2012 (4) TMI 500 - AT - Central Excise

CENVAT Credit - Malafide intention to evade duty - Rule 57S - Held that - A plain reading of the Rule 57S indicate that the assessee needs to take prior permission before removal of the capital goods and if the capital goods are not brought back within a period of three months or within such extended period they are liable to pay duty equivalent to the credit taken. In the instant case it is an admitted fact that the assessee did not take any permission from the department nor did they bring back the moulds and dies within the stipulated period. Hence they are liable to pay duty equivalent to the credit taken - the appellant did not have any mala fide intention and the goods were still available with the job worker and accordingly - Penalties are waived - Decided against Revenue.

Summary

Issues:
Appeal against order-in-appeal regarding Modvat credit on capital goods without permission and imposition of penalty.

Analysis:
The case involves two appeals, one by the appellants and the other by the revenue, arising from a common order regarding the availing of Modvat credit on capital goods without permission. The appellant, a manufacturer of industrial cooling fans, availed Modvat credit on moulds and dies which were removed to a job worker without departmental permission. The adjudicating authority issued a notice for reversal of the Modvat credit, confirmed by the Commissioner (Appeals) with penalties waived due to lack of deliberate intent to evade duty.

The appellant argued that the failure to inform the department and seek permission was due to a procedural lapse caused by a factory strike, during which the goods were eventually brought back. The revenue contended for the imposition of penalties. The Tribunal considered Rule 57S of the Central Excise Rules, requiring prior permission for removal of capital goods and imposing duty if not returned within the specified period. As the appellant did not seek permission or return the goods within the stipulated time, the duty equivalent to the credit taken was upheld.

Regarding the penalty, the Tribunal agreed with the lower appellate authority that penalties were not warranted as there was no deliberate defiance of the law. Penalties are deemed necessary only in cases of intentional evasion, which was not established in this instance. Consequently, the Tribunal upheld the lower appellate authority's decision, dismissing both appeals filed by the appellant/assessee and the revenue.