2006 (6) TMI 227 - AT - Central Excise

Summary

Issues: Disputed penalty imposition for wrongly availed Modvat credit.

In this case, the main issue revolves around the disputed penalty imposed on the respondents for wrongly availing Modvat credit. The Revenue contested the impugned order where the penalty equal to the duty amount of Rs. 14,891 was dropped by the Commissioner (Appeals). The penalty was initially imposed by the adjudicating authority under Rule 57-I(2)/57AH, Section 11AC, and Rule 173Q. The Commissioner (Appeals) set aside the penalty citing a previous case law, Punjab Recorder Ltd. v. CCE, Chandigarh, where the penalty was annulled due to lack of apportionment. However, it was argued that the law applied in the previous case was not applicable to the present situation as the penalty in this instance was imposed under Rule 57-I(4) specifically, allowing for penalty equal to the wrongly claimed Modvat credit without the need for apportionment under Section 11AC. Therefore, the Commissioner (Appeals) was deemed to have erred in applying the previous case law, and the penalty imposition by the adjudicating authority was upheld, resulting in the appeal of the Revenue being allowed.