Custom, Excise & Service Tax Tribunal
Dear Constructions vs Commissioner Of Central Excise, And ... on 2 November, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: ST/20834/2016-SM [Arising out of Order-in-Original No. BEL-EXCUS-COM-BHR-31 (ST) 2015-16 dated 10/03/2016 passed by the Commissioner of Central Excise and Customs, Belgaum] Dear Constructions Engineers and Contractors 10/B, Near Maruti Temple, Ashok Nagar, Hubli 580 032 Appellant(s) Versus Commissioner of Central Excise, and Customs , Belgaum No. 71, Club Road, Belgaum 590 001 Respondent(s)
Appearance:
Shri Raghavendra B. Hanjer Advocate For the Appellant Shri Parasivamurthy, Deputy Commissioner (AR) For the Respondent Date of Hearing: 28/07/2017 Date of Decision: 02 /11/2017 CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER Final Order No. 22685 /2017 Per: S.S GARG The present appeal is directed against the impugned order dated 10.03.2016 passed by the Commissioner whereby the Commissioner has confirmed the demand of interest of Rs. 15,18,104/- (Rupees Fifteen Lakhs Eighteen Thousand One Hundred and Four only) and also appropriated the said amount deposited by the appellant. The Commissioner has also imposed a penalty of Rs. 10,00,000/- (Rupees Ten Lakhs only) under Section 76 of the Act. Briefly the facts of the present case are that the appellants are registered under the category of Construction Service for Commercial and Industrial Building and Civil Structures. During the audit of the records of the appellant, it was revealed that for the period from 2010-11 to 2013-14, the appellant had paid service tax of Rs. 2,52,38,091/- (Rupees Two Crores Fifty Two Lakhs Thirty Eight Thousand and Ninety One only) and had failed to pay interest amount of Rs. 15,18,104/- (Rupees Fifteen Lakhs Eighteen Thousand One Hundred and Four only) for the delayed payment of service tax for the said period. On these allegations a show-cause notice was issued and after following the due process of law, the Commissioner rejected the contention of the appellant and confirmed the demand and also appropriated the interest paid towards the demand for interest and also imposed a penalty of Rs. 10,00,000/- (Rupees Ten Lakhs only) on the appellant under Section 76 of the Act. Hence the present appeal.
2. Heard both the parties and perused the records.
3. Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without appreciating the facts of the case and without considering the facts on record and the statement of the appellant and further the penalty has been imposed in a mechanical manner without application of mind. He further submitted that the appellant has paid the interest amount of Rs. 15,56,151/- (Rupees Fifteen Lakhs Fifty Six Thousand One Hundred and Fifty One only) on 05.10.2015 itself as against the demand for interest of Rs. 15,18,104/- (Rupees Fifteen Lakhs Eighteen Thousand One Hundred and Four only) and in fact the appellant is eligible for the refund of excess interest paid by them. He further submitted that the appellants are the contractors exclusively undertaking the contract work from M/s. Wind World India Ltd. and the said company is not regular in payment of contract bills and the same is evidenced by the amount shown as receivables in the Balance Sheet. But the service tax was paid by the appellant out of their own funds by way of bank overdraft and external borrowings. He further submitted that imposition of penalty by the learned Commissioner is totally wrong since at the first instance no show-cause notice is issued demanding payment of service tax under Section 73(1) of the Finance Act 1994 and only a show-cause notice is issued for payment of interest and hence in such a situation provisions of Section 76 of the Act could not have been invoked at all. Further the learned Commissioner has not disputed the fact that the appellants have on their own paid the service tax to the tune of Rs. 2,52,38,091/- (Rupees Two Crores Fifty Two Lakhs Thirty Eight Thousand and Ninety One only) and that too when they have not received the payment of their bills from the party from whom they had undertaken the work. He further submitted that there could be no allegation of fraud or collusion or willful misstatement or suppression of fact against the appellant and there is no such allegation in the show-cause notice also and therefore the provisions of Section 76 of the Finance Act are not applicable in the present case. The learned counsel further submitted that the perusal of the impugned order clearly shows that the penalty has been imposed on the appellant based on the facts of another case and not the facts of the present case. In support of his submission, the appellant relied upon the decision of the Tribunal in the case of Force Motors Ltd. Vs. CCE, Pune-I reported in 2015 (329) E.L.T. 543 (Tri.-Mum.) wherein it has been held as under:
Penalty - Cenvat/Modvat - Inadmissible credit taken - Reversed on being pointed out - HELD : Show Cause Notice issued only for interest and penalty - Credit paid suo motu by appellant - Penalty under Section 11AC of Central Excise Act, 1944 imposable where duty is determined under Section 11A(2) ibid - Here, neither any show cause notice issued nor adjudication order passed in respect of Cenvat amount - No amount determined under Section 11A(2) ibid - Consequently, penalty under Section 11AC ibid, not imposable - Order Set aside - Section 11AC of Central Excise Act, 1944 read with Rule 15 of Cenvat Credit Rules, 2004.
4. On the other hand the learned AR reiterated the findings of the impugned order.
5. After considering the submissions of both parties and perusal of the material on record, I find that in the present case a show-cause notice was issued only on account of delayed payment of service tax demanding interest amount of Rs. 15,18,104/- (Rupees Fifteen Lakhs Eighteen Thousand One Hundred and Four only). Further I find that the appellant though has not collected the service tax from their main contractor M/s. Wind World India Ltd. but still they have paid the same. Further I also find that the appellants have paid the interest amount of Rs. 15,56,161/- (Rupees Fifteen Lakhs Fifty Six Thousand One Hundred and Sixty One only) on 05.10.2015 against the demand of Rs. 15,18,104/- (Rupees Fifteen Lakhs Eighteen Thousand One Hundred and Four only) and the said amount has been appropriated also in the impugned order. Further I also find that in the show-cause notice, the demand of service tax is not under Section 73(1) of the Finance Act and therefore the imposition of penalty on the appellant is unwarranted in view of the decision in the case of Force Motors Ltd. cited supra. Further I also find that for imposing penalty on the appellant, the Commissioner (Appeals) has taken the facts of some other case which shows that the penalty has been imposed in a mechanical manner. In view of these facts, I am of the considered view that the impugned order is not sustainable in law and the same is set aside by allowing the appeal of the appellant.
(Order pronounced in Open Court on 02/11/2017) (S.S GARG) JUDICIAL MEMBER iss