2012 (11) TMI 651 - AT - Service Tax

Tribunal grants appellant's appeal, waives penalties under Section 76 & 78, finding revenue neutrality.

CCL Products India Ltd. Versus Commissioner of Central Excise and Service Tax

The Tribunal ruled in favor of the appellant, allowing their appeal and rejecting the department's appeal. Penalties under Section 76 and Section 78 were ... Demand of duty, interest and penalty – penalty under Section 78 on the ground that service tax and interest were paid before the order was issued – Held that:- Assessee is a 100% EOU - services were clearly input services for the appellant, the assessee was eligible for credit of service tax if the same had been paid by them - their claim for the revenue neutrality and consequently absence of intention to evade service tax is acceptable. Therefore, there is no justification for imposition of any penalty under Section 78 at all. Therefore, the party's appeal challenging the penalty under Section 78 has to succeed. As it is a clear case of revenue neutrality and a case where intention to evade service tax is absent, the penalty under Section 76 which is imposable deserves to be waived in the light of provisions of Section 80 of the Finance Act, 1994. Issues:1. Appeal against order of the Commissioner (Appeals) dated 9.10.2006 regarding recovery of service tax, interest, and penalties.2. Discrepancy in dates mentioned in the order-in-original and subsequent communications.3. Enhancement of penalty by the Commissioner (Appeals) from Rs.66,731/- to Rs.2,66,924/-.4. Imposition of penalties under Section 76 and Section 78.5. Claim of revenue neutrality and absence of intention to evade service tax by the appellant.Analysis:Issue 1: The appeal was filed by M/s. CCL Products (India) Ltd. against the order of the Commissioner (Appeals) dated 9.10.2006, which upheld the demand of service tax, interest, and penalties. The original authority had imposed penalties under Section 78, citing that the service tax and interest were paid before the issuance of the order.Issue 2: A discrepancy was noted between the date of the order-in-original (30.9.2009) and the dates mentioned in subsequent communications (5.10.2009 and 13.10.2009), indicating a mismatch in the timeline of events.Issue 3: The Commissioner (Appeals) enhanced the penalty from Rs.66,731/- to Rs.2,66,924/-, which was challenged by the appellant. The party's appeal against the penalty was rejected by the Commissioner (Appeals).Issue 4: The imposition of penalties under Section 76 and Section 78 was contested. The department sought enhancement of the penalty equal to the amount of service short-paid/evaded and also penalty under Section 76. The Tribunal noted the appellant's status as a 100% EOU and the nature of disputed service tax related to import of services from a foreign-based commission agent.Issue 5: The Tribunal considered the appellant's claim of revenue neutrality and absence of intention to evade service tax. It found that as a 100% EOU, the appellant was eligible for credit of service tax and refund under certain provisions. The Tribunal ruled in favor of the appellant, stating that there was no justification for the imposition of penalties under Section 76 and Section 78 due to the circumstances indicating revenue neutrality and absence of intent to evade service tax.In conclusion, the Tribunal ruled in favor of the appellant, allowing their appeal and rejecting the department's appeal. The penalties under Section 76 and Section 78 were waived based on the appellant's status as a 100% EOU and the absence of intention to evade service tax, leading to a finding of revenue neutrality.