2004 (1) TMI 468 - AT - Central Excise

Summary

Issues:
Penalty for taking credit in PLA before encashment of cheque.

Analysis:
The appeal was filed against the impugned order-in-appeal confirming a penalty of Rs. 50,000 for taking credit in the PLA before the encashment of a cheque issued by the appellants. The appellants argued that the cheque was issued at the department's instance to collect more revenue before the financial year's end, and they had sufficient Modvat credit to discharge the duty on clearances. The JDR supported the impugned order's correctness.

Upon review, it was found that the appellants had no balance in the PLA when the cheque was issued. They cleared the goods without waiting for the cheque's encashment, indicating a deliberate attempt to cover up the goods' removal without paying duty. The claim that the department insisted on the cheque issuance lacked corroboration, as there was no written order or oral directive. The appellants could have deferred clearances until cheque encashment or used Modvat credit if permissible, but they chose not to. The absence of the cheque return did not grant them the right to clear goods without sufficient PLA balance. Consequently, the penalty under Rules 9(1), 52, 173F was upheld as legally correct.

Regarding the penalty amount, the appellants argued for reduction, while the JDR deemed it reasonable. Considering the case's circumstances, the penalty was reduced to Rs. 30,000. Apart from this modification, the impugned order was upheld, and the appeal was disposed of accordingly.