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In the instant case, the assessee had imported certain drawings,
designs. It classified them as goods and claimed exemption from customs
duty. The Bill of Entry for such import was also finalized by custom
authorities. Subsequently, the Department alleged that it was import of
'Intellectual Property Services' and accordingly demanded service tax
along with interest and penalty.
On appeal, the High Court deleted penalty on basis of following findings of the Tribunal:
- The assessee had paid the entire amount of
service tax liability along with interest prior to issuance of the show
cause notice and had not disputed the liability to pay service tax and
interest;
- The assessee had a bona fide belief that it was
liable to pay customs duty on the drawings and designs imported by it as
the same were goods;
- Under the circumstances, no mala fide intent
could be attributed to it in not discharging the service tax liability
under the category of "Intellectual Property Rights Services"; and
- The assessee had shown a reasonable cause for its
failure to discharge service tax liability and was, therefore, entitled
to relief under section 80.
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