2018 (8) TMI 773 - AT - Central Excise

Manufacture - activity of packing repacking labeling re-labeling of spare components and assemblies of Hydraulic Excavators - effect of the Finance Act 2012 - Held that - The appellant was not liable to pay any Excise duty on the activity of packing repacking labeling re-labeling of spare components and assemblies of Hydraulic Excavators prior to 28/05/2012 when the Finance Act 2012 received the assent of the President. It is an admitted fact that the said amount of excise duty relating to the aforesaid activity having been paid on 07/07/2011 i.e much before coming into effect of the Finance Act 2012 - the appellant is not liable to pay any interest - the penalty under Section 11AC read with Rule 25 of Central Excise Rules 2002 also set aside. Penalty u/s 77 and 78 of FA - Held that - There is no element of fraud suppression or contumacious conduct or falsification of records on the part of the appellant hence the appellant is not liable to pay any penalty under Section 78 or under Section 77 of the Finance Act 1944 - penalty set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Liability to pay Central Excise duty on packing, repacking, labeling, re-labeling of spare components and assemblies of Hydraulic Excavators.
2. Liability to pay service tax under 'Consulting Engineer's Services', 'Intellectual Property Services', and 'Repair & Maintenance Services'.
3. Imposition of penalties under Section 77 and 78 of the Act and under Section 11AC of the Act read with Rule 25 of CER 2002.

Analysis:

Issue 1: Liability for Central Excise Duty
The appeal questioned the liability of the appellant to pay Central Excise duty on activities related to spare parts and assemblies of Hydraulic Excavators. The appellant had voluntarily deposited the duty amount before the issuance of the show cause notice. The Tribunal held that the appellant was not liable to pay any Excise duty on these activities before the Finance Act, 2012 came into effect. Since the duty was paid prior to the enactment of the Finance Act, 2012, the Tribunal ruled that the appellant was not liable to pay interest or penalty under Section 11AC read with Rule 25 of Central Excise Rules, 2002.

Issue 2: Liability for Service Tax
Regarding the demand for service tax under various categories such as 'Consulting Engineer's Services', 'Intellectual Property Services', and 'Repair & Maintenance Services', the appellant had paid the tax on technical support fee and intellectual property services. The Tribunal noted that there was no element of fraud, suppression, or falsification of records on the part of the appellant. Consequently, the Tribunal held that the appellant was not liable to pay any penalty under Section 78 or Section 77 of the Finance Act, 1944. The penalties under both sections were set aside, and the appeal was allowed with consequential benefits to the appellant.

In conclusion, the Tribunal ruled in favor of the appellant on both the issues of liability for Central Excise duty and service tax. The penalties imposed under Section 77 and 78 of the Act and under Section 11AC of the Act were set aside due to the absence of elements like fraud or suppression. The judgment provided relief to the appellant and allowed the appeal with consequential benefits.