KIKANI EXPORTS Vs. COMMISSIONER OF CENTRAL EXCISE, COIMBATORE

JUDGEMENT

(1.) THERE are two appeals being considered in this proceeding. One is filed by the assessee and the other is filed by Revenue. Both the appeals are filed against the same impugned order and hence being considered together. The assessee -appellant is an exporter of cotton yarn to various European countries. They were paying commission to certain agents abroad for canvassing orders. On such service of agents received and commission paid, appellant was not paying service tax during the period Nov 04 to Sept 06. Revenue was of the view that on such service received from persons located abroad, assessee -appellant should have paid service tax as per the provisions of rule 2(1)(d)(iv) of Service Tax Rules, 1994. When the matter was pointed out to the assessee -appellant, they paid service tax along with interest for the period 16 -06 -05 to Sept 06 totaling to tax amount of Rs. 5,74,831/ - and interest of Rs. 23,197/ -. Subsequently, a show cause notice was issued on 09 -05 -08 for demanding service tax and interest and also for imposing penalties under various sections of the Finance Act, 1994. The matter was adjudicated. In the adjudication order, the demand of Rs. 7,78,559/ - was confirmed against the appellant along with interest under section 75. An amount of Rs. 5,74,831/ - and interest of Rs. 23,197/ - already paid were appropriated towards these demands. Further a penalty of Rs. 1000/ - was imposed under section 77. Further penalties under section 76 and 78 of Finance Act 1994 were imposed. Aggrieved by the order, appellant -assessee filed appeal with Commissioner (Appeals). The Commissioner (Appeals) took note of the decision of Bombay High Court in the case of Indian National Ship Owners' Association Vs. UOI reported in : 2009(13) S.T.R. 235 (Bom) and held that service tax demand for the period prior to 18 -04 -06 when section 66A was introduced in Finance Act, 1994 is not sustainable. The finding of Bombay High Court was that rule 2(1)(d)(iv) of Service Tax Rules, 1994 was ultra -vires the provisions of Finance Act, 1994. He confirmed the tax liability from 18 -04 -06 onwards and also confirmed various penalties imposed by adjudicating authority.

(2.) AGGRIEVED by the dropping of the demand for the period prior to 18 -04 -06, Revenue is in appeal. Aggrieved by the penalties imposed, the appellant -assessee is in appeal before Tribunal.

(3.) NOW coming to the appeal filed by the appellant -assessee, I find merit in their argument because they have already paid more than the actual tax liability which they need to have paid towards tax for the period from 18 -04 -06 to Sept 06.