TMI Blog2018 (9) TMI 1848X X X X Extracts X X X X X X X X Extracts X X X X ..... ivities or the operation may be so integrally connected with the final result is the production of a commercial diffferent article. A perusal of the records would show the respondent No. 2 was obliged to submit the details of the wages paid by them to their employees. They were also required to provide the details of the Provident Fund, ESI contributions, etc. This was for the payment by the service recipient. The respondent No. 2 was therefore only to provide manpower for which they were to be paid by the service recepient. It may be that the requirement was for a particular type of personnel and that were to perform particular kind of work. When the definition is clear and unambiguous, ignorance of law cannot be an excuse and the plea of genuine mistake in interpretation cannot hold good. The Tribunal with respect, has erred in coming to the conclusion that it was not mere supply of labour was activity of the respondent but was also obliged to carryout other activity of unloading material to store/production area and packing the same - A manpower recruitment or supply agency is a commercial concern engaged in providing any service directly or indirectly in any manner for rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 . On scrutining the documents it was found that the agreement entered into between respondent No . 2 and M/s . Emox Device Compamy to whom services were being rendered by respondent No . 2 was for supply of manpower came within the ambit of Manpower Recruitment Supply Agency defined under Section 65(68) of the Finance Act 1994 on which service was leviable with effect from 16 . 06 . 2005 . 68 . manpower recuritment or supply agency menas any commercial concern engaged in providing any service, directly or inderectly, in any manner for recruitment or supply of manpower, temporarily or otherwise, to a client; . 4 . Show cause notice dated 13 . 08 . 2010 was issued by the Office of the Commissiner, Centeral Excise,Puducherry Commissionerate, Goubert Avenue, Beach Road, Puducherry 605 001 as to why:- a . An amount of Rs . 34,94,061/- (Rupees Thirty four lakhs ninety four thousand sixty one only), being the Service Tax including Edu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supply Agency Services to M/s . E-Mox Device Co . , Kattukuppam, Puducherry for the period from December 2009 to June 2010 should not be demanded under Section 73(1) of the Finance Act, 1994; b . Interest at the appropriate rates should not be recovered from them under Section 75 of the Finance Act,1994 as amended for delayed payment of Service Tax; c . Penalty under Section 76 of the Finance Act, 1994 as amended should not be imposed on them for failing to pay Service Tax at appropriate rates, in such manner and within the period as prescribed, for providing the taxable service under Manpower Recruitment and Supply Agnency's Service . d . Penalty under Section 77 of the Finance Act,1994 as amended should not be imposed on them for non-finling of returns as per the provisions of Section 70 of the Finance Act, 1994 and failed to obtain registration under Section 69 of the Finance Act, 1994; 6 . Respondent No . 2 gave a reply on 09 . 10 . 2010 and contended that they have entered i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount of penalty so determined has also been paid within the period of thrity days referred to in that proviso . I impose a penalty for the non payment of service tax of Rs . 6,75,974/- demanded under SCN . No . 18/2011 dated 04 . 04 . 2011, at Rs . 200 per day or 2% of such tax per month whichever is higher as per the provisions of Section 76 of Finance Act, 1994 . I impose a penalty of Rs . 200/- for everyday during which such failure continues, starting with the first day after the due date, till the date of actual compliance under Section 77(1)(a) of Finance Act, 1994 . I impose a penalty of Rs . 5000/- (Rupees Five Thousand only) under Section 77(2) of the Finance Act, 1994 . 8 . The respondent No . 2 filed an appeal before the Commissioner (appeals) . The appellate authority after examining the agreements held that the respondent No . 2 had supplied manpower and are bound to pay service tax on the value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lants arre directed to produce all relevant documents to the respondents in order to enable them to conduct proper verification and the amounts may also be requantified by the appellants which in turn may be verified by the respondents and the relief is directed to be granted to the balance amount of service tax subject to verification of the facts based on the documents . 10 . The appellate authority however set aside the order imposing penalty by invoking Section 80 of the Finance Act, 1994 . The appellate authority held that, there was no mala fide intention on the part of the respondent No . 2 herein not to pay Service Tax . The appellate authority held that, since the respondent No . 2 herein (appellant in appeal) had paid Service Tax, during the pendency of the proceeding . It would constitute a mitigating circumstances for invoking the provision of Section 80 of Finance Act, 1994 . The appellate authority waived the penalty imposed under Sections 76,77 and 78 of the Finance Act, 1994 . 11 . The department filed an appeal before the Cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances in the CESAT correct in waiving the penalties imposed under Section 78 76 of the Finance Act, 1994 holding that the show cause notice is not well founded? . 13 . The short issue that arises for consideration is whether the authorities below could take recourse to Section 80 of the Finance Act 1994 in order to waive the penalty levied under Section 76,77,78 and 80 of the Finance Act 1994 . Section 76,77,78 and 80 reads as under:- 76 . Penalty for failure to pay service tax Any person, liable to pay service tax in accordance with the provisions of section 68 or the rules made thereunder, who fails to pay such tax, shall pay, in addition to paying such tax an interest on that tax amount in accordance with the provisions of section 75, a penalty which shall not be less than two hundred rupees [for every day during which such failure continues] but which may entend to two hundred rupees for every day during which such failure continujes, so however, that the penalty under this clause shall not exceed the amount of service tax that he failed to pay] 77 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court, then, the benefit of reduced penalty under the first proviso shall be available, if the amount of service tax so increased, the interest payable thereon and twenty-five per cent . of the consequential increase of penalty have also been paid within thirty days of communication of the order by which such increase in service tax takes effect . Explanation . - For the removal of doubts, it is hereby declared that - (1) the provisions of this section shall also apply to cases in which the order determining the service tax under subsection (2) of section 73 relates to notices issued prior to the day on which the Finance Bill, 2003 receives the assent of the President; (2) any amount paid to the credit of the Central Government prior to the date of communication of the order referred to in the first proviso or the fourth proviso shall be adjusted against the total amount due from such person . ] 79 . Penalty for failure to comply with notice:- 80 . Penalty not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany against any claim which could arise under Workmen Compensation Act, 1953 . . , ( viii) in the event of Contract Labour (Regulation and Abolition) Act, 1970 being applicable . . . forthwith take out necessary licence . , ( ix) discharge all liabilities like salaries, wages and other statutory obligation in respect of the person engaged by the contractor . , ( x) for the purpose of ESI PF, submit the details of Wages by him to his employees . . , ( xi) that this agreement will cease to be in force if the Government issues any notification proposing prohibition of employment of Contract labour under the Contractor Labour (Regulation Abolition ) Act, 1970 or any other Act prohibiting engagement of Contract Labour . . . , 17 . Further the assessing authority after perusing the agreement has also extracted the obligations of respondent No . 2 of the agreement which reads as under:- ( i) To provide adeququate men and personnel for duty req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( i) incidental or ancillary to the completion of a manufactured product; ( ii) which is specified in relation to any goods in the Section or Chapter Notes of the First Schedule to the Central Excise Tariff act, 1985 ( 5 of 1986) as amounting to manufacture; or ( iii) Which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alternation of retail sale price on it or adoption of any other treatement on the goods to render the product marketable to the consumer, and the word manufacture shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacutre on his own account; 20 . A process is a manufacturing process that it brings out a complete transformation for the whole components so as to produce a commercial diffferent article of commodity . Though it is well settled that the process i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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