal no.1728 of 2009 expeditiously and preferably within a period of two months from the date of presentation of the certified copy of this order which the appellant undertakes to file within two weeks. (para 8)

Clearing & Forwarding Agent: Consignment Agent - The contention of the learned counsel with regard to the definition of commission agent as defined under the Finance Act namely, Section 65 (19) under the heading Business Auxiliary Service that they would come within the said purview and would fall outside the purview under the definition of the clearing and forwarding agent is examined in the background of definition Clauses which has been extracted by us herein above and we find that in the definition of "Clearing & Forwarding Agent" itself the consignment agent has been brought within the said Section. We have also examined the agreement in question and we find not only the consignment agent is expressly described at various places as stated herein above and on combined reading of the agreement we find that assessee in question has not restricted its activities to business of commission agency but has also carried on business as Consignment Agent as mentioned in Clause (iii), (v) and (vii) of the agreement and as such we are unable to accept the contention of the learned counsel for the assessee to hold that they would stand outside the definition of clearing and forwarding agent. (para 14)

The activity carried on by the assessee with reference to the text of the enactment would depend on the nature and activity and as held by Their Lordships both in text and context the word 'includes' as mentioned in the definition clause of clearing and forwarding agent we find that the Legislature in its wisdom have desired to give extended and enlarged meaning to such expression and as such we accept the contention of the revenue to hold that the activity carried on by the assessee in question would fall within the purview of clearing and forwarding agent and accordingly we answer the question of law framed herein above by holding that the services rendered by the respondent would fall within the category of "clearing and forwarding agent" and thus, amenable to the definition of taxable service. (para 16)

Interpretation of a word or expression: Intention of the Legislature - The interpretation of a word or expression must depend on the text and the context. The resort to the word 'includes' by the Legislature often shows the intention of the Legislature that it wanted to give extensive and enlarged meaning to such expression. Sometimes, however, the context may suggest that word "includes" may have been designed to mean "means". The setting, context and object of an enactment may provide sufficient guidance for interpretation of word 'includes' for the purposes of such enactment." (para 16)

Commission Agents not C & F Agents: If there was mere procurement of purchase orders for the principal on commission basis by the assessee, it would have definitely fallen under the category of commission agent and would have stood outside the activity of the clearing and forwarding agent. (para 12)

Appeals- Pre-deposit: Tribunal - The Tribunal, first and foremost, is duty bound by Article 141 of the Constitution of India to ensure that it follows binding precedent of the Supreme Court. The Tribunal as a judicial body must follow principles of consistency when it decides cases. The lack of consistency is clear on the face of record. Faced with this situation, we are of the considered view that it would be appropriate to remit the proceedings back to the Tribunal for reconsideration of the matter having regard to the observations made by this Court earlier. Judicial orders must be passed by the Tribunal with a greater degree of circumspection and application of mind. Whim and caprice are alien to the judicial process. Consistency, based on judicial precedents should be the norm. (para 9)

In order to facilitate a fresh decision on remand, the impugned order of the Tribunal dated 11th September 2009 is set aside and the stay application is restored to the file of the Tribunal for a fresh decision. (para 10)

Settlement Commission: Section 127B – Full & True disclosure - It is manifest from a bare reading of the provision that in the application filed under Section 127B, an applicant is required to make a full and true disclosure of his duty liability, which he had failed to disclose before the proper officer. He is also required to exhaustively explain to the Settlement Commission the manner in which such liability has been incurred; the additional amount of customs duty accepted to be payable by him as also the price of such dutiable goods in respect of which he admits short levy on account of misclassification or otherwise of goods. In other words, the applicant is supposed to make a clean breast of his affairs in regard to short levy or non payment of customs duty admitted to be payable by him. The application should have been rejected by the Settlement Commission on that count itself and no relief should have been granted to the appellant. However, in view of the fact that order dated 8th February, 2001 passed by the Settlement Commission allowing the application of the appellant to be proceeded was not challenged by the Commissioner nor such a plea was urged by the Revenue before the High Court or in their reply to the present appeal, we find it difficult to reject the application at this stage. (para 13,22)

Settlement Commission: Accept the favorable and reject which is not -. Having opted to get their customs duty liability settled by the Settlement Commission, under Chapter XIVA of the Act, the appellant cannot be permitted to dissect the Settlement Commission’s order with a view to accept what is favourable to them and reject what is not. . It is manifest from the procedure laid down in Section 127C of the Act that interim order under sub-Section (1) of Section 127C as also the final order under sub-Section (7) of the said Section are to be made by the Settlement Commission after examination of the reports of the Commissioner of Customs or its Commissioner (Investigation). Obviously, these reports are submitted on the disclosures made in the application under Section 127B of the Act and, therefore, the applicant cannot be permitted to resile from his pleadings in the application at any stage of proceedings before the Settlement Commission or set up a new case before the higher Fora. (para 22)

