2002 (1) TMI 1039 - AT - Central Excise

Summary

Issues:
- Modvat credit disallowance under Rule 57-I and penalty imposition under Rule 173Q for alleged contravention of Rule 57G.
- Validity of the application for condonation of delay of Modvat declaration.
- Justification for sustaining the penalty after the belated declaration was filed and acted upon by the Commissioner (Appeals).

Analysis:
1. The appellants took Modvat credit without filing a declaration under Rule 57G, resulting in a delay of 16 days. The Department proposed to disallow the credit and impose a penalty. The Dy. Commissioner disallowed the credit and imposed a penalty. The Commissioner (Appeals) allowed the credit but did not interfere with the penalty. The present appeal is against the penalty, with no cross objection or separate appeal by the Revenue.

2. The Advocate for the appellants argued that once the belated declaration was filed and acted upon by the Commissioner (Appeals), there was no contravention of Rule 57G, hence no justification for the penalty. The JDR contended that no application for condonation of delay was submitted. The JDR insisted on upholding the penalty even after granting the Modvat credit.

3. The J. examined the submissions and found the application for condonation of delay to be genuine. The document submitted by the assessee was accepted as a true copy of the application received by the Department. The Commissioner (Appeals) acknowledged the delay but allowed the credit, indicating acceptance after condonation of the delay. The J. concluded that once the delay was condoned and the credit allowed, there was no contravention of Rule 57G, thus no basis for sustaining the penalty. Consequently, the penalty was set aside, and the appeal was allowed.