2004 (3) TMI 694 - AT - Central Excise

Summary

Issues:
1. Imposition of penalties on M/s. Ashish Enterprises and Shri Ozha under specific rules of Central Excise Rules, 1944.
2. Allegations of fraudulent passing of Modvat credit against the appellants.
3. Use of two sets of invoice books by the appellants without permission.
4. Verification of Modvat credit by departmental authorities.
5. Simultaneous imposition of penalties on a company and its proprietor.

Analysis:

1. The judgment concerns the imposition of penalties on M/s. Ashish Enterprises and Shri Ozha under Rule 173Q and Rule 209A/210 of the Central Excise Rules, 1944, respectively. The penalties were imposed by the Additional Commissioner for fraudulent passing of Modvat credit and other irregularities.

2. The appellants were accused of fraudulently passing on Modvat credit by maintaining two sets of invoice books without proper authorization. The department alleged that Modvat credit was wrongly passed on due to these irregularities, resulting in a potential revenue loss. However, the appellants voluntarily made the payment before the issuance of a show cause notice.

3. It was found that the appellants indeed used two sets of invoice books simultaneously, leading to the issuance of invoices with the same serial numbers but different dates to various customers. Despite this irregularity, the duty payments reflected on the invoices were found to be correct during verification by departmental authorities.

4. The department verified the Modvat credit claimed by buyers with reference to the invoices issued by the appellants. It was confirmed that the Modvat credit taken by the buyers was correct concerning the duty payment on the material by the original manufacturer, as verified by the range superintendent.

5. Regarding the simultaneous imposition of penalties on the company and its proprietor, the judgment noted that such action was not sustainable. The penalty imposed on the proprietor was set aside, considering the plea made by the appellants. The penalty on M/s. Ashish Enterprises was reduced from Rs. 2 lakhs to Rs. 50,000, as the ends of justice were deemed to be met with the reduced penalty amount.

In conclusion, the appeals were partly allowed based on the above analysis and adjustments made to the penalties imposed on M/s. Ashish Enterprises and Shri Ozha.