Delhi High Court
Commissioner Of Central Excise vs Tayajee And Sons (P) Ltd. on 3 February, 2005
Author: M B Lokur
Bench: S Kumar, M B Lokur
JUDGMENT
Madan B. Lokur, J.
1. The Appellant is aggrieved by an order dated 18th September, 2002 passed by the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) dismissing Appeal No. E/772/2002-NB(SM).
2. On 6th July, 1996, officers of Central Excise (Preventive) visited the factory premises of the Respondent. They were informed by the Respondent that it was engaged in the manufacture of PVC Compounds and availed Modvat credit in respect of inputs.
3. On checking the records and stocks of the Respondent, it was found that the Respondent was not able to account for 5.3 metric tonnes of PVC Resin. The Respondent admitted that this PVC Resin was sold in the open market and debited a sum of Rs.49,357/- on the same day being Modvat credit wrongly availed in this regard.
4. Thereafter, a show cause notice was issued to the Respondent alleging that it had wrongly taken credit of Central Excise duty for an amount of Rs.49,357/- under Rule 57-A of the Central Excise Rules, 1944. The Respondent replied to the show cause notice and by an order dated 26th February, 1999, the Assistant Commissioner dis-allowed the Modvat credit of Rs.49,357/- and demanded the same under Rule 57-I of the Central Excise Rules, 1944 (for short Rules) and imposed a penalty of a like amount.
5. Feeling aggrieved, the Respondent filed an appeal before the Commissioner (Appeals). By an order dated 12th February, 2002, the Commissioner (Appeals) upheld the order of the Assistant Commissioner but reduced the penalty amount from Rs.49,357/- to Rs.12,500/- on the ground that it was excessive, particularly since the entire amount of duty had already been debited by the Respondent.
6. Against the order of the Commissioner (Appeals), the Appellant preferred an appeal before the CEGAT, which came to be dismissed by the impugned order.
7. The CEGAT noted that the challenge in the case was only limited to a reduction of the penalty from Rs.49,357/- to Rs.12,500/-. It was contended before the CEGAT by the departmental representative, and this argument was reiterated before us, that the penalty amount could not have been reduced and should have been 100% of the amount in dispute, that is, Rs.49,357/-.
8. The CEGAT noted that the provisions of Rule 57-I (4) of the Rules were not mandatory in the sense that penalty was required to be imposed only if there was a fraud, willful mis-statement, collusion, suppression of facts or contravention of any of the provisions of the Central Excise Act or Rules with intent to evade payment of duty. It was found that none of these ingredients existed in this case. On the contrary, the Respondent admitted that it had made a mistake and had deposited the amount in dispute on the same day. It was, therefore, held that there was no case made out for the levy of any penalty whatsoever. However, since the Respondent had not challenged the levy of penalty, the CEGAT did not interfere in its imposition.
9. We are not at all impressed by the arguments advanced by learned counsel for the Appellant. There is a clear finding of fact given by the CEGAT that the ingredients of Rule 57-I (4) had not been satisfied inasmuch as the Respondent had not sought to a vail Modvat credit by way of a fraud, willful mis-statement, collusion, suppression of facts or contravention of any of the provisions of the Central Excise Act or Rules with intent to evade payment of duty. Nothing has been shown to us to disturb this inding of fact.
10. The Tribunal also held that since the Respondent had debited the amount well before a show cause notice was issued and immediately on Realizing its mistake, it was a fit case for not penalising the Respondent. There is no doubt that the moment the Respondent's lapse was brought to its notice, it debited the Modvat credit without wasting any time. In any case, in view of the categorical finding of the CEGAT that the earlier action of the Respondent was not mala fide, we do not think this would been appropriate case to interfere with the view expressed by the CEGAT.
11. Under the circumstances, the appeal is dismissed, but there will be no order as to costs. It is, however, made clear that since the Respondent has not challenged imposition of the penalty of Rs.12,500/-, we are not disturbing this imposition.
