JUDGMENT :

PRASHANT KUMAR MISHRA, J.

1. The present Appeals lay challenge against the final order dated 28.11.2007 passed by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai¹[For short, ‘CESTAT’], whereby the CESTAT, by common order, allowed the appeals preferred by the respondent-assessee, M/s Diebold Systems Pvt. Ltd., set aside the Orders-in-Original passed by the Commissioner of Service Tax, Chennai, and consequently dismissed the appeal preferred by the Revenue. The impugned order arose out of Order-in-Original Nos. 03/2005 and 04/2005, both dated 23.12.2005, and Order-in-Original No. 04/2007 dated 23.02.2007 passed by the Commissioner of Service Tax, Chennai.

FACTUAL MATRIX

2. The respondent-assessee is engaged in the business of supplying Automated Teller Machines (ATMs) to various banks. Pursuant to contracts awarded by different banks, the respondent-assessee undertook the supply, installation and commissioning of ATMs at the sites identified by the respective banks. The contracts were executed on a turnkey basis under which the respondent-assessee was responsible not merely for supplying the ATMs but also for their installation and commissioning.

3. The controversy in the present Appeals relates to the levy of service tax on 33% of the gross consideration received by the respondent-assessee from the banks for the period from July 2003 to April 2006. According to the Revenue Department, the said component represented consideration attributable to installation and commissioning activities and was, therefore, liable to service tax under the taxable category of "commissioning or installation" under the Finance Act, 1994. The respondent-assessee, on the other hand, maintained that the contracts were indivisible turnkey contracts involving both the supply of goods and incidental installation and commissioning and that no part of the consideration could be segregated and subjected to service tax under the aforesaid taxable entry.

4. Proceeding on the basis that 33% of the gross consideration received by the respondent-assessee represented the value of installation and commissioning services, the Directorate General of Central Excise Intelligence, Chennai Zonal Unit, issued Show Cause Notice No. 6/2005 dated 14.02.2005 proposing recovery of service tax amounting to Rs. 3,37,39,404/- for the period from July 2003 to July 2004 together with interest and penalties. Upon adjudication, the Commissioner of Service Tax, Chennai, by Order-in-Original No. 03/2005 dated 23.12.2005, confirmed the entire demand of service tax along with the applicable interest but declined to impose penalties. While the respondent-assessee challenged the confirmation of the demand before the CESTAT, the Revenue preferred an appeal limited to the question of non-imposition of penalties.

5. While the above appeals were pending before CESTAT, a second Show Cause Notice No. 5/2005 dated 21.10.2005 was thereafter issued in respect of the subsequent period from 01.08.2004 to 31.07.2005 proposing recovery of service tax and education cess aggregating to Rs. 4,68,22,103/- together with interest and penalties. By Order-in-Original No. 04/2005 dated 23.12.2005, the Commissioner of Service Tax, Chennai confirmed service tax and education cess to the extent of Rs. 4,27,95,344/-, directed payment of interest under Section 75 of the Finance Act, 1994 and imposed penalty under Section 76 thereof. The respondent-assessee questioned the said adjudication order by preferring an appeal before the CESTAT.

6. The Revenue subsequently issued a third Show Cause Notice No. 52/2006 to respondent-assessee dated 17.10.2006 covering the period from 01.08.2005 to 30.04.2006 proposing recovery of service tax and education cess amounting to Rs. 2,96,02,757/- together with interest and penalties. By Order-in-Original No. 04/2007 dated 23.02.2007, the Commissioner of Service Tax, Chennai confirmed the proposed demand, together with the applicable interest and