9911796707
TMI Blog2010 (3) TMI 784X X X X Extracts X X X X X X X X Extracts X X X X ..... d.)] made by the Customs, Excise & Service Tax Appellate Tribunal (the Tribunal) : "[1] Whether or not the CESTAT is right in remanding the matter back to the original jurisdiction authority for re-quantification of the demand by extending the benefits to the respondent? [2] Whether the CESTAT is right in setting aside the penalty in terms of Section 80 of the Finance Act, 1944?" 2. The facts stated briefly are that the respondent M/s. P.S.L. Corrosion Control Services Ltd. is engaged in the activity of applying Fusion Bonded Epoxy Coating (FBE Coating) on Reinforced Steel Bars supplied by its customers. Working upon an intelligence that the respondent was not paying service tax on the said activity though the same was tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in appeal before the Tribunal. The Tribunal held that the respondent was liable to pay service tax in respect of the activity undertaken by it during the relevant period. However, the quantum of such tax was required to be re-quantified by extending the benefit of Cenvat credit of duty .on coating material used for epoxy coating and the credit in respect of other input services as available during the relevant period. The Tribunal, however, set aside the penalties imposed upon the respondent in terms of Section 80 of the Act in view of the fact that the revenue was aware of the fact that the respondents were carrying on the activity of epoxy coating. 5. Ms. Naina Gadhvi, learned Standing Counsel for the Central Governments assailed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Commissioner in paragraph 34 of his order has observed thus : "M/s. PSL have further contended that if the activity undertaken by them is held to be taxable, they would be entitled to Cenvat credit of duty paid- -on-coating material, etc. used in epoxy coating and to avail credit on all input services, however, they have not produced any details or any documents in support of this claim. Therefore, the said benefit cannot be granted to them at this stage. However, M/s. PSL shall produce all documentary evidence in support of his claim before the Jurisdictional Deputy/Assistant Commissioner who shall allow such benefit in accordance with the law in force and only after verifying genuineness of the documents produced by them in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e noted that though a question has been proposed as to whether the Tribunal was justified in remanding the matter to the original jurisdiction authority for re-quantification of the demand, no ground is taken up in the appeal memo in relation to the said question. All the grounds pertain only to the second question. In the prayer clause also the appellant has challenged the order of the Tribunal only to the extent of the penalty on the respondent. 9. Insofar as imposition of penalties is concerned, the Tribunal was of the view that the revenue was aware of the activity of epoxy coating being carried out by the respondent, inasmuch as litigation as regards whether the said activity amounted to manufacture or not was going on between th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said activity. That considering the fact that the revenue was aware of the respondent's activities, it cannot be said that there was any suppression, misstatement or intent on the part of the respondent to evade service tax. Besides, the facts of the case indicate that there was a bona fide litigation going on as regards the nature of the activity carried on by the respondent. As to whether the activity carried on the by respondent would amount to production so as to be covered under the category of "Business Auxiliary Services" was a debatable issue. In the circumstances, it cannot be said that the assessee has not proved that there was reasonable cause for the failure referred to in the provisions of Section 76, Section 77 or Section 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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