The CESTAT Ahmedabad in the case of Iwi Crogenic Vaporization System India held that The non-payment of recovered tax coupled with the fact of non-furnishing of the details in respect of unpaid part in periodical returns clearly establish the intention of assesse to evade the payment of service tax recovered. Therefore, in such a case penalty levied u/s 78 is sustainable in law.
The appellant challenged the charges particularly by showing various evidences of receipt of goods, Lorry Receipt, Purity Check report, Payment of Labour Bills and other details, which were not disputed by the lower authorities.
In the present case, it was found that the input supplier supplied input accompanied with Central Excise invoice. There is no dispute of genuinity of invoice. It is clearly evident from the statement of input supplied by the transporter. In such a situation
Tribunal observed that normally it is practice that in case of any doubt or ambiguity, taxing provision is normally construed in favour of the assessee but when it is case of granting some exemption then there should be strict interpretation.
The crucial fact required to be seen is whether the main appellant should have enquired beyond the cenvatable document showing payment of duty that whether the inputs were due to the result of manufacture or not.
Appellant is a registered mandap keeper and was issued a show cause notice. There could be a situation where the appellant could be under a bona fide belief as to not to discharge the Service Tax liability on the advance amount received, during the material period, the issue of Service Tax liability under the Mandap Keeper services also was in litigation finally settled by Hon’ble Apex Court in the case of Tamilnadu Kalyana Mandapam Association v. Union of India[2004] 136 Taxman 596. I find that the appellant had discharged the Service Tax liability on being pointed out. As the appellant is not contesting the Service Tax liability and interest thereof, in my view, the lower authorities should not have issued the show cause notice as provisions of section 73(3) may apply in this case. Be that as it may, the judgment of the Tribunal in the case of Chintamani Mangal Karyalaya (P.) Ltd. (supra) in an identical issue, has held in favour of the appellant.
As regards fumigation charges, a specialized process for cleaning the containers, the Commissioner has allowed the claim on the ground that the fumigation is mandatory when agricultural products are exported and such fumigation can be done only by the Government approved agencies. Very same issue had come up before this Tribunal in the case of Ramdev Food Products (P.) Ltd. v. CCE [2012] 21 taxmann.com 410 (Ahd – CESTAT), wherein the Tribunal has taken a view that notification prescribed a condition that there has to be a written agreement between the buyer and the seller about testing and analysis of the product, if the service has been received without written agreement, the benefit of refund would not be admissible. In this case, fumigation is a specialized cleaning process, requiring to satisfy the condition of notification of written agreement between buyer and seller and ld. Counsel for the respondent fairly agree that they do not have a written agreement.
In this case, the appellants had Calculated and paid the entire amount of credit with interest and on finding that there was a short-fall in payment, the proviso of Sec.73 (3) of the Finance Act, 1994 would come into play and, therefore, the concerned Central Excise Officer should have informed the assessee instead of issuing show-cause notice. Though the Revenue had one year time for issue of show-cause notice, instead of intimating the appellants who would have been willing to deposit the amount without any notice, they have issued show-cause notice in this case. The appellant was not disputing the merit of the stand taken by the revenue. Show-cause notice has been issued which in accordance with the provisions of Sec.73 (3) of the Finance Act, 1994, need not have been issued at all.
It was submitted by the learned A.R. that the appellant company being a limited company is not covered by the term association and exemption available is only to the association. However, it was pointed out by the learned counsel that the appellant is registered under Section 25 of the Companies Act, 1956 which provides that the word “limited” can be dispensed with in respect of an association formed as a limited company for promoting commerce, art, science, religion, charity or any other object.
The stand of the assessee before the lower authorities that it was inadvertent mistake and there was no mala fide in availing the ineligible excess credit. On perusal of the Show-Cause Notice, we find that the Show Cause Notice only alleges the violation of provisions of Rule 14 of Cenvat Credit Rules, 2004 read with section 11AB of Finance Act, 1994 (sic). The said Show-Cause Notice does not allege any mala fide on the appellant for availment of excess credit. In our view, having reversed the ineligibly availed the Cenvat credit on being pointed out by the Audit party, the appellant has shown their bona fide on admitting the error. In view of this, we are of the view that the impugned order which upholds the imposition of penalty on the appellant is liable to be set aside and we do so.
