M/S Orchid Biomedical Systems vs Cce, Goa

IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. IV

APPEAL NO. ST/ 88198 / 13

(Arising out of Order-in-Appeal No. Goa/CEX/GSK/26-27/2013 dated 31.05.2013 passed by the Commissioner of Central Excise, Customs & Service Tax (Appeals) Goa.)

For approval and signature: Honble Shri Anil Choudhary, 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 : Yes 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? =====================================================

M/s Orchid Biomedical Systems

: Appellant Versus

CCE, Goa : Respondent

Appearance Shri Jayant Kuvelkar, Consultant : For Appellant Shri S.V. Nair, A.C. (A.R.) : For Respondent

CORAM: HONBLE SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL)

Date of Hearing : 06.04.2015 Date of Decision: 06.04.2015

ORDER NO.......................................................

Per: Anil Choudhary:

The appellant M/s Orchid Biomedical Systems is in appeal against Order-in-Appeal No. Goa/CEX/GSK/26-27/2013 dated 31.05.2013 passed by the Commissioner of Central Excise, Customs & Service Tax (Appeals), Goa.

2. The appellant is a manufacturer of diagnostic kits, and exports 100% of its production. The appellant have engaged the services of commission agent's who procured orders for the appellant. Such commission agents are located overseas. By virtue of amendment in Section 66A of the Finance Act, the appellant became liable to pay service tax on such commission paid, on reverse charge basis. The appellant did not pay the service tax for the lack of awareness. In the course of audit during October, 2010, it was pointed out to the appellant that they're liable to pay service tax, on reverse charge basis, on the services provided by the service provider's located abroad and service received by the appellant in India, for the period 2007-08 to 2010-11.

3. The appellant accordingly without any dispute deposited the service tax with interest in December 2010. Proper intimation as also given to the Revenue. The Revenue issued a show-cause notice dated 28.02.2012 proposing to adjudicate the demand with interest and further proposal to appropriate the amount of service tax already deposited and also appropriate the amount of interest deposited prior to issue of show-cause notice. Further proposal to impose penalty under Section 76 and 78 was also made.

4. The show-cause notice was adjudicated and the demand of tax conformed with interest and appropriated. Further penalty was imposed under Section 78 of the Act, being equal amount to tax but mentioned as Rs. 10,05,451/- instead of Rs. 10,36,531/-. Being aggrieved the appellant preferred appeal before the Commissioner (Appeals) challenging the imposition of penalty. The Revenue also preferred appeal for the correction of the amount of penalty.

5. The Commissioner (Appeals) was pleased to allow the appeal of Revenue correcting the amount of penalty imposed as Rs.10,36,531/-. Whereas the appeal of the appellant-assessee was dismissed holding that the appellant being an assessee under Central Excise provisions, was aware of his obligations, and as such penalty is rightly imposed. Being aggrieved the appellant is in appeal before this Tribunal.

6. The learned Counsel for the appellant urges that that is no contumacious conduct on the part of the appellant. The issue of taxation on Reverse charge basis was settled by the Honble Bombay High Court in the case of Indian National Shipowners Association, sometime in the year 2008-09. Further the appellant have deposited the tax with interest, on being so pointed out, as such no show-cause was required to be issued under the provisions of Section 73 sub Section 3 of the Finance Act. The Counsel for the appellant also relies on the ruling of this Tribunal Single Member Bench in the case of Landis + GYR Limited Vs. CCE, 2013 (290) ELT 447, wherein under similar circumstances this Tribunal held that only for the allegation that had the audit not discovered the non-payment of tax, the same would've escaped, is not sufficient for imposition of penalty and accordingly penalty imposed were deleted.

7. The learned A.R. relies on the impugned order.

8. Having considered the rival contentions, I find that there is no case of active concealment or contumacious conduct made out against the appellant. Further the transactions were recorded in the books of account maintained in ordinary course of business. The cogent explanation given by appellant was not found untrue. The Commissioner (Appeals) have confirmed penalty on assumption & presumptions, which are not tenable. In this view of the matter the penalty imposed under Section 78 is set aside. Thus, the appeal is allowed with consequential relief if any.

(Pronounced in open Court)

(Anil Choudhary)

Member (Judicial)

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