Settlement Commission: Duty free import of ship spares - Notification No.211/83-Cus dated 23rd July, 1983 - In order to avail the benefit of exemption from whole of the duty of customs leviable under the Customs Tariff Act, 1975, twin conditions, viz., (1) capital goods, components, etc. are required for repairs of ocean going vessels, and (2) the ship repair unit should be registered with the Director General of Shipping, Government of India, are to be fulfilled. Both the conditions are cumulative and admit of no exception. Besides, under the Notification, an importer is also required to maintain a proper account of import, use and consumption of the capital goods, components, etc. imported for the aforesaid purpose in a prescribed form and failure to satisfy the Collector about their installation or consumption for the said purpose makes the importer liable to pay an amount equal to the duty payable on such goods. It is a settled position in law that Exemption Notifications have to be strictly construed. A person claiming the benefit of exemption notification, must show that he satisfies the eligibility criteria. (para 17)

Settlement Commission: Fresh grounds raised before High Court - . It is clear that since M/s Elektronik Lab. was not registered with the Director General of Shipping, they were not eligible to avail of duty exemption under the said notification, they entered into an arrangement with the appellant, a registered ship repairing unit, to import the goods for repair of ocean Thus, the sole object of the transactions was to avail of duty exemption under the said notification. Additionally, in order to claim the benefit of the Exemption Notification, the components, consumables etc. had to be used by the importer himself for repair of the vessels and not through someone else, who incidentally was not even named in the shipping bills. Moreover, proper accounts of imports, use and consumption of such goods was to be maintained by the importer, and in the event of failure to render the account for such consumption, the importer was liable to pay the customs duty as may be demanded by the Commissioner of Customs. However, once the imported goods were sold to a third party, the appellant was incapacitated from maintaining and rendering the account to the Commissioner in terms of the notification. All these factors go to show that the additional ground sought to be raised before the High Court was not only an after thought, adjudication thereon did involve investigation into facts and, therefore, the decision of the High court in not entertaining the additional ground did not suffer from any infirmity. Held that the order of the Settlement Commission did not suffer from any error, legal or factual, and, therefore, the High Court was fully justified in dismissing the writ petition. (para 21)

Penalty under Section 11AC: Their Lordships of Hon'ble Supreme Court in the case of Union of India v. Ra- jasthan Spinning and Weaving Mills, 2009 (238) ELT 3 (SC) held that mandatory provisions of penalty under Section 11AC of the Act are not applicable automatically to every case of non-payment of duty or short payment of duty. Therefore, to determine whether the penalty is imposable or not, the requirements of Section 11AC have to be fulfilled. It has been held in para 19 of the judgment that 'penalty under Section 11AC, as the word suggests, is punishment for an act of deliberate deception by the assessee with the intent to evade duty by adopting any of the means mentioned in the section'. However, once it was found to be applicable then the concerned authorities would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under section 11(2) of the Act.(para 10)

Penal clause would not be attracted to the facts of every case unless a categorical finding of fraud, collusion, willful mis-statement etc. with the intention to evade payment of duty have been recorded. In the absence of such a finding, the imposition of penalty is not automatic and cannot be levied. Accordingly, we hold that the appeal does not merit admission and the same is liable to be dismissed. (para 12)

Imports under EPCG Scheme: The substitution of the text “bio-tech, engineering, textile and chemical sectors” by virtue of notification no.122/99-cus dated November 4, 1999 for preexisting text of “bio-tech and engineering” in notification no. 31/99-cus dated March 8, 1999 was based on recognised practices employed in legislative drafting. Above substitution of the provision resulted in repealing the former provision and its replacement by the later one amending the operation of the provision during the period in which it was in force on the basis of the policy of the Government, i.e. from April 1, 1999.

The settled principles of law as laid down in the above decisions, therefore, run counter to the submissions of the Learned Counsels of the respondents that in view of the provisions of Clause(a) of sub-section(4) of Section 25 of the Customs Act, 1962, the benefit of 0% duty of customs under EPCG Scheme was introduced with effect from November 4, 1999. Because the above notification was introduced for the purpose of substitution of earlier notifications. The word substitution would connote that the Central Government intended to give benefit of 0% duty of customs under. EPCG Scheme from the date of introduction of the policy of the Central Government. Consequent upon the above discussions and observations the impugned order dated July 30, 2003 stands quashed and set aside. The respondents are directed to give the benefit of 0% duty of customs under EPCG Scheme to the petitioner company in respect of the import of textile machineries under reference within a period of two months.

Interpretation of the word “Substitute”: Substitution of a provision results in repeal of the earlier provision and its replacement by the new provision (see principles of Statutory Interpretation, ibid., p.565). If any authority is needed in support of the proposition, it is to be found in West U.P. Sugar Mills Assn. v. State of U.P., State of Rajasthan v. Mangilal Pindwal, Koteswar Vittal Kamth v. K. Rangappa Baliga and Co. and A.L.V.R.S.T. Veerappa Chttiar v. S. Michael. In West U.P. Sugar Mills Assn. case a three-Judge Bench of this Court held that the State Government by substituting the new rule in place of the old one never intended to keep alive the old rule. Having regard to the totality of the circumstances centring around the issue the Court held that the substitution had the effect of just deleting the old rule and making the new rule operative. In Mangilal Pindwal case this Court upheld the legislative practice of an amendment by substitution being incorporated in the text of a statute which had ceased to exist and held that the substitution would have the effect of amending the operation of law during the period in which it was in force. In Koteswar case a three-Judge Bench of this Court emphasised the distinction between “supersession” of a rule and “substitution” of a rule and held that the process of substitution consists of two steps: first, the old rule is made to cease to exist and, next, the new rule is brought into existence in its place.”

