M/S. Prabhakar Mahindra Bhosale vs Commissioner Of Central Excise, ...

[Arising out of Order-in-Appeal No. P-II/MMD/229/2012 dtd. 17/10/2012 passed by the Commissioner (Appeals), Central Excise  Pune-II]

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? =======================================================

M/s. Prabhakar Mahindra Bhosale : Appellants

VS

Commissioner of Central Excise, Kolhapur-I Division : Respondent

Appearance

Shri. Vidyasagar S. Apte, Advocate for the Appellants Shri. A.B. Kulgod, Asstt. Commissioner (A.R.) for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 16/6/2015 Date of decision: 16/6/2015

ORDER NO.

Per : Ramesh Nair

This appeal is directed against Order-in-Appeal No. P-II/MMD/229/2012 dtd. 17/10/2012 passed by the Commissioner (Appeals), Central Excise Pune-II, wherein the Ld. Commissioner upheld the order-in-original dated 14/3/2012. The appeal of the appellant was rejected in toto.

2. The facts of the present case is that the appellant is registered service tax provider in respect of services of mining. The appellant was recovering charges for the services provided from their customer. During the scrutiny of records of the service provider by the department, it was observed that they had short paid service tax amount of Rs. 6,37,742/- for the period January, 2009 to March, 2009 out of which an amount of Rs. 3,29,436/- had been paid by them on 14/10/2009. On pointing out that the balance amount of Rs. 3,08,306/- was not paid, the appellant then paid the amount vide Challan dated 30/8/2010 alongwith interest of Rs. 48,016/-. Show cause notice dated 15/6/2011 was issued proposing confirmation of demand and appropriation of amount of service tax paid alongwith interest and also proposing imposition of penalty under Section 76 and 78 of the Finance Act, 1994. In the adjudication, the Adjudicating authority vide order-in-original dated 14/3/2012 confirmed and appropriated the amount of service tax paid alongwith interest and imposed equal amount of penalty under Section 78 of the Finance Act, 1994. Aggrieved by the said order-in-original dated 14/3/2012, appellant filed appeal before the Commissioner (Appeals) which was rejected by upholding order-in-original. Being aggrieved by the impugned order, the appellant is before me.

3. Shri. Vidyasagar S. Apte, Ld. Counsel for the appellant submits that appellant have been regularly paying service tax and filing ST3 returns. Appellant on their own ascertainment have paid part of the amount i.e. Rs. 3,29,436/- without detection from the department, remaining amount of Rs. 3,08,306/- was not paid. On pointed out by the department during the scrutiny of the records appellant has paid the said amount alongwith interest before issuance of show cause notice. It is his submission that this short payment is occurred due to accounting mistake as new account clerk was appointed for maintaining books of account. At the time of finalizing of account i.e. in the month of October, 2009 it was observed by the appellant that there was short of payment of service tax for the period from 1/1/2009 to 31/3/2009 to the tune of Rs. 6,36,743/-. He submits that on pointing out this error, appellant voluntarily paid part of amount of Rs. 3,29,436/- However balance amount could not be paid as they were facing financial crisis. Ld. Counsel has categorically submitted that they are not contesting the demand of service tax and payment thereof alongwith interest. The Grievance is only of imposition against penalty under Section 78. He further submits that since the appellant has paid entire service tax alongwith interest before issuance of show cause notice without any protest, their case is covered by Section 73(3). Accordingly neither any show cause notice should have been issued nor any penalty was imposable. He prays for waiver of penalty under Section 78 by invoking Section 73(3) of the Finance Act, 1994.

4. Shri. A.B. Kulgod, Ld. Asstt. Commissioner (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that since value of the short paid service tax and the service tax payable has not been declared in the ST 3 returns nor intimated otherwise to the department till it was pointed out by the departmental officers; there is clear suppression of fact on the part of the appellant. It is his submission that had the departmental officer not pointed out the said discrepancy, appellant could not have made payment of duty. Therefore there is suppression of facts. Immunity provided under Section 73(3) is applicable not merely on the basis of payment of services tax and interest has been paid before issuance of show cause notice. Non payment of service tax should not be on account of suppression of fact and if there is suppression of fact Section 73(3) shall not be applicable, therefore Ld. Commissioner has rightly upheld the penalty under Section 78.

5. I have carefully considered the submissions made by both sides and perused the record.

6. I find that though the appellant have not declared value of the service tax and service tax payable correctly in the ST3 returns but data was available in the books of account and on scrutiny by the department officers. They have retrieved data from books of account only. Since, on pointed out by the department officer, appellant has paid entire service tax alongwith interest, penalty under Section 78 should not have been imposed. I agree with the Ld. A.R. that Section 73(3) is not applicable in the case where suppression of fact is established, however, I am of the view that taking into overall facts and circumstances of the case and data was available in the books account and the appellant has paid entire service tax alongwith interest. In my view the appellant has made reasonable cause for invoking of Section 80. In view of my above discussion, I find that in terms of Section 80, appellant deserves waiver of penalty under Section 78, therefore, I waive the penalty. Confirmation of demand of the service tax alongwith interest and payment thereof is maintained. Penalty under Section 78 is waived. Appeal is allowed in the above terms.

(Operative part pronounced in court)

Ramesh Nair Member (Judicial)

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