2005 (11) TMI 420 - AT - Central Excise

Summary

Issues: Disallowance of Modvat credit and penalty imposition

Analysis:
The appeal before the Appellate Tribunal CESTAT, Mumbai arose from the order of the Commissioner of Central Excise (Appeals) disallowing Modvat credit of Rs. 67,713/- to the appellants and imposing a penalty of Rs. 7,000/- on them. The disallowed amount comprised Rs. 19,984/- due to the absence of a required certificate and the remaining amount due to the appellants' inability to avail credit at a rate higher than the actual duty paid by the input supplier.

Regarding the disallowed amount of Rs. 19,984/-, it was argued that the relevant invoice contained all the necessary particulars as required by the certificate prescribed under the relevant Notification. The Tribunal agreed with this argument, holding that the appellants were entitled to this credit as the invoice already included the required particulars. Therefore, the Tribunal allowed the credit of Rs. 19,984/- to the appellants.

On the remaining disallowed amount of Rs. 47,729/-, the Tribunal concurred with the lower appellate authority that the appellants could only claim credit based on the duty actually paid by the input supplier, not at a higher rate of 12%. Consequently, the disallowance of credit amounting to Rs. 47,729/- was upheld by the Tribunal.

Additionally, the penalty imposed on the appellants was reduced from Rs. 7,000/- to Rs. 2,500/- by the Tribunal. In conclusion, the appeal was partially allowed by the Tribunal, granting the appellants the credit of Rs. 19,984/- while upholding the disallowance of credit amounting to Rs. 47,729/- and reducing the penalty to Rs. 2,500/-.