Iwi Crogenic Vaporization System India vs Commissioners Of Central Excise

[ Arising out of OIA-VAD-EXCUS-002-APP-96-14-15dated 12.5.2014Passed by Commissioners of Central Excise, Customs and Service Tax-VADODARA-II ]

Iwi Crogenic Vaporization System India - Appellant(s)

Vs.

Commissioners of Central Excise, Customs and Service Tax-VADODARA-II - Respondent(s)

Represented by

For Appellant(s) : Shri Paritosh Gupta, Advocate For Respondent(s) : Shri Alok Srivastava, Authorised Representative

For approval and signature :

Mr. H.K. Thakur, Hon.ble Member (Technical)

1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

No 2 Whether it should be released under Rule 27 of 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?

Seen 4 Whether Order is to be circulated to the Departmental authorities?

Yes

CORAM :

Mr. H.K. Thakur, Hon.ble Member (Technical)

Date of Hearing : 17/6/2015 Date of Decision : 29/6/2015

ORDER No. A/10893 / 2015 dtd 29/6/2015

Per : Mr. H K Thakur;

This appeal has been filed by the appellant with respect to OIA No  dated 12.5.2014 under which OIO dated 22.10.2013 passed by the Adjudicating Authority has been upheld.

2. Shri Paritosh Gupta, Advocate, appearing on behalf of the appellant argued that the appellant is registered with the Dept. and are availing the facility of Cenvat Credit on services like GTA Services, Maintenance and Repair Services, Erection and Commission and Installation Services, Supply of Eligible Goods Services, Clearing Services etc. That as a result of investigation carried out by the officers of Central Excise, appellant was found to be not paying Service Tax on certain services for which show cause notice dated 13.4.2012 was issued for Rs 34,06,598/-, alongwith interest, and imposition of penalties under Section 76 and 78 of the Finance Act 1994 were also proposed. That the entire Service Tax demand alongwith interest was paid by the appellant which has been appropriated by the appellant in the OIO dated 22.10.2013 alongwith equivalent penalty under Section 78 of the Finance Act 1992. Learned Advocate submits that the appellant is not contesting the payment of Service Tax and interest but is only contesting imposition of penalty under Section 78 of the Finance 1994. It was his case that the entire amount of Service Tax demand and interest was paid by the appellant before the issue of show cause notice. Therefore, there was no need of imposition of any penalty under Section 78 of the Finance Act 1994. It was also his case that on certain Services like GTA Services, Service Tax was to be paid under reverse charge mechanism for which appellant was entitled to Cenvat Credit. That once Service Tax is paid under reverse charge basis then the the same would have been admissible as Cenvat Credit to the appellant. That in view of the revenue neutral situation in case of reverse charge duty payment there could be no intention to evade payment of Service Tax and accordingly no penalty under Section 78 of the Finance Act 1994 is imposable. Learned Advocate relied upon the case law of Bhagwati Caters Pvt Ltd vs CST, Ahmedabad [Order No A/11751/2013 dated 20.12.2013].

2. Shri Alok Srivastav, Authorised Representative, appearing on behalf of the Revenue, argued that in the case of Bhagwati Caterers Pvt Ltd vs CST, Ahmedabad [Order No A/11751/2013 dated 20.12.2013], is not applicable because in the present case no financial hardships has been contested by the appellant which was the fact in the relied upon case law and appellant was also paying Service Tax to some extent before filing of the periodical returns. It was strongly argued by the Learned Authorised Representative that the appellant was recovering the Service Tax from their customers and the same was not paid.

3. Heard both the sides and perused the case records. The appellant is not contesting the payment of Service Tax on merits. The only argument of the appellant is that penalty under Section 78 of the Finance Act 1994 is not imposable as the entire Service Tax demand alongwith interest, was paid before the issue of show cause notice. It was also their case, that that Service Tax required to be paid under reverse charge mechanism was admissible as Cenvat Credit to the appellant and accordingly there cannot be any intention to evade payment of Service Tax. In this regard, it is observed that the appellant was recovering the Service Tax from the services. Further, they were registered with the Central Excise Dept. for providing several services including the services on which Service Tax was required to be paid on reverse charge basis. Appellant was also recovering the Service Tax from the service recipients. Once appellant is registered with respect to services, it is understood that the due service tax should have been paid to the Central Excise Dept when the same is received from the Service recipients or payable on reverse charge mechanism. No Financial hardship has been claimed by the appellant as was the case before the Bench in the case of Bhagwati Caterers Pvt Ltd vs CST, Ahmedabad (supra) as pointed out by the Learned Authorised Representative, appearing on behalf of the Revenue. Appellant has also not filed required periodical returns Revenue could detect none payment of Service Tax as a result of special investigation. It is not the case where the appellant was not registered with Central Excise Dept and could claim ignorance of law. By recovering the Service Tax from their service recipients and not paying the same to the Dept. has to be considered as evasion of Service Tax with intention to evade when no periodical returns were filed. In view of the above observations, there is no reason to interfere with the order passed by the lower authorities and the order passed by the first appellate authority is required to be upheld.

5. Appeal filed by the appellant is rejected.

(Pronounced in the Court on 29.6.2015)

(H.K. Thakur) Member (Technical)

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