Custom, Excise & Service Tax Tribunal
M/S. Siemens Building Technologies ... vs Commissioner Of Central Excise, ... on 12 February, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
E/Misc./40028/2018 and E/697/2010
(Arising out of Order-in-Original No. 6/2010 (C) dated 6.8.2010 passed by the Commissioner of Central Excise, Puducherry)
M/s. Siemens Building Technologies Pvt. Ltd. Appellant
Vs.
Commissioner of Central Excise, Puducherry Respondent
Appearance Ms. Sweta Giridar, Advocate for the Appellant Shri S. Govindarajan, AC (AR) for the Respondent CORAM Honble Ms. Sulekha Beevi C.S., Member (Judicial) Honble Shri Madhu Mohan Damodhar, Member (Technical) Date of Hearing / Decision: 12.02.2018 Final Order No. 40418 / 2018 Per Bench The appellant is engaged in the manufacture of access control system, fire control system and parts thereof and are registered with the Service Tax Department. On intelligence gathered that they are not discharging service tax on the payments received from outside India under the category of Consulting Engineer Service, the appellant was directed to pay the service tax. The appellant discharged service tax along with interest before issue of show cause notice. On verification of records, it was found that the appellant had availed wrong credit on inputs. The inputs rejected were removed out of the factory for testing and thereafter brought into the factory. The appellant did not reverse the credit of these inputs which were removed out of the factory for testing and when they were brought back into the factory they again availed credit on the same inputs. The third issue raised against the appellant was that the appellant had failed to discharge service tax under consultancy service before the due date required as per law. They paid service tax with a delay of 15 days. A show cause notice was issued raising the above allegations. The show cause notice alleged suppression of facts with intent to evade payment of duty and also proposing to recover the service tax along with interest and for imposing penalties. After due process of law, the original authority confirmed the demand, interest and imposed equal penalty. However, benefit of reduced penalty as provided in proviso (1) and (2) of section 78 of the Finance Act was allowed. Aggrieved, the appellants are now before the Tribunal.
2. On behalf of the appellant, ld. counsel Ms. Sweta Giridar submitted that the appellant is not contesting the demand of service tax or the interest thereof. She submitted that with regard to the first issue the appellant has paid the demand and interest thereof even prior to issue of show cause notice. That the appellant is praying for setting aside the penalty. With regard to the second issue, the appellant had paid the tax amount to the tune of Rs.5,62,172/- along with interest and also paid 25% penalty under protest within 30 days from the date of receipt of Order-in-Original. In regard to third issue of non-payment of service tax under reverse charge mechanism, for the period from March 2009 to May 2009, she submitted that the tax amount was paid along with interest and penalty of 25% was paid within 30 days from the date of receipt of Order-in-Original under protest. The ld. counsel argued that the department has alleged suppression of fact in the third issue when actually there was only a delay of 15 days to discharge service tax liability. The returns were yet to be filed in the month of April. Prior to filing of returns, there cannot be any allegation of suppression. Further that delay to pay the service tax cannot be considered as suppression of facts with intent to evade payment of duty. She submitted that the original authority though granted the benefit of reduced penalty as per the proviso to section 78 has confirmed the equal penalty of all the three issues. The ld. counsel requested to set aside the penalty in respect of issue No. 2 (wrongly availed credit on inputs) and issue No. 3 (delayed payment of service tax).
3. The ld. AR Shri S. Govindarajan reiterated the findings in the impugned order. He submitted that there is no cause of appeal for the appellant since the original authority has granted the benefit of reduced penalty under proviso to section 78.
4. Heard both sides
5. Summary of the payment details made by the appellant is as follows:-
Issue Involved Tax amount paid Interest amount paid Penalty amount paid Non-payment of service tax under RCM for the period May 2008 to Feb. 2009 1,27,59,703 13,58,421 31,89,925 (25% penalty paid prior to passing of the impugned order) Availment of CENVAT credit twice on the same bill of entry 5,62,172 2,43,274 1,40,543(25% paid within 30 days of receipt of order under protest) Non-payment of service tax under RCM for the period March 2009 to May 2009 26,31,769 70,776 6,57,942(25% paid within 30 days of receipt of order under protest)
6. The appellant is not contesting the service tax demand and the interest liability paid in respect of the first issue which is non-payment of service tax under reverse charge mechanism for the period May 2008 to February 2009. It is submitted that the entire amount of service tax along with interest was paid prior to issue of show cause notice and the same was intimated to the department. As per sub-section (3) of section 73, no show cause notice ought to have been issued to the appellant. The Honble High Court of Karnataka in the case of Commissioner of Central Excise Vs. Adecco Flexione Workforce Solutions Ltd. 2012 (26) STR 3 (Kar.) has held that issue of show cause notice when entire amount along with interest stands paid is incorrect and bad in law. Following the same, we hold that the penalty imposed for this issue requires to be set aside which we hereby do.
6. The second issue is with regard to availment of CENVAT credit twice on the same Bill of Entry. The ld. counsel has submitted that due to oversight, when the inputs were removed out of the factory for testing, the credit was not reversed. The appellant has thereafter availed credit on the very same inputs when they were brought back into the factory. The explanation given by the ld. counsel that such credit was availed by oversight is not acceptable. The credit having not reversed and also having taken again for the second time points out that there is some adverted mistake on the part of the appellant. For this reason, we do not find any ground to set aside the penalty in respect of this issue. However, the order passed by the original authority granting benefit of reduced penalty of 25% of tax paid is upheld. The penalty on this issue will stand discharged as the appellant has paid 25% of tax demand pursuant to the Order-in-Original.
7. The third issue is with regard to service tax demand, interest and penalty in respect of non-payment of service tax under reverse charge mechanism for the period March 2009 to May 2009. The appellant does not contest the service tax demand or the interest thereof. The appellant is aggrieved by the penalty imposed. However, taking into consideration that there was only delay in discharging the liability of service tax, we are of the view that the penalty on this issue requires to be set aside. Thus, the penalty on this issue is set aside.
8. The impugned order is modified to the extent of setting aside the penalty in respect of first and third issues only. The appeal is party allowed in the above terms.
9. The miscellaneous application filed by the appellant for change of cause title from M/s. Siemens Ltd. to M/s. Siemens Building Technologies Pvt. Ltd. is allowed.
(Operative portion of the order was
pronounced in open court)
(Madhu Mohan Damodhar) (Sulekha Beevi C.S.)
Member (Technical) Member (Judicial)
Rex
2
6