1997 (4) TMI 437 - AT - Central Excise

Summary

Issues:
1. Classification of Hybrid Transformers under Central Excises Tariff Act, 1985.
2. Availment of excess credit by Bhiwadi unit.
3. Imposition of penalty on Bangalore unit.
4. Request for re-credit of excess amount and penalty imposition.

Issue 1: Classification of Hybrid Transformers under Central Excises Tariff Act, 1985
The case involved the classification of Hybrid Transformers under Chapter 85 of the Central Excises Tariff Act, 1985. The Bangalore unit cleared the consignment at a duty rate of 20% instead of the prescribed 5% under Notification 52/93. The Bhiwadi unit then availed excess credit based on the duty paid by the Bangalore unit.

Issue 2: Availment of excess credit by Bhiwadi unit
A show cause notice was issued to the appellants for the recovery of Modvat credit wrongly availed by the Bhiwadi unit. The Additional Collector confirmed the demand and imposed a penalty on the Bangalore unit. The appellants challenged this decision, seeking re-credit of the excess amount in the Bangalore unit's account.

Issue 3: Imposition of penalty on Bangalore unit
The Collector (Appeals) upheld the penalty imposed on the Bangalore unit for paying duty at 20% instead of 5% as per Notification 52/93. The appellants argued that the payment at 20% was a technical lapse and not intentional, requesting the penalty to be set aside.

Issue 4: Request for re-credit of excess amount and penalty imposition
The DR opposed setting aside the penalty, stating that the Bangalore unit's actions were deliberate to enable credit availment. However, regarding re-credit of the excess amount, the DR left the decision to the Bench. The Tribunal directed re-credit of the excess amount to the Bangalore unit but upheld the penalty, reducing it to Rs. 5,000 considering the circumstances.

In conclusion, the Tribunal allowed re-credit of the excess amount to the Bangalore unit but upheld the penalty imposed on them, albeit reducing it to Rs. 5,000. The decision was based on the understanding that the payment of duty at 20% by the Bangalore unit was not a technical lapse but a deliberate action to facilitate credit availment, justifying the penalty imposition.