Samsonite South Asia Pvt. Ltd vs Cce Nashik

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT No. I

Appeal No. ST/344/11

(Arising out of Order-in-Original No. 07/ST/2011 dated 09.03.2011 passed by Commissioner of Central Excise & Customs, Nashik)

For approval and signature:

Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical)

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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 : No 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?

Samsonite South Asia Pvt. Ltd. Appellant Vs.

CCE Nashik Respondent

Appearance:

Shri Sachin A. Chitnis, Advocate for appellant Shri A.B. Kulgod, Asst. Commissioner (AR) for respondent

CORAM:

Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical)

Date of Hearing: 05.08.2015 Date of Decision: 05.08.2015

ORDER NO

Per: M.V. Ravindran

This appeal is directed against Order-in-Original No. 07/ST/2011 dated 09.03.2011.

2. The relevant facts that arise for consideration are during the period April 2006 to July 2010, the appellant had made payment in foreign currency to their parent company for technical inspection and advertisement services rendered for the products manufactured in India. Revenue authorities were of the view that the said services are liable to be taxed in the hands of appellant under the category of technical testing and inspection services and advertising services. This was pointed out to the appellant during the course of audit. The appellant accepted that they are liable to pay the service tax and paid the entire amount of service tax along with interest in August 2009 in compliance with the findings of the audit party. Subsequently, on 26.10.2010 show cause notice was issued for appropriation of the amounts paid and also for the imposition of penalties. The appellant contested the show cause notice. The adjudicating authority rejected the contentions raised by the appellant and after appropriating the amount of service tax and interest there, he imposed penalties under Section 78 of the Finance Act, 1994.

3. Learned Counsel would submit that they are not contesting the service tax liability and the interest thereof but submits that as per the provisions of Section 73(3) of the Finance Act, 1994 the amounts have been paid as pointed out by the audit party hence no show cause notice should have been issued. He relies upon the decision of the Tribunal in the case of Kitec Industries India Ltd. V. CCE & Service Tax  2015 (38) STR 166 (Tri. Ahmd.).

4. Learned D.R. on the other would submit that the appellant being from an organized sector, should have discharged the service tax liability on his own hence penalty imposed under Section 78 is correct.

5. We have considered the submissions made by both sides and perused the records.

6. We find that the appellant is not contesting the service tax liability during the relevant period and has also paid the tax and interest thereof. Since the appellant is not contesting the service tax liability, the same is upheld along with interest.

6.1 As regards the penalty imposed under Section 78 of the Finance Act, 1994 we do find merits in the submission made by the learned Counsel. The amount of service tax and the penalty thereof has been calculated by the audit party and intimated to the appellant. The appellant has in August 2009 discharged the entire liability along with interest. In our view this is a fit case wherein the provisions of Section 73(3) of the Finance Act, 1994 will apply as the said Section contemplates for non-issuance of show-cause notice if the assessee discharges the service tax liability on being pointed out by the departmental officers or on his own ascertainment. Be that as it may, we find that the appellant has made out sufficient case for non-imposition of penalty under Section 78, as during the relevant period the issue was being contested in various higher judicial forum and the same got settled by the judgement of the Honble High Court of Bombay in the case Indian National Ship Owners Association  2009 (13) STR 235 (Bom.) and upheld by the Honble Apex Court in 2010 (17) STR J-57.

6.2 In view of the facts and circumstances of this case, we find that the penalty imposed under Section 78 of the Finance Act, 1994 is unwarranted and needs to be set aside and we do so.

7. Impugned order to that extent it is imposing penalty under Section 78 is set aside and appeal is allowed to that extent.

(Dictated in Court)

(C.J. Mathew) Member (Technical) (M.V. Ravindran) Member (Judicial)

nsk

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Appeal No. ST/344/11