Customs, Excise and Gold Tribunal - Calcutta
Commissioner Of C. Ex. vs Gurdian Leisure Planners Pvt. Ltd. on 30 November, 2006
Equivalent citations: (2007)7VST157(CESTAT-KOL)
ORDER D.N. Panda, Member (J)
1. Revenue has preferred this appeal against waiver of penalty of Rs. 8,236/- by the Ld. Commissioner (Appeals) by order dated 29-9-2004 which was imposed by the Ld. Adjudicating Authority under section 76 of Finance Act 94 ("hereinafter referred to as the act") by order of Adjudication dated 29-4-2004 in relation to belated payment of service tax for Tour Operator Service which is exigible to tax w.e.f. 1-9-97. Admittedly the liability related to the period October, 2001 to September, 2002 discharged on 18-11-2002 and application for registration was even delayed and filed on 14-3-02 which was beyond statutory period of 30 days as prescribed by Section 69 of the Act read with Rule 4 of Service Tax Rules, 1994. The Ld. Adjudicating authority finding that the service tax was not deposited with the Government in respect of the above period duly, worked out period of delay in order of adjudication which was the basis for imposition of penalty @ Rs. 200/- per day, being a continuing default. In respect of the delay for payment of Service Tax he imposed penalty of Rs. 8,236/- under section 76 of the Act. While doing so, he also imposed a penalty of Rs. 1,000/- for breach of provisions of Section 77 of the Act and Rs. 500/- levied towards penalty for violation of Section 75A of the Act. So far as imposition of penalty under section 77 is concerned that relates contravention of any provision for which no specific penalty is prescribed and section 75A related to levy of penalty on the delayed payment.
2. Being aggrieved by the order of adjudication, the assessee went in appeal before the Ld. Commissioner (Appeals) who considering the matter of imposition of penalty under section 76 of the Act observed that there was delay in deposit of service tax but the same having been deposited before issue of show cause notice (SCN), such penalty is unsustainable following the decision in the case of Amritsar Crown Caps (P) Ltd. reported in 2002 (140) E.L.T. 437 (Tri.), Rashtriya Ispat Nigam Ltd. reported in 2003 (161) E.L.T. 285 (Tri.) and Machino Montell(I) Ltd. reported in 2004 (168) E.L.T. 466 (Tri-LB) but penalty under Section 77 and interest under section 75A levied by the Ld. adjudicating authority were confirmed.
3. The assessee did not prefer appeal against the penalty sustained by the Ld. Commissioner nor also filed any cross objection against Revenue's appeal.
4. Notice in this case was first issued fixing hearing on 29-5-2006 there was no response. Thereafter another notice was issued on 30-5-2006 fixing hearing on 3-7-2006. The respondent neither appeared nor sought adjournment. When third notice was issued on 20-11-2006 by speed post fixing hearing on 23-11-2006 that was returned by Postal Authority with remark that "no such addressee here". Of course on the scheduled date of hearing on 23-11-2006 following principles of natural justice, the matter was adjourned to 27-11-2006. In spite of such opportunity, there was no appearance by Respondent. It was therefore considered proper to dispose the appeal on its own merit.
5. Heard the Ld. DR. He submitted that the Ld. Commissioner (Appeal) without appreciating mandatory provisions of Section 76, set aside penalty imposed under that section merely relying on the decisions in the case of Amritsar Crown Caps (P) Ltd. reported in 2002 (140) E.L.T. 437 (Tri), Rashtriya Ispat Nigam Ltd. reported in 2003 (161) E.L.T. 285 (Tri) and Machino Montell (I) Ltd. reported in 2004 (168) E.L.T. 466 (Tri. - LB).
6. It was found that there were delay of certain number of days in depositing the tax due as found by the learned Adjudicating Officer and such delay ranged from 23 days to 296 days for the impugned period from October 2001 to September 2002 and remained undisputed throughout. Nor also any reasonable cause was shown by the assessee before the forums below as well as before Tribunal to consider the issue in the light of provisions contained in Section 80 of the Act. Such Section required proof of existence of reasonable cause for the failure under Section 76 of the Act. Except the plea that they had to spend substantial amount on account of advertisement and other expenses with a view to attract travel loving people that they had made a substantial loss in the accounting year ending 31-3-2003 for which they had to pass through acute financial crisis, there was no other reason that was advanced by the Assessee. Authorities below did not make any finding whether the assessee had collected any service tax from its service takers during the impugned period to determine Assessable Value of taxable service in terms of provision contained in Section 67 of the Act.
