Case Law Details
The instruction of the Board dated 31.10.07, sought to be relied upon by the department, is in the context of concluding proceedings on payment of service tax, interest and 25% of the amount as penalty on issue of show cause notice. In the present case, adjudication has been done by the original authority and penalties have been imposed under various sections including Section 78. Proviso to Section 78 clearly provides for payment of concessional penalty if the duty and interest “determined” by the authorities are paid within 30 days. Obviously, the determination of the liability is through issue of speaking order and the original authority has passed the order on 08.06.07. However, it is noticed that the original authority has not given the option to pay the reduced penalty. The decision of the Commissioner (A) extending the option is in conformity with the decision of the Hon’ble High Court of Delhi in the case of K.P Pouches (P) Ltd. Vs. UOI – 2008 (228) ELT 31 (Del.)
There is no specific prayer for restoration of penalty under Section 76 & 77. Considering that penalties under Section 78 has been imposed and upheld by the Commissioner (A) to the extent of 25%, there is no justification for a separate penalty under Section 76 as held by the Tribunal in the case of AK & I Advertising Pvt. Ltd. Vs. CCE, Bangalore – 2008 (12) STR 315 (Tri.-Bang.)
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
ST/341/2009
Arising out of Order in Appeal No. 157/2008 (P) (ST) Dated: 29.12.2008
Passed by the Commissioner of Central Excise (Appeals), Chennai
Date of Decision: 18.02.2011
CCE, PONDICHERRY
Vs
M/s AMMAA TRADERS
FINAL ORDER NO.331/2011
Per: M Veeraiyan:
Heard both sides.
2. The original authority confirmed service tax demand of Rs.2,61,768/- along with interest relating to the period 01.08.04 to 31.03.06 and appropriated the amount paid in March, 2006 and October, 2006. He imposed penalty under Section 76 and a penalty of Rs. 1000 under Section 77 and a penalty of Rs. 2,61,768/- under Section 78 of the Finance Act, 1994 (However, he has not given any option to pay concessional penalty in terms of proviso to Section 78). The party filed an appeal before the Commissioner (A). The Commissioner (A) upheld the demand of service tax and interest. He set aside the penalty imposed on the appellants under Sections 76 & 77 of the Act and also reduced the penalty to 25% of the amount imposed by the original authority under Section 78 of the Finance Act, 1994.
3.1 Ld. SDR, draws my attention to the grounds of appeal and submits that the respondents have not paid the 25% of the penalty within 30 days from the date of issue of show cause notice and therefore, the benefit of concessional penalty under proviso to Section 78 cannot be extended to them. Ld. SDR submits that though there is no specific prayer regarding restoration of penalty under Section 76 & 77 of the Act, since there is a prayer for setting aside the order of the Commissioner (A), it is implied that there is a prayer for restoration of penalties imposed under Section 76 & 77.
3.2 He also relies on the instructions of the Board in Circular No. 137/167/06-CX.4 dated 3.10.07, which contains guidelines on implementation of Section 73 (1) A of the Finance Act, 1994.
4. Ld. CA, strongly supports the order of the Commissioner (A). He submits that when penalty under Section 78 is imposed, there is no justification for separate penalty under Section 76. The Commissioner (A) has rightly set aside the penalties under Section 76 & 77 and in as much as entire duty along with interest stands paid before issue of show cause notice on 10.04.07, and that the Commissioner (A) has rightly extended the concessional penalty under proviso to Section 78 of the Finance Act, 1994.
5.1 I have carefully considered both sides and perused the records. The instruction of the Board dated 31.10.07, sought to be relied upon by the department, is in the context of concluding proceedings on payment of service tax, interest and 25% of the amount as penalty on issue of show cause notice. In the present case, adjudication has been done by the original authority and penalties have been imposed under various sections including Section 78. Proviso to Section 78 clearly provides for payment of concessional penalty if the duty and interest “determined” by the authorities are paid within 30 days. Obviously, the determination of the liability is through issue of speaking order and the original authority has passed the order on 08.06.07. However, it is noticed that the original authority has not given the option to pay the reduced penalty. The decision of the Commissioner (A) extending the option is in conformity with the decision of the Hon’ble High Court of Delhi in the case of K.P Pouches (P) Ltd. Vs. UOI – 2008 (228) ELT 31 (Del.) .
5.2 There is no specific prayer for restoration of penalty under Section 76 & 77. Considering that penalties under Section 78 has been imposed and upheld by the Commissioner (A) to the extent of 25%, there is no justification for a separate penalty under Section 76 as held by the Tribunal in the case of AK & I Advertising Pvt. Ltd. Vs. CCE, Bangalore – 2008 (12) STR 315 (Tri.-Bang.)
6. The appeal is rejected.
(Order pronounced and dictated in the open Court)