Consignment Agents: The appellants being consignment agents and stockists are not liable to pay service tax, as they are neither clearing agents nor forwarding agents. Held that the consignment agent or stockist is not liable to pay service tax under the category of C&F agents. (para 7)

Renting of immovable property: Stay not granted by Apex Court - The judgment of this Court is challenged by filing the SLP, till date there is no order passed by the Supreme Court staying the operation of that judgment. In these circumstances, the respondent could not instruct their officers to peruse the matter with tax payers calling upon them to pay service tax or to resort to other means under the law to protect the Revenue. The manner in which the letters are written clearly indicate that the payment of tax is demanded and the threat is also extended that if there is no compliance, Department would initiate further necessary action against them. (para 8)

Mr. Chandhiok, learned ASG appearing for the respondent, assures that corrective steps shall be taken by issuing further instructions, in supersession of earlier instructions, to the officers not to write such letters demanding the payment of service tax or threatening coercive steps. On this assurance no further orders are required to be passed in this Writ Petition. Writ Petition is disposed of. Dasti. (para 9)

Valuation - short payment/short levy of duty: The assessee was able to demand from its customers the balance of the higher prices by virtue of retrospective revision of the prices. At the time of sale the goods carried a higher value and those were cleared on short payment of duty. The differential duty was paid only later when the assessee issued supplementary invoices to its customers demanding the balance amounts. Seen thus it was clearly a case of short payment of duty though indeed completely unintended and without any element of deceit etc. The differential price signify that value, which is the function of the price, on the date of removal/clearance of the goods was not correct. That, it was understated. Therefore, the price indicated by the supplementary invoice is directly relatable to the value of the goods on the date of clearance, hence, enhanced duty. This enhanced duty is on the corrected value of the goods on the date of removal. When the differential duty is paid after the date of clearance, it indicates shortpayment/ short-levy on the date of removal. (para 14)

Valuation – interest: The assessee in default may make payment of the unpaid duty on the basis of his own ascertainment or as ascertained by a Central Excise Officer and, in that event, such assessee in default would not be served with the Demand Notice under Section 11A(1) of the Act. However, Explanation (2) to the sub-section makes it clear that such payment would not be exempt from interest chargeable under Section 11AB of the Act. What is stated in Explanation (2) to sub-section 2(B) is reiterated in Section 11AB of the Act, which deals with interest on delayed payment of duty. From the Scheme of Section 11A(2B) and Section 11AB of the Act, it becomes clear that interest is levied for loss of revenue on any count. Appeal allowed. (para 14)

Photography Service: The components of sale of photography, developing and printing etc. are clearly distinct and discernible than that of photography service. The photography is in the nature of works contract and it involves the elements of both sale and service, therefore, the Service Tax is not leviable on the sale portion.

Works Contract Service: Stay: The work executed is in respect of the irrigation services and is not for any commerce or industry. The activities which are concerned with welfare of the citizens of this country has been excluded from the liability of Service Tax. Stay granted.

Speaking Order: Reasons of decision being heart beat of justice learned adjudicating authority shall give reasonable opportunity to the appellant for hearing and shall pass a reasoned and speaking order depicting clearly the evidence which forms basis of his judgments. Matter remanded back.

Stay: Input Service Credit: Goods Transport Agency: In the view of ABB Ltd., Application for waiver of the pre-deposit of the amount is allowed and recovery thereof stayed till the disposal of the appeal.

Credit of Service Tax paid for GTA Service: Following the ratio of the larger Bench decision, service availed by a manufacturer for outward transportation of final products from the place of removal should be treated as an input service. Appeal allowed.

Input Service Credit: Goods Transport Agency: In the view of ABB Ltd., that the services availed by a manufacturer for outward transportation of final products from the place of removal should be treated as an input service. Appeal allowed with consequential relief.

Input Service Credit: Goods Transport Agency: In the light of the larger Bench decision, appeal of the assessee allowed holding that credit is admissible on outward transportation of goods beyond the place of removal.

Security Agency Service: Penalty: The appellants provided helper and gunman to the BSNL. There is no material placed by the appellant that the security men were used for other purposes. So, the demand of tax along with interest is upheld, there is no mala fide on the part of the appellant accordingly, the penalties are set aside.

Stay: Credit of Capital Goods: Applicants got duty paid Towers and Shelters and taken credit treating them as components and spare parts of capital goods. On the basis of similar case waiver of pre-deposit of Service Tax, interest and penalty is granted.

Commercial Coaching Service: Stay: Issue is whether "study material package" sold by the applicant in the market would be liable to Service Tax. The study material was sold in the market under the cover of Bill. Stay petition is allowed.