Custom, Excise & Service Tax Tribunal
M/S. Forbes Marshall Pvt. Ltd vs Commissioner Of Central Excise, Pune on 10 October, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No.ST/594/12-MUM (Arising out of Order-in- Appeal No. PI/RKS/118-119/2012 dated 18/5/14 passed by the Commissioner (Appeals), Central Excise, Pune -I ) For approval and signature: Honble Mr. P.S. Pruthi, Member (Technical) ============================================================
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 Their Lordships wish to see the fair copy :
of the Order?
4. Whether Order is to be circulated to the Departmental :
authorities?
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M/s. Forbes Marshall Pvt. Ltd.
:
Appellant
VS
Commissioner of Central Excise, Pune-1
:
Respondent
Appearance
Shri. Mehul Jivani, CA for Appellant
Shri. N. N. Prabhu Desai, Supdt. (A.R) for respondent
CORAM:
Mr. P.S. Pruthi, Member (Technical)
Date of hearing : 10/10 /2014
Date of decision : 10/10/2014
ORDER NO.
This is an appeal filed against the impugned order confirming demand of service tax, interest and penalties under Section 77 & 78 of the Finance Act, 1994.
2. The appellants were receiving various services under reverse charge mechanism and paying service tax. However, for the months of March 2008 and March 2009, the required service tax was not paid and the same was paid in only on 1st October 2009.
3. Heard both sides.
4. The Ld. Counsel stated that they agreed to pay the service tax demand as it would be revenue neutral and they are entitled to take the credit of the same. However, he disputes the demand of interest on the basis of revenue neutrality relying on the Tribunal judgment in the case of Reliance Industries Ltd. Vs. Commissioner of Central Excise, Rajkot reported in 2013 (292) ELT 378 (Tri.Ahd.). He also disputes the imposition of penalty under Section 77 & 78 of the Finance Act, 1994 in revenue neutral situation relying on CESTAT judgment in the case of Patel Alloys Ltd. 2013(293) ELT (264) ELT (Tri.Ahd.) which was upheld by the Gujarat High Court.
5. The Ld. A.R. emphasis that payment of interest is a civil liability and drew attention to the judgment of Honble Mumbai High Court 2007 (215) ELT 023 in the case of M/s. Vikhe Patil SSK. Ltd. He added that the onus is on the appellant to prove that there was no intention to evade payment of duty. He reiterates the findings of the Commissioner.
6. I have carefully considered the submissions. It is a fact that duty having been paid by the appellants, they were entitled to take Cenvat Credit which they have taken. The issue remains of deciding whether interest and penalties are to be demanded. Simply because a situation leads to revenue neutrality does not imply that tax need not be paid on time. When law requires tax to be paid it has to be paid as per time specified. The Ld. Counsel has relied on the case of Reliance Industries (supra) to say that interest is not demandable. I note that this case refers to situation where the question of payment of duty on intermediate products was the issue. In the facts of the present case, it is clear that the tax has been paid much later than the date on which it was due. The time to be considered for interest purposes is this time between the due date and the payment day. It cannot be said that the Government has not lost interest between the two dates, notwithstanding the fact that Cenvat Credit could have been availed on the same date if duty had been paid on time. This aspect was not considered in the citations referred. I hold that interest is payable under Section 75 of the Finance Act.
7. As regards penalty the Ld. Counsel stated in court that in a similar case of a group company M/s. Khrone, penalty was set aside and no appeal was filed against that order. Although the appellants are paying regularly service tax regularly, two transactions were missed due to oversight and tax could not be paid in respect of these two transactions. Intention to evade payment of duty is not established when clearly the appellants are eligible for taking Cenvat Credit as soon as duty is paid by them. The case of Patel Alloys Pvt. Ltd. (supra) supports this case.
8. The appeal is disposed of in the above terms. Interest is payable; however penalties are set aside.
(Dictated in court) (P. S. Pruthi) Member (Technical) Sm ??
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