VISTEON AUTOMOTIVE SYSTEMS INDIA PVT. LTD. Vs. CCE

JUDGEMENT

(1.) IN this appeal, M/s Visteon Automotive Systems India Pvt. Ltd. (VASI) has challenged the order of the Commissioner (Appeals) who has sustained the penalty of Rs. 1,000/ - imposed on it under Section 77 of Finance Act '94, for its failure to file Service Tax returns during April 2003 to December 2003. The lower authorities have found that the appellants were not liable to pay Service Tax during the material period. The appellants received technical know -how from its collaborator M/s Halla Climate Control (HCC), Taejon, South Korea. As per the Finance Act 1994, the appellants were required to pay service tax under the category of 'Consulting Engineer Service' on the technical know -how fees paid to HCC. However, in terms of Notification No. , dated 16.12.2002 Service Tax was exempted in respect of technology transfers up to an amount equal to the amount of cess levied under Research & Development Cess Act, 1986. The Notification reads as under:

(2.) AS the appellant had satisfied the conditions of the Notification, the demand for service tax from the appellant was dropped. However, the original authority maintained that the assessee was required to file returns under Section 70 and imposed a penalty of Rs. 1,000/ - under Section 77, for not filing the returns during the material period. Vasi has filed the appeal accompanied by an application for waiver of pre -deposit and stay of recovery. After hearing both the sides, I find that the appeal itself can be disposed of. Therefore, the appeal is taken up for decision after dispensing with the pre -deposit. Section 70 of the Finance Act, reads as under:

(3.) AFTER examining the facts of the case, both the lower authorities were satisfied that the appellant was not liable to pay service tax on Consulting Engineer Services on transfer of technology by VISA and dropped the demand for service tax. Once the appellant was not found liable to pay tax there was no need to penalise him. The appellant had not filed the returns as they were not liable to pay any tax. In the circumstances, the penalty of Rs 1,000/ - imposed on the appellant is set aside and the appeal allowed. Consequently the stay application also stands dismissed.