Custom, Excise & Service Tax Tribunal
Virola International (Unit-Ii) vs C.C.E.- Kanpur on 23 November, 2017
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH : ALLAHABAD COURT No. I APPEAL No.ST/1437/2011-ST[SM] (Arising out of Order-in-Original No.10/ST/Commissioner/2011 dated 26/04/2011 passed by Commissioner, Central Excise, Kanpur) Virola International (Unit-II) Appellant Vs. C.C.E.- Kanpur Respondent
Appearance:
Ms. Surabhi Sinha (Adv) for Appellant Shri Gyanendra Kumar Tripathi, (AC) AR for Respondent CORAM: Mrs. Archana Wadhwa, Honble Member (Judicial) Date of Hearing : 23/11/2017 Date of Decision : 23/11/2017 FINAL ORDER NO-71661/2017 Per: Mrs. Archana Wadhwa:
The challenge in the present appeal is only to imposition of penalty in terms of section 76, 77 and 78 of the Finance Act, 1994.
2. As per the facts on record the appellant is engaged in manufacture of Footwear and utilized the services of Foreign Commission Agents for the purpose of getting orders from the foreign countries. Inasmuch as the said foreign commission agents were not having in any office in India, the service tax liability fell upon the appellant, on reverse charge basis.
3. Accordingly, demands were raised against them for the period 01.04.2004 to 31.03.2007. While adjudicating the said show cause notice, the Commissioner observed that the duty liability would fall upon the appellant only w.e.f. 18.04.2006, when the provision of section 66A were introduced and in terms of the Honble Bombay High Court decision in the case of Indian National Shipowners Association Vs. Union of India : 2009 (13) STR 235. Accordingly, the adjudicating authority appropriated the duty and interest paid by the appellant before the issuance of the show cause notice, by holding liability to be effective from 18.04.2006. He also imposed penalty under the said sections of the Finance Act.
4. The challenge in the present appeal is only to imposition of penalties. The learned advocate appearing for the appellant submits that the law was not clear during the relevant period and the same was clarified with the Bombay High Courts decision in above judgment in the case of Indian National Shipowners Association Vs. Union of India : 2009 (13) STR 235. Inasmuch as the law was not cleared, no malafide would be attributed to them so as to invoke penal provisions. She also submits that the entire duty alongwith the interest having been paid prior to the show cause notice, there was no requirement for issuance of the notice in terms of section 73 of the Finance Act. For the above provisions reliance is placed upon Karnataka High Court decision in the case of Commissioner of Central Excise, Bangalore-III Vs. Apollo Power Systems (P) Ltd.: 2017 (347) E.L.T. 71 (Kar.) as also of the Honble Allahabad High Court decision in the case of Commissioner of Customs & Central Excise Vs. Supreme Industries Ltd.:2016 (341) E.L.T. 607 (All.)
5. Learned AR appearing for the Revenue reiterates the reasoning of the lower authorities in imposing penalties and submits that inasmuch as the assessee is expected to know the law and the appellant having not paid the service tax during the relevant period, are liable to met with penalties.
6. After appreciating the submissions made by both the sides I find that the relevant period was not clear and was subject matter of litigation before various courts. It is only with a declaration of law by the Honble Bombay High Court decision in the case of Indian National Shipowners Association Vs. Union of India : 2009 (13) STR 235, that the levy on reverse charge basis was upheld w.e.f. 18.04.2006. The appellant have already paid the said duty alongwith interest. As such I find no justification for imposition to penalty upon them. The same is accordingly set aside. At the stage learned advocate submits that inasmuch as the demand was raised for the period prior to 18.04.2006 and stands confirmed by the adjudication authority only w.e.f. 18.04.2006. They have deposited the excess duty alongwith excess interest and the lower authority be directed to calculate the correct amount of duty and interest. For the said purpose, I direct the lower authority to do the re-quantification accordingly.
7. The appeal is disposed of in above manner.
(Dictated and pronounced in Court) (Archana Wadhwa) Member (Judicial) GS 1 4 APPEAL No.C/135/2011-CU[SM]