2005 (5) TMI 460 - AT - Central Excise

Summary

Issues:
1. Challenge against penalty imposition under Rule 209A.
2. Disallowance of Modvat credit and penalty imposition under Rule 57U.
3. Irregular availing of Modvat credit on printing machine.
4. Irregular Modvat/Cenvat credit on inputs found short.
5. False installation date for availing Modvat credit.
6. Contesting shortage of inputs during physical stock verification.
7. Negligence in handling and transport of inputs.
8. Imposition of penalty on the partner of the firm.

Analysis:
1. The appeal was filed challenging the penalty imposed under Rule 209A. The Appellate Commissioner upheld the disallowance of Modvat credit and imposition of penalties under Rule 57U. The appellant, a partner of the firm, was penalized Rs. 10,000 under Rule 209A of the Central Excise Rules, 1944.

2. The assessee, engaged in manufacturing polyester flexible packing material, availed Modvat/Cenvat credit of excise duty paid on inputs and capital goods. Proceedings were initiated for irregularly availing Modvat credit on a printing machine before installation and on inputs found short during physical stock verification.

3. The installation date of the printing machine was falsely declared to avail Modvat credit. The machine was received on 31-3-2000 but installed on 5-4-2000. The authorities found the installation date manipulation with intent to claim full Modvat credit.

4. Shortage of inputs was noted during physical stock verification, attributed to handling, transport loss, and evaporation. The assessee failed to convince authorities about the input usage in final product manufacture or duty payment, leading to credit reversal.

5. The appellant's appeal against the penalty of Rs. 10,000 was rejected as no prima facie case was made. The Tribunal could refuse to admit an appeal when the penalty amount does not exceed Rs. 50,000, which was applicable in this case. The application was thus rejected.

In summary, the judgment upheld the penalties imposed for irregular Modvat credit availing and false installation date declaration, while also highlighting the importance of providing convincing explanations and complying with excise rules to avoid penalties and credit reversals.