LAWS(CE)-2011-7-140

DCM TEXTILES Vs. COMMISSIONER OF CENTRAL EXCISE, GURGAON

Decided On July 20, 2011
Dcm Textiles Appellant
V/S
Commissioner Of Central Excise, Gurgaon Respondents

JUDGEMENT

(1.) THE appellants are manufacturers of cotton yarn for export of the same. They had appointed commission agents in various countries, who were procuring the export orders for them. The services of procuring orders provided by the commission agents was taxable as Business Auxiliary Services w.e.f. 1st July, 2003. Though initially there was exemption in respect of the services of business auxiliary provided by the commission agents, the services of business auxiliary provided by Commission Agents become chargeable to Service tax w.e.f. 9 -7 -2004. The appellants, however, while receiving the services of commission agent from abroad, were not paying any service tax on the same. In November, 2006, when the department initiated inquiries by calling for their balance sheets, it was found that they were availing services of procuring export orders from the commission agents in abroad since 2005 but they were not paying any Service tax in respect of the same and had not even obtained service tax registration. It is in view of this, the show cause notice dated 18 -4 -2007 was issued to the appellants for -

(2.) The show cause notice was adjudicated by the Joint Commissioner vide order -in -original dated 23 -4 -2008 by which the Service tax demand as raised in the show cause notice was confirmed along with interest and besides this, penalties were imposed under Section 76, 77 as well as Section 78 of the Act equal to the Cenvat Credit demand. However, the appellants prior to adjudication of the matter had paid Service tax amount of Rs. 7,62,349/ - along with interest in respect of the Service tax liability upto 31 -10 -2006. On appeal to the Commissioner (Appeals), the Commissioner (Appeals) held that service tax is chargeable only for the period w.e.f. 18 -4 -2006 and penalty would be imposable only under Section 78 equal to the service tax liability for the period 18 -4 -2006 to 31 -10 -2006. He set aside the penalty under Section 76 and 77 of the Act. Against this order of the Commissioner (Appeals), the present appeal has been filed challenging the Commissioner (Appeals)'s order upholding the penalty under Section 78 of the Act.

(3.) SHRI R. Krishnan, Advocate, ld. Counsel for the appellant, pleaded that the appellant had disclosed the information regarding receipt of services of procuring orders from the commission agents abroad in their balance sheet, that initially since they were under impression that in respect of the services received from the commission agents abroad, they were not required to pay any service tax, they did not get service tax registration and they were not paying any service tax, that there was no intention to evade the service tax, which is clear from the fact that the information regarding receipt of services of foreign service providers was reflected in the balance sheet, and the same was provided to the department as soon as the department called for the same, that as soon as the department pointed out the non -payment of service tax, the appellant paid an amount of Rs. 7,62,349/ - along with interest and discharged their duty liability, that from the conduct of the appellant, it is clear that there was no intention to evade the service tax, that the Hon'ble Supreme Court in the case of Cosmic Dye Chemical v. C.C.E., Bombay reported in : 1995 (75) E.L.T. 721 (S.C.) has held that for invoking the extended period under Section 11A(1) of the Central Excise Act, intention to evade duty must be proved and it must be proved that there was wilful misstatement or suppression of facts, that in this case, there is no evidence from which it can be concluded that there was intention on the part of the appellant to evade service tax and that in view of this, the impugned order upholding the penalty on the appellant under Section 78 is not correct.