2004 (10) TMI 454 - AT - Central Excise

Summary

Issues:
1. Entitlement to Modvat credit on packing material.
2. Imposition of penalties under Rule 57-I(4) and Rule 173Q.

Entitlement to Modvat credit on packing material:
The appeal involved a dispute regarding the entitlement of the assessee to claim Modvat credit on packing material. The Revenue contended that the assessee had availed Modvat credit on BOPP tape while also claiming abatement of packing material, which, according to Rule 57B(2)(iii), would disentitle them from taking Modvat credit on packing material. The Revenue sought to set aside the Order-in-Appeal that allowed Modvat credit on BOPP tape. However, the Tribunal noted that in previous orders related to the same assessee, it was ruled that deductions from the assessable value could be claimed for packing charges. Consequently, the Tribunal held that the assessee was not entitled to take Modvat credit on the final product, in line with Rule 57B(2)(iii). The Tribunal granted the Revenue's prayer by setting aside the portion of the Order-in-Appeal that allowed Modvat credit on BOPP tape, allowing the assessee to claim a refund of any excess duty paid.

Imposition of penalties under Rule 57-I(4) and Rule 173Q:
The Tribunal, after considering the submissions, found no evidence of fraud, wilful misstatement, collusion, or suppression of facts by the assessee with the intent to evade duty payment. Consequently, the Tribunal agreed with the lower appellate authority's decision that there was no basis for imposing penalties of Rs. 98,652 under Rule 57-I(4) and Rs. 1,000 under Rule 173Q. As a result, the Revenue's appeal was allowed, and the penalties were not upheld, aligning with the lower appellate authority's ruling.

In conclusion, the judgment addressed the issues of entitlement to Modvat credit on packing material and the imposition of penalties under Rule 57-I(4) and Rule 173Q. The Tribunal ruled in favor of the Revenue regarding the Modvat credit entitlement, setting aside the portion of the Order-in-Appeal that allowed such credit. Additionally, the Tribunal dismissed the imposition of penalties, agreeing with the lower appellate authority's finding of no evidence to support penalty imposition.