COMMISSIONER OF CENTRAL EXCISE, PUNE-I Vs. GANESH ENTERPRISES
LAWS(CE)-2015-6-37
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on June 12,2015

Commissioner Of Central Excise, Pune -I Appellant
VERSUS
Ganesh Enterprises Respondents

JUDGEMENT

RAMESH NAIR,MEMBER (J) - (1.)This Revenue's appeal is against Order -in -Appeal No. PUN -EXCUS -001 -APP -051 -14 -15 dated 31 -7 -2014 passed by the Commissioner (Appeals), Central Excise, Pune -1, wherein, ld. Commissioner (Appeals) dropped the penalty imposed under Sec. 78 and reduced penalty from Rs. 20,000/ - to Rs. 500/ - imposed under Sec. 77. Revenue has filed this appeal for restoration of penalty under Sec. 78 and against reduction of penalty under Sec. 77. Shri. A.B. Kulgod, ld. Asstt. Commissioner (AR) appearing on behalf of the Revenue submits that respondent have charged and recovered service tax from M/s. Cadbury India Ltd. and have not deposited the service tax at the relevant time therefore they have defaulted the Government therefore the penalty under Sec. 78 should not have been dropped and the penalty under Sec. 77 should not have been reduced from 20,000/ - to Rs. 500/ -.
(2.)On the other hand, Shri Sadashiv Hawaldar, ld. Counsel for the respondent submits that respondent had no mala fide intention to evade service tax. From the entire proceedings, the fact which emerged clearly shows that respondent have been paying amount in cash to the consultant. As per the representation given by the consultant, he submits that it is consultant, who has done fraud with the respondent and not deposited service tax in time with the department. It is his submission that to the effect of this fraud committed by the consultant, department also initiated the criminal proceedings and filed FIR with the police. This undisputed facts clearly shows that appellant did not have any mala fide intension or intention to evade service tax. Non payment of service tax has occurred only due to the fraud committed by the consultant. Therefore penalty should not have been imposed under Sec. 78 as reasonable cause has been shown. By invoking Sec. 80 of the Finance Act, penalty under Sec. 78 was correctly dropped by the Commissioner (Appeals) as regard the reduction of penalty under Sec. 77, he submits that entire records was with the consultant and appellant was under bona fide belief that since, entire job of depositing service tax and filing of the returns was assigned to the consultant therefore they are under bona fide belief that the returns might have been filed regularly. In this position the Commissioner has correctly reduced penalty from Rs. 20,000/ - to Rs. 500/ - which does not require any interference.
(3.)I have carefully considered the submission made by both sides and perused the record. The present Revenue's appeal is only for imposition of penalty under Sec. 78 and restoration of the penalty of Rs. 20,000/ - imposed by the original authority which was reduced by the Commissioner (Appeals) to Rs. 500/ -. From the entire proceedings, I observed that appellant have been making submission before the Adjudicating Authority and before the Commissioner (Appeals) that they did not have any intension to evade service tax as they have been making cash payment to their consultant, who was assigned the job for computing the service tax and depositing in the bank and also filing the return periodically. However, consultant has not deposited cash given to him as service tax in the bank and consultant defrauded the respondent, when this fact came to the notice, the department has initiated investigation. Ld. Commissioner in respect of dropping penalties recorded his findings as under:
I find that the appellants have claimed that they had appointed the consultant Shri Amol Adhav for making tax calculations, payment of service tax and submission of return etc. and they were paying cash to the consultant for the payment of service tax and the impugned case is outcome of investigations conducted by the Department at the end of the said consultant. I find that no contrary evidence has been brought in the investigations in this regard to prove that the amount was not being paid by the appellants to the consultant for the payment of service tax to the department or the appellants were colluding with the consultant. The show cause notice states that the department has filed F.I.R. with the police authorities for the fraudulent act on the part of the consultant. The appellants also not been named in the F.I.R. along with the consultant. The ld. Adjudicating Authority has not accepted the plea of the Appellants regarding payment of amount of service tax to consultant and their bana fide belief that the consultant has deposited the amount, on the grounds that they has not ascertained the authenticity of such payment from the jurisdictional service tax Superintendent. In view of the these facts that there is no evidence on record to prove collusion of the appellant with the consultant and the fact that the appellants are not made party in the FIR filed against the consultant and it is the consultant's fault, the charges of fraud or collusion or willful misstatement, or suppression of facts with intent to evade payment of duty do not stand against the appellants. Accordingly the appellants are not liable to any penalty under Sec. 78 of the Act. Further, in view of the said facts an extremely lenient view is called for while imposing the penalty under Sec. 77 of the Act for not filing the returns as the appellants had entrusted the said job to the consultant who was found to be involved in a fraud and there is no evidence contrary to the appellant's claim or their collusion with the consultant.

From the above findings of the ld. Commissioner (Appeals) where it can be seen that the same is discussed in details that regarding the fraud committed by the consultant with the appellant for not depositing service tax in the Government's account for which FIR proceedings also initiated against consultant by the department, which clearly shows that it is not the appellant who has committed an offence of non payment of service tax, it is the consultant, who has defrauded them therefore there is reasonable cause for waiver of penalty under Sec. 78. Accordingly ld. Commissioner (Appeals) has correctly set aside the penalty imposed under Sec. 78. As regard the reduction of penalty under Sec. 77 from Rs. 20,000/ - to Rs. 500/ -. On the same fact ld. Commissioner (Appeals) has exercised his discretion in reducing penalty from Rs. 20,000/ - to Rs. 500/ -. In my view there is no reason to interfere in the findings of the ld. Commissioner (Appeals) who has reduced penalty by proper application of mind therefore upheld the impugned order and dismiss the appeal of the Revenue. CO is also disposed of accordingly.

(Dictated in Court)

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