2003 (2) TMI 507 - AT - Central Excise

Summary

Issues:
1. Admissibility of credit availed on tin plates of varying thickness.
2. Application of penalty under different provisions of the Central Excise Rules.
3. Imposition of penalty on company officers for alleged irregularities.

Issue 1: Admissibility of credit availed on tin plates of varying thickness:

The case involved an investigation into a company manufacturing excisable goods and availing credit of duty paid on inputs used in their final product. It was found that the company had availed irregular modvat credit on tin plates of thickness exceeding 0.24 mm, which were not used in the manufacture of their final products. The Commissioner confirmed a duty demand for the credit wrongly availed on tin plates with thickness ranging between 0.26 mm to 0.31 mm. The Tribunal upheld this confirmation, stating that the credit availed on such inputs was clearly not admissible as they were not suitable for the final product. The Tribunal also noted the extended period of limitation invoked due to the company not disclosing vital information about the tin plates' specifications. The duty demand of &8377; 14,50,994.34 was confirmed for this issue.

Issue 2: Application of penalty under different provisions of the Central Excise Rules:

Regarding the penalty imposed on the manufacturing unit, the Tribunal set it aside because the Commissioner had invoked provisions of Rule 173Q of the Central Excise Rules, which differed from the provisions initially proposed in the show cause notice. The penalty imposed on the company officers was also set aside as they did not deal with the offending goods directly, and the substitution of imported inputs was carried out by another entity. The Tribunal referenced a case law to support the decision that dealing with goods liable to confiscation is a prerequisite for imposing a penalty under Rule 209A of the Central Excise Rules.

Issue 3: Imposition of penalty on company officers for alleged irregularities:

The penalty imposed on the officers of the company was set aside as they were not directly involved in the substitution of imported inputs. The Tribunal highlighted that the officers did not deal with the offending goods, and dealing with such goods was necessary for the imposition of a penalty under Rule 209A of the Central Excise Rules. As a result, the duty demand of &8377; 14,50,994.34 was confirmed, while the remaining duty demand and penalties on the manufacturing unit were set aside. The appeals of the appellants were partly allowed or allowed in toto, depending on the specific circumstances of each case.

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