Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise vs Chillies Export House Ltd on 15 February, 2011
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No.ST/673/2010
[Arising out of Order-in-Appeal No.267/2010 dated 20.7.2010 passed by the Commissioner of Central Excise (Appeals), Madurai]
For approval and signature:
Honble Mr. M.VEERAIYAN, Technical Member
1. Whether Press Reporters may be allowed to see 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
CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? :
3. Whether the Member wishes to see the fair copy of
the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
Commissioner of Central Excise,
Madurai
Appellant
Versus
Chillies Export House Ltd.
Respondent
Appearance:
Shri K.Balasubramanian, DR Sri Savith V.Gopal, Advocate For the Appellant For the Respondent CORAM:
Honble Mr.M.Veeraiyan, Technical Member Date of hearing : 15.2.2011 Date of decision : 15.2.2011 Final Order No.____________ This is an appeal by the department against the order of the Commissioner (Appeals) No.267/2010 dt. 20.7.2010.
2. Heard both sides.
3.1. The relevant facts, in brief, are that the respondent is a manufacturer of Oleoresin and they are exporting the said product. They have utilized services of foreign based commission agents for getting export orders and made payment to the said foreign based firms. During the period from 16.6.2005 to 29.2.2008, they paid totally sum of Rs.25,62,777/- as commission. A show cause notice dt. 11.11.2008 was issued alleging that the respondents, as recipient of the services were required to pay service tax of Rs.3,10,446/- along with interest and that they are liable to penalties under Section 76, 77 and 78 of the Finance Act, 1994. Original authority confirmed the demand as proposed in the SCN and imposed penalties of Rs.3,10,446/- under Section 78 and Rs.5000/- under Section 77 of the Finance Act. However, he refrained from imposing penalty under Section 76.
3.2. On appeal by the party, Commissioner (Appeals) held that
a) no service tax is payable by the respondent as recipient for the period from 16.6.2005 to 17.4.2006 i.e. prior to introduction of Section 66A of the Finance Act, 1994
b) the demand relating to the period 18.4.2006 to 30.9.2007 is time-barred.
c) the demand relating to the period from 1.10.2007 to 29.12.2008 is sustainable and penalty under Section 76 is also liable to be imposed.
d) the original authority to calculate the actual duty liability, interest and the penalty imposable under Section 76 & 77 as per his direction.
4. Ld. DR, reiterating the grounds of appeal, makes the following submissions :-
a) They are not contesting the finding of the Commissioner (Appeals) in setting aside the demand relating to the period upto 17.4.2006.
b) The decision of the Commissioner (Appeals) that demand relating to the period 18.4.2006 to 30.9.2007 is barred by limitation is not legal and proper inasmuch as the respondents have failed to disclose the fact of receiving services from the foreign agents and failed to furnish details of commission paid to such agents and failed to file half-yearly returns for the relevant period within the stipulated time. In this regard, he relies on the decision of the Larger Bench of the Tribunal in the case of Sindhu Resettlement Corpn. Ltd. Vs CCE Rajkot [2000 (118) ELT 182].
c) The Commissioner (Appeals) should not have remanded the matter to the original authority for the purpose of quantifying service tax demand from 1.10.2007 and quantifying penalties under Section 76 & 77 inasmuch as he does not have power of remand after amendment of Section 35A (3) w.e.f. 11.5.2001. In this regard, he relies on the decision of the Honble Supreme Court in the case of MIL India Ltd. Vs CCE Noida [2007 (210) ELT 188 (SC)].
5.1. Ld. advocate for the respondent strongly supports the order of the Commissioner (Appeals). He seeks leave to introduce certain documents stating that the issue relating to liability of service tax on commission paid by the respondent was under investigation by three different agencies.
5.2. The Superintendent (Preventive), Virudhunagar Division issued a letter dt. 15.2.2006 from File No.C.No.IV/16/75/2005-Prev. seeking details of commission paid w.e.f. 16.6.2005 which was furnished by them vide their letter dt. 24.5.06. Thereafter, nothing was heard from the Preventive Wing.
5.3. The matter was also taken up for investigation by Directorate General of Central Excise Intelligence, Madurai and summon dt. 18.4.2006 was issued by Senior Intelligence Officer seeking details relating to the period from 9.7.2004 regarding commission paid in terms of foreign currency as well as Indian rupees. The details were furnished to the Senior Intelligence Officer through their letter dt. 27.5.2006. Nothing was heard from the department.
5.4. Thereafter, a letter dt. 6.6.08 was issued by Superintendent of the Range vide O.C.No.686/2008 seeking details of the commission paid by them from 18.4.2006 to Feb2008 which was furnished to the Superintendent vide letter dt. 9.7.2008.
6. Narrating the above facts referring to relevant documents, ld. advocate submitted that the matter was under investigation by other agencies of the department from Feb2006 onwards and, therefore, the allegation in the SCN that relevant information was suppressed is incorrect. Therefore, the finding of the Commissioner (Appeals) to the effect that mere amendment incorporated in the taxing statute making the service recipient to tax cannot be the basis of imputing mens rea to a person liable to pay tax when he has continued to do after the amendment what he was doing prior to the amendment and the same was lawful prior to amendment is correct. The decision of the Commissioner (Appeals) against invoking extended period of limitation should not be interfered with. He also fairly concedes that as the power of remand is not available to the Commissioner (Appeals), the duty liability within the normal period of limitation could have been arrived at by the Commissioner (Appeals) himself.
6. Ld. DR, in his rejoinder, submits that the letter dt. 15.2.2006 from the Superintendent to the respondent and replies thereto, summon dt. 18.4.06 issued by Senior Intelligence Officer to the respondent and the replies thereto are being produced for the first time before the Tribunal and he is not in a position to make submission on the veracity of the same.
7.1. I have carefully considered the submissions from both sides and perused the records. At the outset, the ground taken by the department that Commissioner (Appeals) has no power of remand after Section 35A (3) was specifically amended by deleting the word power of remand is valid and therefore the Commissioner (Appeals) could not have remanded to the original authority the issue relating to determination of penalty under Section 76 of the Finance Act. However, he has practical difficulties in ascertaining the actual delay that may be involved in payment of tax which depends on the date on which the respondents pay the differential tax involved.
7.2. Further, I find from the documents produced by the learned advocate for the respondents, prima facie, there have been investigation by Preventive Superintendent in Feb2006 and by DGCEI in April 2006 and the communications exchanged between them and the respondent prima facie show that the respondents cannot be held to have suppressed the relevant information as held by the original authority. The basis on which the Commissioner (Appeals) came to a conclusion that the respondents were not liable to penalty under Section 78 is not clear from the order as it was conceded that these documents were not produced before the Commissioner (Appeals).
8. I deem it proper that the matter goes back to the original authority for fresh consideration by him. To enable the same, I set aside the order of the Commissioner (Appeals) and order of the original authority and remand the matter to the original authority for fresh consideration with the following directions :-
a) as recipient, the respondent is not liable to pay service tax for the period prior to 17.4.06
b) the issue relating to time bar shall be considered afresh in the light of evidence now submitted before the Tribunal
c) penalty, if any, imposable shall be determined afresh.
9. The original authority shall decide the matter afresh after granting reasonable opportunity of hearing to the respondents.
(Dictated and pronounced in open court) (M.VEERAIYAN) TECHNICAL MEMBER gs 2