CHETTINADU CONSTRUCTIONS Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE assessees challenge the penalty of Rs. 1,90,696 imposed under the provisions of Section 76 of the Finance Act, 1994. The period of dispute is April, 2006 to September, 2006.

(2.) I have heard both sides. The plea of the assessees for reworking out of the penalty for the reason that penalty at the rate of 2 per cent has been wrongly applied for the entire period to arrive at the quantum of penalty while liability to penalty arises only if the assessees do not pay even after receipt of the tax from their clients. The assessees collected service tax from their customers only during the period from October, 2006 to October, 2007 and, therefore, they rightly submit that penalty requires to be recalculated as every day rate has been applied by the authorities below, right from October, 2006. In these circumstances, I set aside the impugned order only insofar as it relates to penalty under Section 76 and direct reworking of the penalty amount in the light of the fact that the entire amount of service tax was not collected from their customers in April, 2006 but was staggered from October, 2006 to October, 2007. Fresh order shall be passed after extending a reasonable opportunity to the assessees of being heard in their defence.