2002 (9) TMI 781 - AT - Central Excise

Summary

Issues:
- Duty chargeable on inputs cleared as such

Analysis:
The appeal filed by M/s. Maruti Udyog Ltd. pertains to the duty chargeable on inputs cleared as such. The Appellants manufacture motor vehicles and avail CENVAT Credit on duty paid on inputs. The issue arose when parts obtained for the manufacturing division were transferred to the spare parts division due to a shortage. The differential demand was confirmed against them, along with a penalty, based on the argument that excise duty is payable on the selling price of the spare parts division. The Appellants voluntarily paid the differential duty for a specific period and disputed the retrospective application of an amendment to Rule 57AB of the Central Excise Rules, 1944. The Commissioner confirmed the demand, leading to a legal dispute.

The Appellants argued that no penalty should be imposed as they had paid the entire differential duty before the show cause notice was issued. They cited precedents where penalties were set aside under similar circumstances. On the other hand, the Respondent contended that penalties were justified based on the Appellants' admission of liability to pay the differential duty from a certain date. The Tribunal analyzed the provisions of Rule 57AB and compared them with Rule 57F, emphasizing the legal fiction created to ensure the manufacturer restores the original position by debiting the same rate of duty at which they had taken credit. The Tribunal agreed with the Appellants that a specific notification did not indicate retrospective effect, rendering the demand for a certain period not maintainable.

Regarding the period not challenged by the Appellants, the Tribunal held that they had discharged the duty liability before the show cause notice, but disagreed with the argument that no penalty should be imposed. Citing a Supreme Court decision, the Tribunal emphasized the discretionary nature of penalty imposition and concluded that a nominal penalty was warranted. Consequently, the penalty amount was reduced to Rs. 15,000, considering the Appellants' actions in discharging the duty liability promptly upon noticing the omission. The appeal was disposed of in this manner, addressing the duty chargeable on inputs cleared as such and the imposition of penalties in the given circumstances.