C.C.E. Panchkula vs M/S. Krishna Cylinders

[Arising out of Order-in-Appeal No. 22/ST/PKL/2008 dated 31.12.2008 by the Commissioner of Central Excise (Appeals), Delhi].

For approval and signature:

Honble Mr Ashok Jindal, Member (Judicial)

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?

C.C.E. Panchkula .Appellants

Vs.

M/s. Krishna Cylinders .Respondent

Appearance:

Shri Govind Dixit, DR for the Appellants

Shri Gagan Kohli, Advocate for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Hon'ble Shri R.K. Singh, Member (Technical)

Date of Hearing: 08.01.2015

FINAL ORDER NO. 50094/2015-CU(DB)

Per Ashok Jindal:

Revenue is in appeal against the impugned order wherein Ld. Commissioner (A) has dropped the penalty against the respondent under section 76, 77 & 78 of the Finance Act 1994.

2. The brief facts of the case are that during the period 30.08.2006  31.08.2006 audit took place in the factory of the respondent and it was revealed that during the period 01.04.2005  31.03.2006 the respondent has not paid any service tax on outward transportation of their goods. Therefore, they are liable to pay service tax under the category of goods transport agency services. Thereafter, a show cause notice was issued to the respondent to demand service tax along with interest and proposal was also made to impose the penalty under section 76, 77 & 78 of the Act. Before the adjudication the respondent paid the entire amount of service tax along with interest. Thereafter, if adjudication took place the amount paid by the respondent was appropriated and penalties under various provisions of the act were also imposed. The said order was challenged by the respondent before the Ld. Commissioner (A) who after giving a benefit under section 80 of the Finance Act 1994 has dropped the penalties under section 76, 77 & 78 of the Act. Aggrieved from the said order revenue is before us.

2. Shri R K Mishra, Ld. AR appearing on behalf of the revenue submits that the respondent cannot take the benefit of the section 80 of the Act. As they were already registered with the service tax department and they initially suppressed these facts from the department and not paid the service tax, if same is not detected, during the course of the audit the respondent have not paid the service tax. Therefore, respondents are not entitled for the benefit of the section 80 of the Act.

3. On the other hand the Ld. Counsel appearing on behalf of the respondent submits that the levy of outward transportation service cast on the respondent w.e.f. 01.01.2005 and they were not well conversant with the provision of the levy of the service tax and procedure to pay service tax on outward transportation services. Therefore, they are entitled for the benefit of the section 80 of the Act which Ld. Commissioner (A) has considered and given the benefit to them. Therefore, the impugned order is required to be upheld.

4. Heard the parties and considered the submissions.

5. Admittedly in this case audit took place on 30.08.2006 and 31.08.2006. It was revealed that the respondent has not paid the service tax for the period 01.04.2005 -31.03.2006 on outward transportation services. It is also fact on record that the levy of service tax by the respondent in outward transportation agency services came into the fact on 01.01.2005. We further find that for the subsequent period 01.01.2006-31.03.2007 the respondent has paid the service tax on pointing out by the audit team and there was no allegation against the respondent in those proceedings for suppression of the facts. In these circumstances, we are convinced with the arguments advanced by the Ld. Counsel for the respondent that as the levy of service tax on the services in question was new one. Therefore, they were under bonafide belief and could not pay service tax. We further find that respondent has been able to satisfy their bonafides. Therefore, they are entitled to the benefit of section 80 of the Finance Act 1994. In these circumstances, we hold that as the Ld. Commissioner (A) had rightly considered the factual matrix of the case and gave the benefit of section 80 to the respondent. Therefore, we do not find any infirmity with the impugned order, accordingly same is upheld. In these circumstances, appeal filed by the revenue deserves no merit and the same is dismissed.

(Dictated and pronounced in the open court)

(R.K.Singh) (Ashok Jindal) Member (Technical) Member (Judicial)

Bhanu

4

ST/223/2009-CU (DB)