A.K. Srivastava, Technical Member. - These appeals have been filed by M/s. Magnum International and M/s. Magnum Environment Managements Pvt. Ltd. against the Orders-in-Appeal Nos. 10-ST/BPL/2006 and 11-ST/BPL/2006, dated 18-1-2006 passed by the Commissioner of Customs & Central Excise (Appeals), Bhopal.

2. The Assistant Commissioner vide Order-in-Original No. 35/AC-1/ADJ/ST/SA/05, dated 20-4-2005 in the case of M/s. Magnum Environment Managements Pvt. Ltd. has ordered as under:-

(i)The amount of service tax for the period 16-10-1998 to March, 2002 is assessed as Rs. 3,87,672 under section 73 of Finance Act, 1994 on gross amount of Rs. 77,53,441 collected by the party M/s. Magnum Security Pvt. Ltd. However, as the party has already paid an amount of Rs. 48,184 as service tax, the same is adjusted and an amount of Rs. 3,39,488 is determined as service tax short paid by the party on the escaped value of taxable services, which is recoverable from them.

(ii)Interest at the appropriate rate is also recoverable under section 75 of Finance Act, 1994 for the period of default.

(iii)A penalty of Rs. 1,66,600 is imposed under section 76 of Finance Act, 1994.

(iv)A penalty of Rs. 3,39,488 is imposed under section 78 of Finance Act, 1994.

(v)A penalty of Rs. 33,949 is imposed upon them under section 79 of Finance Act, 1994.

Similarly, the Assistant Commissioner vide Order-in-Original No. 36/AC-I/ADJ/ST/SA/05, dated 20-4-2005 in the case of M/s. Magnum International has ordered as under:-

(i)The amount of service tax for the period 16-10-1998 to March, 2002 is assessed as Rs. 19,89,148 under section 73 of Finance Act, 1994 on gross amount of Rs. 3,97,82,951 collected by the party M/s. Magnum International. However, as the party has already paid an amount of Rs. 1,82,964 as service tax, the same is adjusted and an amount of Rs. 18,06,185 is determined as service tax short paid by the party on the escaped value of taxable services, which is recoverable from them.

(ii)Interest at the appropriate rate is also recoverable under section 75 of Finance Act, 1994 for the period of default.

(iii)A penalty of Rs. 1,66,600 is imposed under section 76 of Finance Act, 1994.

(iv)A penalty of Rs. 18,06,185 is imposed under section 78 of Finance Act, 1994.

(v)A penalty of Rs. 1,80,619 is imposed upon them under section 79 of Finance Act, 1994.

3. Against the above Orders-in-Original passed by the Assistant Commissioner, the appellants filed appeals before the Commissioner (Appeals), who has upheld the orders passed by the Assistant Commissioner and rejected the appeals by Orders-in-Appeal dated 18-1-2006 referred to para-1 above.

4. Heard both the sides and perused the records.

5. The appellants are registered with the Central Excise Department for collecting service tax on Security Agency with effect from 24-11-1999.

6. The appellants have not disputed the Service Tax liability on merits, i.e., the payment of the Service Tax on the gross amounts received. However, they stated that the demand is barred by limitation as the show-cause notice has been issued in the case of M/s. Magnum International on 24-2-2003 for the period for 16-10-1998 to 31-3-2002 and in the case of M/s. Magnum Environment Managements Pvt. Ltd. (Magnum Security Services Pvt. Ltd.), the show-cause notice has been issued on 7-3-2003 for the identical period, i.e., from 16-10-1998 to 31-3-2002.

7. The appellants have contended that their contracts with the clients were for providing security guards (un-skilled/Semi-skilled), Supervisor etc. The contractual payments were on the basis of reimbursement at actual per-diem rate per to unskilled/semi-skilled security guard or supervisors for days worked + Appellant’s Supervision/Service Charges varying from 5 per cent to 15 per cent of the actuals reimbursement. The per day rates in turn were based on Minimum Wages Act, EPF & ESIC contributions. They paid service tax on the percentage service charges received by them.

8. The appellants stated that they hone