2004 (6) TMI 539 - AT - Central Excise

Summary

Issues:
Appeal against penalty for taking credit suo motu without proper authorization under Central Excise Rules, 1944.

Analysis:
The judgment delivered by the Appellate Tribunal CESTAT, Mumbai, addressed the issue of an appeal pending since 1999 regarding the imposition of a penalty of Rs. 2000/- in each case for taking credit suo motu without proper authorization. The Commissioner objected to the appellant's conduct in this regard, and after hearing the arguments, upheld the penalty, stating it was not excessive and required no interference.

Regarding the credit taken by the appellants, it was noted that they had reversed Modvat credit on certain goods arising from ship breaking as per Rule 57C and Rule 57CC of the Central Excise Rules, 1944. However, a circular clarified that Rule 57C did not apply to non-excisable goods, as was the case here. The Assistant Commissioner had issued a show cause notice and directed the appellants to return the amount taken by them. The Tribunal found that since the competent authority had confirmed the proceedings and directed the return of the amount, the appellants could not have taken credit without challenging the orders through an appeal or application for stay, which they failed to do. Therefore, their action of taking credit entries suo motu was deemed improper, and the order of the Commissioner (Appeals) was upheld.

In conclusion, the Tribunal confirmed the penalty imposed by the Commissioner, emphasizing the need for proper authorization and adherence to the Central Excise Rules, 1944, in matters of taking credit. The judgment highlighted the importance of following due process and challenging official orders through appropriate legal channels to avoid unauthorized actions and penalties.