Raasi Refractories Ltd vs Commissioner Of Central Excise, ...

[Arising out of Order-in-Appeal No. 44/2009 dated 14/09/2009 passed by the Commissioner of Customs, Central Excise and Service Tax, Hyderabad]

For approval and signature: HON'BLE Mr. B.S.V. MURTHY, TECHNICAL MEMBER

1 Whether Press Reporters 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 the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 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

Raasi Refractories Ltd. Lakshmipuram, P.O. Narketpally, Nalgonda (Dist.) Appellant(s) Versus Commissioner of Central Excise, Customs And Service Tax Hyderabad-III Opp: LB Stadium Road, Basheerbagh, Hyderabad  500 004 Andhra Pradesh Respondent(s)

Appearance:

Mr. Rajesh Kumar, CA Hiregange & Associates, No. 1010, 26th Main, Above Corporation Bank, 4th T Block, Jayanagar, Bangalore  560 041 For the Appellant

Mr. N. Jagdish, AR For the Respondent

Date of Hearing: 17/03/2015 Date of Decision: 17/03/2015 CORAM:

HON'BLE Mr. B.S.V. MURTHY, TECHNICAL MEMBER

Final Order No. 20739 / 2015

Per: B.S.V. MURTHY

Appellant is engaged in the manufacture of refractory bricks. They also got registration for payment of service tax in respect of GTA services received by them. However over a period of two years in 2004-05 and 2005-06, the appellant did not pay the tax on a regular basis and there was delay. Return for the period from 1/2005 to 3/2005 was filed in January 2006 and payment was also delayed. Similar was the situation for subsequent quarters up to September 2006 and in all the cases service tax was paid belatedly and returns were also filed belatedly. Proceedings initiated culminated in imposition of penalty of Rs. 13,68,399/- (Rupees Thirteen Lakhs Sixty Eight Thousand Three Hundred and Ninety Nine only) under Section 76 of the Finance Act 1994 and a penalty of Rs. 2,000/- (Rupees Two Thousand only) under Rule 7C of Service Tax Rules 1994. However even though appellant had made payments of service tax belatedly, they had not deposited the interest also completely. The interest was deposited only when the matter reached the Tribunal and at the time of Stay Order as per the directions of the Tribunal, the entire interest was paid.

2. Even though the learned CA took 2-3 grounds for the assessee, I consider that only one ground is sufficient to decide the appeal. Therefore I am not going into all other grounds mentioned.

3. The learned CA relies upon the provisions of Section 83A of Finance Act 1994 and Notification No. 30/2005-S.T. dated 10.08.2005 issued under Section to submit that in this case the original authority could not have adjudicated the case at all since the amount involved is more than Rs. 5,00,000/- (Rupees Five Lakhs only) and the Assistant Commissioner or Deputy Commissioner of Central Excise could have adjudicated the case only if the amount of service tax or cenvat credit specified in the notice for the purpose of adjudication under Section 83A was less than Rs. 5,00,000/- (Rupees Five Lakhs only).

4. I have considered the submissions. For better appreciation Section 83A of Finance Act 1994 and Notification No. 30/2005 are reproduced below:

1[83A Power of adjudication. Where under this Chapter or the rules made thereunder any person is liable to a penalty, such penalty may be adjudged by the Central Excise Officer conferred with such power as the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963), may, by notification in the Official Gazette, specify.]1 NOTIFICATION NO. 30/2005, Dated: August 10, 2005 Sub: Section 83A - Monetary limit for adjudication under service tax. G.S.R. (E).- In exercise of the powers conferred by section 83A of the Finance Act, 1994 (32 of 1994), the Central Board of Excise and Customs hereby confers on the Central Excise Officer specified in column (2) of the Table below, such powers as specified in the corresponding entry in column (3) of the said Table, for the purposes of adjudging a penalty under Chapter V of the said Finance Act or the rules made thereunder. Table S.No Central Excise Officer Amount of service tax or CENVAT credit specified in a notice for the purpose of adjudication under section 83A (1) (2) (3)

1. Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise Not exceeding Rs. 5 lakhs

2. Joint Commissioner of Central Excise Above Rs. 5 lakhs but not exceeding Rs. 20 lakhs

3. Additional Commissioner of Central Excise Above Rs. 20 lakhs but not exceeding Rs. 50 lakhs

4. Commissioner of Central Excise Without limit.

Provided that nothing contained in this notification shall be applicable where a decision or order passed under Chapter V of the said Finance Act or the rules made thereunder has been referred back to any authority which passed such decision or order, with such directions, for a fresh adjudication or decision, as the case may be.

2. This notification shall come into force on the date of its publication in the Official Gazette. It can be seen that only if the amount of service tax specified is less than Rs. 5,00,000/- (Rupees Five Lakhs only), the original adjudicating authority could have adjudicated the case. In this case in the annexure to the show-cause notice the total amount of service tax mentioned is Rs. 20,05,788/- (Rupees Twenty Lakhs Five Thousand Seven Hundred and Eighty Eight only) which is definitely more than Rs. 5,00,000/- (Rupees Five Lakhs only). Therefore the original authority would not have adjudicated the show-cause notice at all. That being the situation entire proceedings become invalid.

5. At this stage learned AR submits that the observations above may not be correct. Section 83A is applicable only when penalty is to be adjudged. It is not applicable to amount of tax. Therefore it is his submission that if the penalty proposed in the show-cause notice is less than Rs. 5,00,000/- (Rupees Five Lakhs only), the matter can be adjudicated by the original authority at the level of Assistant Commissioner or Deputy Commissioner. He fairly agrees that in this case unfortunately for the Revenue even the penalty proposed in the annexure to the show-cause notice is Rs. 13,68,399/- (Rupees Thirteen Lakhs Sixty Eight Thousand Three Hundred and Ninety Nine only). Therefore even going by the logic proposed by the learned AR, the present proceedings do not become valid.

6. The learned CA has not contested the interest which has already been paid and which is liable to be paid as per the recent decision of the Honble High Court of Bombay wherein it has been held that interest becomes automatically payable once the principal is paid even they demand.

7. In view of the above discussion, the demand for interest is upheld and penalty is set aside.

(Order pronounced in open court)

(B.S.V. MURTHY) TECHNICAL MEMBER

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