P.G. Chacko, Judicial Member - This appeal filed by the assessee is against penalties imposed on them under Sections 76 and 78 of the Finance Act, 1994. They had obtained technical know-how from M/s. Hyundai Motor Co. (Korea) to manufacture, assemble, sell and service various models of motor cars in India and had paid royalty to the supplier during the period 25-11-04 to 5-12-05. The department issued a show-cause notice on 30-11-06 requiring them to show cause why service tax should not be demanded under the proviso to Section 73(1) of the Finance Act, 1994 in respect of the above royalty which was allegedly paid for "Intellectual Property Service". The notice also demanded interest on service tax under Section 75 of the Act. The amounts already paid by the party were sought to be appropriated towards these demands. Penalties under Sections 76, 77 and 78 of the Act were also proposed. The extended period of limitation was sought to be invoked on the ground of alleged suppression of material facts by the noticee. The allegations were denied and the demands were contested on factual and legal grounds. In adjudication, ld. Commissioner passed the impugned order confirming the demand of service tax (with Education Cess) against the assessee under the proviso to Section 73(1), demanding interest on the amounts under Section 75 of the Act, appropriating the payments already made towards these demands, and imposing penalties of Rs. 2,70,900/- @ Rs. 100/- per day and Rs. 8,84,43,553/- (equivalent to Service Tax + Education Cess) on the party respectively under Sections 76 and 78 of the Act.

2. In the present appeal, the challenge is against the penalties imposed on the appellants. Ld. Counsel submits that the department had been proceeding against the appellants for recovery of service tax in the category of "Consulting Engineer’s Service" in respect of transfer of technology and that, for the period Nov’02 to July’04, a show-cause notice had been issued for recovery of service tax from the appellants in the said category of taxable services. It is submitted that such dispute is still pending before the Commissioner (Appeals) pursuant to the remand order of this Bench reported in 2006 (4) S.T.R. 76 (Tri.-Chennai). While so, a new service viz. "Intellectual Property Service" was introduced and, in such circumstances, the appellants had bona fide doubt as to which of the services would cover the activity of transfer of technology. However, on the basis of legal advice, the appellants got registered with the department in respect of "Intellectual Property Service" on 16-11-05 and paid the service tax and Education Cess (with interest) for the present period of dispute. Ld. Counsel submits that, when the department themselves had taken the stand that transfer of technology was a service in the category of "Consulting Engineer’s Service" for the earlier period, it was not open to them to allege that the appellants had suppressed facts with intent to evade payment of service tax and, therefore, the extended period of limitation was not invocable against the appellants. It is, further, submitted that the appellants are entitled to take Cenvat credit of the service tax paid for the period of dispute and, therefore, on the principle of revenue-neutrality, it can be reasonably contended that the larger period of limitation was not invocable in this case. In any case, as the entire amount of service tax (with Education Cess) was paid with interest prior to issue of the SCN, no penalty was liable to be imposed on the appellants. It is submitted that, in the facts and circumstances of this case, the appellants are entitled to the benefit of Section 80 of the Finance Act, 1994. In the context of arguing against the invocation of extended period of limitation, ld. Counsel has relied on Final Order No.1159/07 dated 14-9-07 [2008 (9) S.T.R. 34 (Tribunal)] passed by this Bench in Appeal No. S/152/07 as also Final Order No.1224/07 dated 28-9-07 [2