2002 (5) TMI 285 - Commission - Central Excise

Summary

Issues:
1. Admissibility of duty liability disclosure.
2. Grant of immunity from prosecution.
3. Application of Rule 57-S(2)(b) in the case.
4. Adjustment of admitted duty liability against deposit.
5. Interpretation of Modvat Rules regarding disposal of capital goods.
6. Settlement terms and conditions.

Admissibility of Duty Liability Disclosure:
The Applicant disclosed a duty liability of Rs. 1,71,833 out of a total demand of Rs. 7,64,136, admitting Rs. 6,42,842 and disputing Rs. 1,21,294 due to the sale of capital goods along with the factory. The Applicant argued that Rule 57-S(2)(b) was not applicable as the capital goods were not removed from the factory. The Commission noted the Applicant's cooperation and full disclosure, settling the case on payment of Rs. 6,42,842 and waiving the fine and penalty for the disputed amount.

Grant of Immunity from Prosecution:
The Applicant sought immunity from prosecution under the Central Excise Act, 1944, and the Indian Penal Code. The Revenue objected, citing clandestine removal of goods. However, the Commission granted immunity considering the Applicant's cooperation and disclosure of duty liability.

Application of Rule 57-S(2)(b) in the Case:
The Applicant contested the application of Rule 57-S(2)(b) since the capital goods were not physically removed from the factory but sold along with it. The Commission analyzed Rule 57-S, which deals with the removal of goods from the factory, and concluded that the demand for Modvat credit on capital goods was not applicable in this scenario.

Adjustment of Admitted Duty Liability Against Deposit:
The Applicant adjusted the admitted duty liability against a deposit made during the investigation, contrary to settled law. The Commission viewed this action seriously, emphasizing the importance of following legal procedures and not adjusting liabilities arbitrarily.

Interpretation of Modvat Rules Regarding Disposal of Capital Goods:
The Commission interpreted the Modvat Rules concerning the disposal of capital goods, emphasizing scenarios where goods can be removed from the factory and the implications for Modvat credit. The Commission clarified that the demand for Modvat credit on capital goods did not apply in this case due to the sale of the factory without unutilized Modvat credit.

Settlement Terms and Conditions:
The Commission settled the case based on the Applicant's cooperation and disclosure, requiring payment of Rs. 6,42,842 while waiving fines and penalties. Despite instances of fraud, the Commission decided not to levy interest due to a previous duty deposit. Additionally, the Applicants were granted immunity from prosecution under the Central Excise Act, 1944, and the Indian Penal Code, subject to the settlement order being void if obtained by fraud or misrepresentation.