2005 (2) TMI 644 - AT - Central Excise

Summary

Issues:
Challenge to duty confirmation and penalty imposition for denial of Modvat credit on capital goods removed without valid permission.

Analysis:
The appeal challenged the order-in-appeal affirming the duty confirmation of Rs. 1,51,67,478/- with a penalty of Rs. 15 lakhs against the appellants. The duty was confirmed for denying Modvat credit on capital goods under Rule 57Q due to their removal from the factory without valid permission post availing the Modvat credit in December 1999.

The appellant's counsel argued that permission was granted for the removal of goods (Moulds and Dies) by the competent authority, and extensions were sought and granted for certain goods. However, the tribunal found that while permission was initially granted and extended until 31-12-1999, no further extension was sought or granted by the competent authority. The appellants failed to bring back the goods to the factory upon expiry of the period, and some goods were even removed to another premises without permission.

The tribunal rejected the appellant's contention that an extension request was made through a letter dated 29-12-1999, as the letter did not reflect any prayer for extension. It was noted that the appellants had removed goods without proper authorization, leading to the duty demand being rightfully confirmed after disallowing the Modvat credit.

Regarding the Modvat credit entitlement upon bringing back the goods, the tribunal held that it was not within the scope of the present appeal but advised the appellants to seek relief through the competent authority. The penalty imposed was reduced to Rs. 1 lakh based on the circumstances of the case.

In conclusion, except for the penalty modification, the impugned order was upheld, and the appeal was disposed of accordingly on 28-2-2005.