2001 (9) TMI 963 - AT - Central Excise

Summary

Issues:
1. Denial of Modvat credit to the appellants.
2. Imposition of penalty.

Analysis:
1. Denial of Modvat credit:
The authorities denied the Modvat credit of Rs. 12,86,308.75 to the appellants, stating that the inputs were not properly declared in their declaration. The appellants had availed Modvat credit for C.R. Coils, C.R. Coil Ends, and Pig Iron. The advocate for the appellants argued that although the declarations mentioned Cold Rolled Sheet 2mm and C.R. Strips, the use of terms C.R. Coils and C.R. Coil Ends was due to trade practices and did not affect the classification. Referring to a Trade Notice based on a Circular, it was argued that as long as the product and its classification were correct, Modvat credit should not be disallowed. The tribunal found the argument acceptable for C.R. Coils and C.R. Coil Ends, allowing the credit. However, for Pig Iron, the appellants described it differently from its actual classification under 7201.00, leading to the denial of Modvat credit for Pig Iron.

2. Imposition of penalty:
A penalty of Rs. 20,000 was imposed on the appellants along with the denial of Modvat credit. The tribunal set aside the penalty as the denial of credit was only upheld for Pig Iron, not for C.R. Coils and C.R. Coil Ends. Therefore, the penalty was not justified and was consequently set aside. The appeal was disposed of with the decision to allow credit for C.R. Coils and C.R. Coil Ends while upholding the denial of credit for Pig Iron due to incorrect description and classification in the declaration.