Radico Khaitan Limited Versus Principal Commissioner of GST & Central Excise Delhi
Central Excise
2018 (7) TMI 1280 – DELHI HIGH COURT – 2018 (17) G. S. T. L. 582 (Del.)
DELHI HIGH COURT – HC
Dated:- 17-7-2018
SERTA 19/2018
Central Excise
MR. S. RAVINDRA BHAT AND MR. JUSTICE A. K. CHAWLA JJ.
Appellant Through: Mr. L. Badri Narayanan, Advocate with Mr. Yogendra Aldak, Mr. Karan Sachdev, Mr. Shrey Ashat, Ms. Apeksha Mehta and Mr. Kunal Kapoor, Advocates.
Respondent Through: Mr. Harpreet Singh, Sr. Standing Counsel for respondent with Mr. Suresh Chaudhary, Advocate.
MR. S. RAVINDRA BHAT (ORAL)
CM APPL. 27730/2018 (for exemption)
Allowed, subject to all just exceptions.
SERTA 19/2018 & CM APPL. 27729/2018 (for stay)
2. Issue notice.
3. Mr. Harpreet Singh, Sr. Standing Counsel for the respondent accepts notice.
4. The appellant's grievance in the present proceedings under Section 35G of the Central Excise Act, 1944 is that the final order of the Customs, Excis
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t part of the order reflecting this aspect is as follows:-
“32. Now, the noticee has submitted the legal agreement dt : 30-06-2006 duly signed by them as well as by M/s Jefferies with their reply to the show cause notice and has also produced the same for my perusal at the time of personal hearing. I find in the fact and circumstances of the present case the very first issue before me is whether the agreement dated : 30-06-2006 is a legal document are not as alleged in the impugned SCN, in as much as classification of services received by the noticee depends upon the sanctity of the said agreement as the same was discarded by the department ab-initio on failure of the noticee to produce the signed copy during the course of investigation.
33. I find it is an admitted fact that according to the balance sheet for the year 2006-07 the noticee had raised foreign currency convertible bonds of US dollars 50 millions and had incurred a foreign currency expenditure of Rs. 11.47 crorres for ra
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d introduce potential purchasers to the company in connection with the purchase of securities.
35 to 43 xxx xxx xxx
44. Further I find the ibid letter of engagement dated 20-04-2006 was translated into a further legal agreement MOU between the parties vide subscription agreement dated 30-06-2006, duly signed, dated and delivered and is legally binding upon both the parties.
45. The subscription agreement dated 30-06-2006, inter alia, provides for the following clauses –
(a) Preamble/Details
The issuer proposes, subject to the compliances all conditions set out herein. To issue US $ 4,00,00,000 3.5% convertible bonds due 2011. In addition, the issuer grants the manager an option to subscribe or procure subscription for up to an additional US $ 100,00,000 3.5% convertible bonds due 2011.
(b) Issue of the bonds (Clause 3)
The issuer undertakes to the manager (subject to the terms and in accordance with provisions of this agreeme
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is as per the provision of clause 5 of subscription agreement).
49. I further find that the subscription agreement dt : 30-06-2006 is the authentic, genuine and legally binding agreement and the so called agreement (letter of engagement) dated 20-04-2006 was not a binding agreement which is clearly evident from the following paras/language in the said letter dt : 20-04-2006.
(A) The final terms and conditions governing the transactions shall be mutually agreed between the company and Jefferies.
(B) The terms of the transaction will be governed by one or more definitive agreements. This agreement is not intended to constitute a binding agreement to consummate the transaction or to enter into any agreement in relation to the transaction nothing in this agreement shall give rise to any underwriting or purchase obligation on the part of Jefferies in relation to the transaction. Similarly, nothing in this agreement shall give rise to any obligation on the part of the company to issue or
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consider that the said letter dated 20.04.2008 was a relevant evidence in the present case and established the fact that the foreign service provider was indeed engaged and appointed by the notice as lead manager and sole placement agent for certain purpose and provision of services for raising FCCB of US$50 Millions in the FY 2006-07. The adjudicating authority erred in taking into account only the agreement MOU between the said parties dated 20.04.2006. It is pertinent to take note of the relevant fact that the transaction between the parties were initiated only through letter agreement dated 20.04.2006 and it is relevant as to the purpose, the motive and the intention behind the transaction to be carried out between the parties. Also, it is not disputed that only the letter agreement dated 20-04-2006 was translated into a further agreement MOU between the parties vide subscription agreement dated 30-06-2006.
The adjudicating authority further failed to consider the essence and sub
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service provider in relation to the raising FCCB of US $ 50 Millions. Therefore, the findings of the Adjudicating Authority were perverse to the extent that in terms of the later and binding agreement dated 30.06.2006, the service provided were 'underwriting service' and not 'Banking and Other Financial service'.”
8. In the impugned order the CESTAT noticed this aspect and remitted the matter for de novo fresh consideration by the Commissioner in the following terms.
“7. After hearing both the parties and on perusal of record, it appears that in the instance case the main controversy is pertaining to the agreement between the service provider and service recipient. It is the allegation that in the memorandum of understanding, the scope has been enhanced and the new document has been given at the time of adjudication. The contention of the department is that both the agreements has different contents. When it is so, then we set aside the impugned order and remand the matter to the or
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on both the genuineness of the document (agreement dated 30.06.2006) as well as on its interpretation. Given these facts, if the Tribunal was in doubt as to whether the document was genuine, the least that it could have done was to limit the findings on remand while retaining Revenue's appeal on the file. This Court notices that CESTAT has been repeatedly passing remand orders virtually abdicating its responsibility as an Appellate Court. This trend is unhealthy given that it is the final Court of fact and is required to adjudicate both on the issues of fact and law, especially in matters such as the present one i.e. where the appeal before it was by way of the first appeal.
11. In these circumstances, this Court hereby sets aside the impugned order. The Tribunal is hereby directed to render specific findings on the issue after taking into account the submissions of the parties and calling for a limited remand findings on the issue of genuineness of the document alone.
The appeal st
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