2003 (12) TMI 383 - AT - Central Excise

Summary

Issues:
Challenge against penalty imposition under Rule 173Q of Central Excise Rules for interest loss due to delayed payment of duty.

Analysis:
The appellant, a chemical manufacturer, faced penalty imposition under Rule 173Q for interest loss suffered by the Revenue due to delayed duty payment. The original penalty of Rs. 3,00,000 was reduced to Rs. 1,00,000 by the Commissioner (Appeals). The appellant manufactured caustic soda required in a neighboring plant and cleared it at different prices, debiting differential duty upon notification by authorities. A show cause notice was issued for breach of Rule 173C, despite the appellant's compliance with Modvat procedure. The appellant argued against penalty imposition citing precedents like DCW Ltd. v. Asst. Collector of Central Excise, Tuticorin and G.K. Steels (CBE) Ltd. v. CCE, Coimbatore.

Analysis:
The appellant contended that since the entire differential duty paid was availed as Modvat credit, there was no intention to evade duty. Precedents like Gujarat State Fertilizers & Chemicals Ltd. v. CCE were cited to support this argument. The Departmental Representative argued that the admission of default by the appellant justified the penalty. However, the Tribunal found merit in the appellant's argument, stating that no evidence suggested an intent to evade duty. The appellant promptly paid the differential duty and utilized the equivalent credit in its other plant, indicating no fraudulent motive.

Analysis:
Ultimately, the Tribunal set aside the penalty, ruling in favor of the appellant. The decision highlighted that the appellant's immediate payment of the differential duty and the legitimate use of credit in its other plant negated any intention to evade duty. The judgment emphasized the lack of evidence supporting fraudulent intent and upheld the appellant's compliance with the Modvat procedure.