CCE Vs. MERLIN MARKETING

JUDGEMENT

(1.) THE relevant facts of the case, in brief, are that the Respondents are engaged as C & F Agent of M/s. Intas Pharmaceuticals Ltd. It has been alleged that the Respondent failed to discharge the tax liability as C&F Agent during the relevant period. The Respondent deposited the tax of Rs. 34,815/ - along with interest upon detection by the Central Excise Officers before issue of show cause notice. The Adjudicating Authority confirmed the demand of tax and appropriated the amount as deposited by the Respondent. He also imposed penalty of equal amount under Section 78 of the Finance Act, 1994 and penalty of Rs. 100/ - per day for non -filing of the Returns under Section 76 of the Act along with interest. The Commissioner (Appeals) set aside the penalty under Section 78 and reduced the penalty to Rs. 5,000/ - under Section 76 of the Act. Hence, the Revenue filed this appeal.

(2.) HEARD the ld. DR on behalf of the Revenue. None appeared on behalf of the Respondent.

(3.) AFTER hearing the ld. DR and on perusal of the records, it is seen from the order of the Commissioner (Appeals) that the Respondent entered into an agreement with M/s. Intas Pharmaceuticals Ltd. intentionally to save service tax, which they were remitting to the Agent viz. the Respondent herein. It is also seen from the order of the Commissioner (Appeals) that the complicity of revising the agreement in 1997 to save the Service Tax component squarely falls on the principals viz. M/s. Intas Pharmaceuticals Ltd. and not on the Agent, the Respondent. The Commissioner (Appeals) observed that no mala fides on this account can be attributed to the Respondent as they were appointed as C&F Agent. The Adjudicating Authority observed that the Respondent had intentionally entered into agreement to save the tax and mislead the Revenue department. In view of the above, it appears that the Respondent had knowingly entered into agreement to the principal in order to avoid the payment of tax. So, the Commissioner (Appeals) is not correct to extend the benefit under Section 80 of the Finance Act, 1994 in the present case. Accordingly, the impugned order passed by the Commissioner (Appeals) is, required to be set aside. The Adjudication Order is restored. However, it is seen that the Respondent deposited the duty before issue of show cause notice and, therefore, imposition of penalty under Section 78 of the Act would be reduced to 25% of the tax, which comes to Rs. 8,700/ -. Considering the facts and circumstances of the case, the penalty imposed under the Adjudication Order is reduced to Rs. 8,700/ - and Rs. 5,000/ - under Section 78 and 76 of the Act respectively. The appeal is allowed in the above terms.