P.G. Chacko, Member (J) - (1.)AFTER examining the records and hearing both sides, I am of the considered view that the appeal itself requires to be finally disposed of at this stage. Accordingly, after dispensing with predeposit, I take up the appeal.
(2.)THE appellants are engaged in the manufacture of textile products. During the period from 01.01.2005 to 30.09.2005, they had paid service tax on the service of Goods Transport Agency (GTA) received in relation to transport of goods by road, by availing CENVAT credit on other input services. Obviously, they treated GTA service as output service, a fact evident from the service tax returns filed from time to time for the aforesaid period. The department objected to such availment of input service tax credit for payment of service tax on GTA service and accordingly issued a show -cause notice dated 09.03.2006 to the party asking them to reverse CENVAT of Rs. 91,399/ - as also to pay service tax of Rs. 36,303/ - under Section 73 of the Finance Act read with Rule 14 of the CENVAT credit Rules, 2004 with interest thereon under Section 75 of the Finance Act read with Rule 14. The notice proposed penalty also on the party under Section 76 of the Finance Act read with Rule 15 of the CCR, 2004. These demands were contested in a reply dated 05.05.2006, wherein, referring to various provisions of the CCR, 2004, they argued that GTA service could be deemed to be output service and, therefore, availment of CENVAT credit on input services for payment of service tax on GTA service was in order. However, while the case was pending adjudication, the party filed revised returns and paid service tax in cash for GTA service for the period of dispute. A letter stating these facts was submitted to the adjudicating authority also. The party also requested the adjudicating authority to drop further proceedings. The Assistant Commissioner refrained from imposing penalty on the party, though he formally confirmed the proposed demands against them vide Order -in -Original dated 30.01.2007. This decision was revised by the Commissioner under Section 84 of the Finance Act, 1994 after issuing the requisite show -cause notice to the party. The revisional authority has imposed on the assessee a penalty of Rs. 200/ - per day starting with first day after the due date till the date of actual payment, not exceeding Rs. 1,27,702/ - (equivalent to the sum of the CENVAT credit reversed by the assessee and the service tax paid in cash by them), under Section 76 of the Finance Act, 1994. The present appeal of the assessee is directed against this decision of the Commissioner.
After giving careful consideration to the submissions of both sides, I note that the case of the appellants is that they are entitled to the benefit of Section 80 of the Finance Act, 1994, which provisions reads as under:

Notwithstanding anything contained in the provisions of Section 76, 77 or 78 no penalty shall be imposable on the assessee for any failure referred to in the said provisions if the assessee proves that there was reasonable cause for the said failure.

(3.)IN this connection, it has been stated that, as soon as the appellant came to realise their mistake of having deemed the GTA service to be output service, they voluntarily reversed the input service tax credit and paid service tax in cash on GTA service, before the order of adjudication was passed in this case. It has been claimed that, in these circumstances, there was reasonable cause for the omission to pay service tax in cash on GTA service within time. This reality, according to the appellants, was recognised by the adjudicating authority and hence that authority refrained from imposing penalty. As against this case of the assessee, it has been submitted by learned SDR that the reversal of input service tax credit or payment of service tax on GTA service in this case cannot be considered to be voluntary inasmuch as neither of this was done promptly upon receipt of the show -cause notice. It is pointed out that, instead of doing this, the assessee chose to contest the demand on a legal ground based on the premise that GTA service was an output service. According to learned SDR, the action taken by the assessee after stepping up a contest against the show -cause notice, during the pendency of adjudication, is far from voluntary and, therefore, there is no warrant for invoking Section 80 ibid.