2003 (11) TMI 532 - AT - Central Excise

Summary

Issues:
- Appeal against Order-in-original confirming demand of Central Excise duty and imposing a penalty.
- Dispute over availing exemption under Notification No. 202/88-C.E. wrongly.
- Previous remand by the Appellate Tribunal for readjudication.
- Confirmation of demand of duty and penalty under the impugned order.
- Disallowance and reversal of Modvat credit.
- Reduction of penalty due to decreased duty liability.

Analysis:
The Revenue filed an Appeal against the Order-in-original confirming the demand of Central Excise duty and imposing a penalty of Rs. 50,000 on the company. The dispute arose from the alleged wrongful availing of an exemption under Notification No. 202/88-C.E. The Senior Departmental Representative argued that the show cause notice was issued for this reason, and previous orders confirmed the demand and penalty. However, the matter was remanded by the Appellate Tribunal for readjudication, focusing on Modvat credit and the admissibility of benefits under specific sections of the Central Excise Act. The Commissioner subsequently confirmed the duty demand, imposed a penalty, and allowed Modvat credit and abatement of duty under Section 4(4)(d)(ii) of the Act.

The company's Advocate acknowledged the disallowance of Modvat credit and agreed to reverse it. Regarding the penalty, it was argued that with the decrease in duty liability due to the availability of Modvat credit and redetermination of assessable value, the penalty should be reduced. Upon considering both sides' submissions, the Tribunal agreed to reduce the Modvat credit amount and allowed the Appeal filed by the Revenue to that extent. However, the Tribunal also agreed with the company's Advocate that the penalty should be reduced due to the decreased duty liability. Therefore, the penalty of Rs. 50,000 imposed on the company was upheld, and the Appeal was disposed of accordingly.