2003 (10) TMI 516 - AT - Central Excise

Summary

Issues:
Challenge to penalty and interest under Section 11AC of the Central Excise Act.

Analysis:
The appeal in this case involves a challenge by M/s. Steel Authority of India Ltd. against the penalty imposed on them and interest demanded under Section 11AC of the Central Excise Act. The appellant, represented by Shri B.L. Narasimhan, argued that they manufacture iron and steel, avail Modvat credit on inputs and capital goods, and reverse the credit on a monthly basis. They acknowledged instances where credit remained unreversed for clearances to ineligible shops but contended that there was no mala fide intention as they promptly reversed the amount upon notification by the Department. The appellant emphasized that they had a sufficient credit balance and cited a Tribunal decision to support their position.

The respondent, represented by Shri D.N. Choudhary, countered the appellant's arguments by stating that duty demand for a specific period was confirmed and unchallenged, indicating admission of suppression of facts and invoking the extended limitation period. It was highlighted that the appellant failed to comply with Rule 57S regarding intimation for removal of capital goods, and the Department discovered the non-reversal of Modvat credit only through their detection efforts. Consequently, the respondent asserted that penalty and interest were applicable under Sections 11AC and 11AB of the Central Excise Act.

Upon evaluating both sides' contentions, the Tribunal noted that the appellant did not dispute the duty demand confirmed for an extended period, thereby accepting the invocation of the extended limitation period as per the proviso to Section 11A(1) of the Act. Consequently, the Tribunal held that the provisions of Section 11AC for penalty imposition and Section 11AB for interest demand were applicable. Despite this, considering that the appellant promptly discharged the duty liability upon detection by Central Excise officers, the Tribunal decided to reduce the penalty amount to Rs. 10 lakh. Ultimately, the appeal was rejected with the modified penalty amount.