2002 (3) TMI 742 - AT - Central Excise

Summary

Issues: Violation of Rule 57F(3), Disallowance of Modvat credit, Confiscation of goods and lorry, Penalty under Rule 173Q

Violation of Rule 57F(3):
The case involved the transportation of goods from Unit I to Unit II under Rule 57F(3) but due to a clerical error, a regular gate pass was issued instead of a 57F(3) challan. The lower authorities found that the goods were not returned to Unit I as required by the rule. The appellate tribunal noted that the amendment to the rule allowed clearance on payment of duty, indicating a procedural contravention. As duty was debited on the final product, the tribunal found no reason to deny the recovery of the Modvat credit amount.

Disallowance of Modvat credit:
The Commissioner (Appeals) confirmed the disallowance of Modvat credit wrongly availed by the appellants. However, the appellate tribunal disagreed with this decision, stating that since duty was debited on the final product and no justification was found for confiscating the seized goods and lorry, the Modvat credit of Rs. 4,664/- should not be denied.

Confiscation of goods and lorry:
The goods were confiscated under Rule 52A(8)(c) and allowed to be redeemed on a fine, while the lorry was confiscated under the Customs Act and Central Excise Act. The Commissioner (Appeals) set aside the redemption fine on the lorry and goods. The tribunal found that as the goods were job worked at Unit II and duty was debited on the final product, there was no justification for confiscation. Therefore, the confiscation of goods and lorry was not upheld.

Penalty under Rule 173Q:
A penalty of Rs. 5,000/- was imposed on the appellants under Rule 173Q. The tribunal analyzed the penalty provisions and concluded that penalty liability could not be established as the goods were not liable for confiscation. Since there was no intent to evade duty and the confiscation liability was not upheld, the penalty under Rule 173Q was set aside.

In conclusion, the appellate tribunal set aside the orders of the lower authorities and allowed the appeal based on the findings related to the violation of Rule 57F(3), disallowance of Modvat credit, confiscation of goods and lorry, and the penalty imposed under Rule 173Q.