Custom, Excise & Service Tax Tribunal
Crompton Greaves Ltd vs Commissioner Of Central Excise, Nashik on 30 April, 2014
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
Appeal No. ST/451/11-Mum
(Arising out Order-in-Appeal No. AKP/86/NSK/2011 dated 25.07.2011 passed by the Commissioner of Central Excise (Appeals), Nashik)
For approval and signature:
Honble Mr. Ashok Jindal, Member (Judicial)
1. Whether Press Reporters may be allowed to see No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the Yes CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy Yes
of the Order?
4. Whether Order is to be circulated to the Departmental Yes
authorities?
Crompton Greaves Ltd.
Appellant
Vs.
Commissioner of Central Excise, Nashik
Respondent
Appearance:
Shri J.F. Pochkanwalla, Sr. Advocate with Shri Nimesh Mehta, Advocate for the appellant Shri S. Dewalvar, Addl. Comm (AR) for the respondent CORAM:
Honble Mr. Ashok Jindal, Member (Judicial) Date of hearing : 30/04/2014 Date of decision : 30/04/2014 O R D E R No:..
The appellant is in appeal against the impugned order levying penalty under Section 78 of the Finance Act, 1994.
2. The brief facts of the case are that during the period 01.11.2005 to December 2009 the appellant availed certain consultancy service from the foreign service provider. The appellant was under an impression that as they are service recipient, therefore they are not required to pay service tax and did not pay service tax on the service received from the foreign service provider. When the investigation was started and it was found that the appellant is required to pay service tax under reverse charge mechanism on the service received from outside India, and can take credit of the same, the appellant immediately paid the service tax payable by them along with interest. Later on, the show-cause notice was issued to impose penalty under Section 76, 77 and 78 of the Finance Act, 1994. The lower authorities did not impose penalty under Section 76 and 77 of the Act but imposed penalty equal to the service tax payable under Section 78 of the Finance Act, 1994. Aggrieved from the same the appellant is before me.
3. It is the contention of the ld. counsel on behalf of the appellant that as appellant were under an impression that they were not required to pay service tax being service recipient, therefore the appellant are entitled for immunity from penalty under Section 80 of the Finance Act, 1994. It is further submitted that whatever service tax they had to pay they are entitled to take credit. As there is a situation of revenue neutral, benefit of Section 80 be given to them. To support this contention, he relied upon the decision in the case of India Trimmings P. Ltd. 2012 (28) STR 401 (Tri-Chennai).
4. On the other hand, ld. AR strongly opposed the ld. counsel and submits that as appellant were receiving the service from the foreign service provider, therefore, as per the provisions of the Finance Act, 1994, they are required to pay service tax on reverse charge mechanism. Hence, they cannot escape the liability of penalty.
5. Heard both sides. Considered the submissions.
6. It is a case where the appellant were ignorant of their service tax liability and on pointing out by the department immediately paid the service tax along with interest. Further, I find that whatever service tax they were to pay they were entitled to credit. If they had paid service tax at the time of receiving the same, they were not required to pay interest. In these circumstances, I hold that as appellant were ignorant of their service tax liability; therefore they are entitled for immunity under Section 80 of the Finance Act, 1994 for imposing the penalty. Accordingly, I set side the penalty imposed by way of impugned order and allow the appeal qua imposition of penalty.
(Dictated in Court) (Ashok Jindal) Member (Judicial) //SR 3