ARVIND PROCESSORS P. LTD. Vs. COMMR. OF C. EX. & S.T., KOLHAPUR
LAWS(CE)-2015-6-38
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on June 17,2015

Arvind Processors P. Ltd. Appellant
VERSUS
Commr. Of C. Ex. And S.T., Kolhapur Respondents




JUDGEMENT

RAMESH NAIR,MEMBER (J) - (1.)This appeal is directed against Order -in -Appeal No. PUN -EXCU -002 -APP -012 -14 -15, dated 7 -5 -2014 passed by the Commissioner (Appeals), Central Excise, Pune -II, wherein ld. Commissioner (Appeals) modified the Order -in -Original dated, 22 -2 -2013 and held as under:
(i) the demand of service tax of Rs. 9,10,592/ - was reduced to Rs. 6,20,019/ -

(ii) Penalties under Ss. 77 and 78 in respect of service tax on renting of immovable property service was waived in terms of Sec. 80(2) of the Act.

(iii) Penalty of Rs. 1,91,924/ - related to demand on Intellectual Property service was upheld.

The appellant filed present appeal for setting aside the impugned order but during the hearing it was categorically stated by the ld. Counsel Shri Ganesh K.S. Iyer that they are not contesting the service tax demand and interest thereon confirmed by the ld. Commissioner and payment thereof already made by the appellant. The appellant now contesting only penalty of Rs. 1,91,924/ - imposed under Sec. 78 which relates to the demand of equal amount of Service tax on intellectual property services for the period November, 2007 to March, 2011.

(2.)Shri Ganesh K.S. Iyer, ld. Counsel for the appellant submits that aforesaid penalty was confirmed by the ld. Commissioner (Appeals) only on the ground that appellant have not contested imposition of penalty under Sec. 78 in respect of intellectual property services. He submits that para 3 of the impugned order discussed about the ground of appeal of the appellant, point No. 7 of para No. 3 mentioned that "As the appellant were under bona fides belief of their activities being non taxable due to the confusion prevailing in field, they claimed immunity under Sec. 80 of the Act in respect of the penalties imposed." He further submits that appellant have specifically sought for in para 15.1 of the ground of appeal before the Commissioner (Appeals) waiver of penalty under Sec. 80 as they were under bona fide belief about their activity were not taxable. It is his submission that in view of this undisputed facts ld. Commissioner (Appeals) finding that for not considering waiver of penalty as not being contesting penalty is not correct. He submits that appellant entered in royalty agreement with M/s. Shree Arvind Finishers, Ichalkaranji for using the goodwill "Finished by Shri Arvind Processors Pvt. Ltd.", for which they were receiving an amount as per the said agreement. The appellant was under bona fide belief that since the VAT has been paid on the entire amount of agreement the said use of goodwill shall not be liable for service tax. On this fact, appellant was under bona fide belief that the services is not taxable. He submits that appellant bonafidely entered into agreement and recorded the payment transaction in their books of account which clearly shows that appellant had no mala fide intention to evade service tax on the services of Intellectual property. In view of this fact, he prays that penalty of an amount of Rs. 1,91,924/ - imposed under Sec. 78 may be waived by invoking Sec. 80 of the Finance Act, 1994.
(3.)Shri S.R. Nair, ld. Examiner (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order. He further submits that the appellant had not contested the penalty in respect of intellectual property service, as can be seen from the para 8 of the order -in -appeal. He submits that appellant has made ground of appeal before the Commissioner (Appeals) only for waiver of penalty in respect of 'renting of immovable property services' and not in respect of 'intellectual property services', therefore since the appellant have not contested the penalty under Sec. 78 in respect of intellectual property services before the Commissioner (Appeals), the Commissioner (Appeals) has rightly confirmed penalty. He placed reliance in the case of Balaji Society - [ : 2015 (38) S.T.R. 139]. He also submits that in the present case extended period is invokable as appellant has neither informed to the department nor taken registration, therefore department not in knowledge of activity of the appellant.
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