Commissioner Of Central Excise, Pune vs M/S. Ganesh Enterprises

[Arising out of Order-in- Appeal No. PUN-EXCUS-001-APP-051-14-15 dtd. 31/7/2014 passed by the Commissioner(Appeals), Central Excise, Pune-1]

For approval and signature:

Honble Mr Ramesh Nair, Member(Judicial)

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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 : CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : seen of the Order?

4. Whether Order is to be circulated to the Departmental: Yes authorities? =======================================================

Commissioner of Central Excise, Pune-1 : Appellants

VS

M/s. Ganesh Enterprises : Respondent

Appearance

Shri. A.B. Kulgod, Asst. Commissioner(A.R.) for the Appellants Shri. Sadashiv Hawaldar, Advocate for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 12/6/2015 Date of decision: 12/6/2015

ORDER NO.

Per : Ramesh Nair

This Revenues appeal is against Order-in- Appeal No. PUN-EXCUS-001-APP-051-14-15 dtd. 31/7/2014 passed by the Commissioner(Appeals), Central Excise, Pune-1, wherein, Ld. Commissioner(Appeals) dropped the penalty imposed under Section 78 and reduced penalty from 20,000/- to Rs. 500/- imposed under Section 77. Revenue has filed this appeal for restoration of penalty under Section 78 and against reduction of penalty under section 77.

2. Shri. A.B. Kulgod, Ld. Asstt. Commissioner(A.R.) appearing on behalf of the Revenue submits that respondent have charged and recovered service tax from M/s. Cadbury India Ltd and have not deposited the service tax at the relevant time therefore they have defaulted the government therefore the penalty under Section 78 should not have been dropped and the penalty under Section 77 should not have been reduced from 20,000/- to Rs. 500/-.

3. On the other hand, Shri. Sadashiv Hawaldar, Ld. Counsel for the respondent submits that respondent had no malafide intention to evade service tax. From the entire proceedings, the fact which emerged clearly shows that respondent have been paying amount in cash to the consultant. As per the representation given by the consultant, he submits that it is consultant, who has done fraud with the respondent and not deposited service tax in time with the department. It is his submission that to the effect of this fraud committed by the consultant, department also initiated the criminal proceedings and filed FIR with the police. This undisputed facts clearly shows that appellant did not have any malafide intension or intention to evade service tax. Non payment of service tax has occurred only due to the fraud committed by the consultant. Therefore penalty should not have been imposed under Section 78 as reasonable cause has been shown. By invoking Section 80 of the Finance Act, penalty under Section 78 was correctly dropped by the Commissioner(Appeals) as regard the reduction of penalty under Section 77, he submits that entire records was with the consultant and appellant was under bonafide belief that since, entire job of depositing service tax and filing of the returns was assigned to the consultant therefore they are under bonafide belief that the returns might have been filed regularly. In this position the Commissioner has correctly reduced penalty from Rs. 20,000/- to Rs. 500/- which does not require any interference.

4. I have carefully considered the submission made by both sides and perused the record.

5. The present Revenues appeal is only for imposition of penalty under Section 78 and restoration of the penalty of Rs. 20,000/- imposed by the original authority which was reduced by the Commissioner(Appeals) to Rs. 500/-. From the entire proceedings, I observed that appellant have been making submission before the adjudicating authority and before the Commissioner(Appeals) that they did not have any intension to evade service tax as they have been making cash payment to their consultant, who was assigned the job for computing the service tax and depositing in the bank and also filing the return periodically. However, consultant has not deposited cash given to him as service tax in the bank and consultant defrauded the respondent, when this fact came to the notice, the department has initiated investigation. Ld. Commissioner in respect of dropping penalties recorded his findings as under:

I find that the appellants have claimed that they had appointed the consultant Shri. Amol Adhav for making tax calculations, payment of service tax and submission of return etc and they were paying cash to the consultant for the payment of service tax and the impugned case is outcome of investigations conducted by the Department at the end of the said consultant. I find that no contrary evidence has been brought in the investigations in this regard to prove that the amount was not being paid by the appellants to the consultant for the payment of service tax to the department or the appellants were colluding with the consultant. The show cause notice states that the department has filed F.I.R. with the police authorities for the fraudulent act on the part of the consultant. The appellants also not been named in the F.I.R. along with the consultant. The Ld. Adjudicating authority has not accepted the plea of the Appellants regarding payment of amount of service tax to consultant and their banafide belief that the consultant has deposited the amount, on the grounds that they has not ascertained the authenticity of such payment from the jurisdictional service tax Superintendent. In view of the these facts that there is no evidence on record to prove collusion of the appellant with the consultant and the fact that the appellants are not made party in the FIR filed against the consultant and it is the consultants fault, the charges of fraud or collusion or willful mis-statement, or suppression of facts with intent to evade payment of duty do not stand against the appellants. Accordingly the appellants are not liable to any penalty under Section 78 of the Act. Further, in view of the said facts an extremely lenient view is called for while imposing the penalty under Section 77 of the Act for not filing the returns as the appellants had entrusted the said job to the consultant who was found to be involved in a fraud and there is no evidence contrary to the appellants claim or their collusion with the consultant.

From the above findings of the Ld. Commissioner(Appeals) where it can be seen that the same is discussed in details that regarding the fraud committed by the consultant with the appellant for not depositing service tax in the governments account for which FIR proceedings also initiated against consultant by the department, which clearly shows that it is not the appellant who has committed an offence of non payment of service tax, it is the consultant, who has defrauded them therefore there is reasonable cause for waiver of penalty under Section 78. Accordingly Ld. Commissioner(Appeals) has correctly set aside the penalty imposed under Section 78. As regard the reduction of penalty under Section 77 from Rs. 20,000/- to Rs. 500/-. On the same fact Ld. Commissioner(Appeals) has exercised his discretion in reducing penalty from Rs. 20,000/- to Rs. 500/-. In my view there is no reason to interfere in the findings of the Ld. Commissioner(Appeals) who has reduced penalty by proper application of mind. I, therefore upheld the impugned order and dismiss the appeal of the Revenue. CO is also disposed of accordingly.

(Dictated in court)

Ramesh Nair Member (Judicial)

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