7. Penalty is a preventive as well as deterrent measure to defeat recurrence of breach of law and also to discourage non-compliance to the law of any wilful breach. Penalty prescribed by Section 76 is levy on service tax on the consideration received in relation to Tour Operator Service which came into force from 1997 and well known to tour operators. The decisions on which the Ld. Commissioner (Appeals) relied upon relates to the matter of Central Excise and mere payment of service tax before issue of show cause notice does not alter commission of breach of law on the date of commissioning of the offence. Casual plea of the assessee that they spent substantial money on advertisement and other expenses to attract travel loving people does not appear to be reasonable cause to exonerate from penalty. Of course, just because penalty is prescribed that should not mechanically be levied following Apex Court's decision in the case of Hindusthan Steel Ltd. v. State of Orissa . Section 80 of the Act having made provision for excuse from levy of penalty under section 76 if the assessee proves that there was a reasonable cause for failure under that section no other criteria is mandate of Law to exonerate from penalty. No reasonable cause being patent from the record towards failure to deposit the tax due, duly, except the casual approach of aforesaid, the ld. Commissioner (Appeals) was not justified to set aside the penalty levied under section 76 of the Act.
8. There is no disagreement that duty deposited before issuance of show cause notice under Section 11 AC of the Central Excise Act, 1944 did not call for action under that section following decision of the Tribunal in the case of Rashtriya Ispat Nigam Ltd. v. Commr. of Central Excise, Vishakapatnam and similar such views of Hon'ble High Court of Madras in the case of CCE, Madras v. Jkon Engineering Pvt. Ltd. 2005 (67) RLT 157 (Madras) and Hon'ble High Court of Karnataka in the case of Commr. of Central Excise, Bangalore v. Shreekrishna Pipes Industries . The view taken by the Tribunal at Bangalore was subject matter of appeal before the Apex Court. However, that appeal was dismissed as reported in 2004 (163) E.L.T. A53. Similar view was also taken by the South Zonal Bench of the Tribunal at Chennai in the case of EID Parry (I) Ltd. v. Commr. of Central Excise, Mumbai ; following its earlier decision in Dynamatic Technologies Ltd. v. CCE, Chennai reported in 2003 (54) RLT 675 (CEGAT-Chennai). But contrary decision holding penalty whereever prescribed shall be leviable whenever there is a failure to pay duty by the date was held by Hon'ble High Court of Allahabad in the case of PEE AAR Steels Pvt. Ltd. v. Commr. of Central Excise . Relying on such judgement, Tribunal has already held in the case of Mittal Texo Fab Ltd. v. Commr. of Central Excise that deposit of duty prior to show cause notice is a mitigating factor for reducing penalty. In the case of Commr. of Central Excise Indore v. S.P. Tobacco Ltd., Navin Jhanjhi, M.D. wherein it was held that imposition of penalty has nothing to do with the timing of show cause notice and the mere fact that after detection of the case by the Revenue, the appellant have paid dues immediately, thereafter will not make him free from the charges of removing the goods without payment of duty.
9. It is relevant to state that the decision on which the learned Commissioner (Appeals) relied relates to provision under Central Excise Act, 1944 while present appeal is under Finance Act, 1994 which is self contained code. Provisions of section 76 of Finance Act 94 has fastened liability to mandatory penalty in addition to the tax payable and there is no exception provided except cases covered by Section 80 of the Act. Provisions contained in 11 AC of the Central Excise Act and Rule 173Q of the Central Excise Rules 1944 called for pay". This provided discretion whether to levy or not depending on the facts and circumstances of the case, while section 76 of the Finance Act has fastened liability subject to Section 80 of the Act even to excuse in justified cases and findings.
10. With the aforesaid observations, to meet the end of justice, the learned Adjudicating Officer would do well to determine assessable value of service under Section 67 of the Act and determine tax liability afresh as well as impose penalty @ Rs. 100/- each for everyday of default on the defaulted amount or @ 2 per cent of tax due per month whichever is higher as per law as in for on the day of default.
11. In the result order of learned Commissioner of Central Excise (Appeals) waiving penalty under Section 76 of the Act is set aside. The Respondent gets relief to the extinct (sic) (extent) indicated aforesaid and appeal of Revenue allowed in the manner decided as aforesaid.
(Pronounced on 30-11-2006)