2004 (3) TMI 557 - AT - Central Excise

Summary

Issues:
1. Penalty imposition for non-compliance with Rule 57T regarding Modvat credit availed on capital goods.

Analysis:
The appeal before the Appellate Tribunal CESTAT, New Delhi involved the setting aside of a penalty imposed on the appellants by the Commissioner (Appeals) for availing Modvat credit on capital goods in violation of Rule 57T. The appellants contested the penalty, arguing that since the Modvat credit had been allowed by the Commissioner (Appeals), no penalty should be imposed. On the contrary, the JDR representing the respondent contended that the penalty was rightly imposed due to the breach of Rule 57T by the appellants.

Upon review of the case, it was found that the appellants had indeed availed the Modvat credit on capital goods before their installation in the factory, which was a violation of the relevant Notification and Circular. The adjudicating authority disallowed the Modvat credit and imposed a penalty, which was later reduced by the Commissioner (Appeals). However, the Tribunal noted that since the appellants were entitled to the Modvat credit and there was no dispute regarding the same in the factory, the penalty imposition was deemed unwarranted.

The Tribunal emphasized that the only lapse on the part of the appellants was making an entry regarding the Modvat credit in the statutory record before installation of the capital goods, which was not in compliance with Rule 57T. However, there was no evidence to suggest that the credit was utilized before installation. Therefore, considering the circumstances of the case, the Tribunal concluded that the penalty imposition was unjustified and set it aside. Consequently, the impugned order of the Commissioner (Appeals) was modified, and the appeal of the appellants was disposed of in their favor.