DIXON ELECTRONICS Vs. CCE

JUDGEMENT

(1.) SINCE both the appeals are against the same impugned order passed by the Commissioner (Appeals), same are heard together and are being disposed of by a common order. Appeal No. ST/437/07 has been filed by M/s. Dixon Electronics (hereinafter referred to as the Appellant) and the Appeal No. ST/552/07 has been filed by the respondent - CCE, Chandigarh.

(2.) THE Appellant are the authorized repairs various electronic appliances manufactured by M/s. Samsung India Electronics Ltd. (hereinafter referred to as SIEL) Maintenance & Repair Services were brought into the service not w.e.f. 1.7.03. The appellants have been paying service tax on the amount received from the customers for repair jobs. However, it was found by the Department that as per their agreement with SIEL, they were providing free repair service to the customers of SIEL within the warranty period and for which they were receiving monthly amount of Rs. 35,000/ - and in addition to this, they are also receiving some reimbursement on account of office expenses, communication, stationery, consumable equipments, travelling allowances, transportation etc. but they were not paying any service tax on the amount received from M/s. Samsung India Electronics Ltd. On being pointed out, by the Department, the Appellant paid the service tax amount of Rs. 1,92,998/ - alongwith interest for the period from 1.7.03 to 31.3.05. However, thereafter a show cause notice dt. 18.2.06 was issued by the Department for confirmation of the demand of service tax (which has already been paid by them) and also for imposition of penalty on them under Section 76 & 78 of the Finance Act). The jurisdictional Dy. Commissioner of Central Excise vide order -in -original dt. 27.9.06, besides confirming the service tax demand of Rs. 1,92,988/ - alongwith interest also imposed penalty of Rs. 100/ - per day under Section 76 for the period during which failure to pay the service tax continued and also imposed penalty of Rs. 1,92,998/ - on the appellant under Section 78. On appeal against this order, the Commissioner (Appeals) vide the impugned order reduced a penalty under Section 78 to Rs. one lakh but maintained the penalty of Rs. 100/ - per day under Section 76. In appeal before the Commissioner (Appeals), the service tax has not been challenged. While the Appellant have filed the appeal against the Commissioner (Appeals)'s order maintaining the penalty of Rs. 100/ - under Section 76 and penalty of Rs. one lakh under Section 78, the Department has filed appeal against reduction of penalty under Section 78 to Rs. one lakh.

(3.) I have carefully considered the submissions from both the sides. The Appellants were doing the repair job as authorized service centre of SIEL and the repair jobs were of two types - one type of repair jobs were those where the amount for repair was being charged from the customers and on this amount, the service tax was being paid and this amount received from the customers and the service tax paid on the same was being declared on the service tax returns. The other repair jobs being carried out were the free repairs under warranty period for the customers of SIEL and for these repairs, while no amount was being charged from the customers, the Appellants were getting a fixed amount of Rs. 35,000/ - per month plus some reimbursement of certain other expenses from SIEL. On this amount, no service tax was being paid. The appellants pleaded that they were under bonafide belief that they were not liable to pay service tax on this amount as the same was not being received from the customers and as soon as the Department pointed cut, that this amount also attracts service tax, they paid the same forthwith alongwith interest. I find merit in the appellant's contention and therefore, I find that this is a fit case for invoking Section 80 of the Finance Act which the Commissioner (Appeals) in the impugned order had not accepted. The impugned order, therefore, is set aside and the appeal filed by the Appellant is allowed. The Revenue's appeal is dismissed.