2007 (11) TMI 119 - AT - Central Excise

Appellants paid duty precautionary as they were in doubt that slitting of the films amount to manufacture or not held that once there is no demand and duty has been paid voluntarily without protest, the same can t be set aside but penalty not imposable - not availed any credit of PVC films but cleared them on payment of duty even though no process was carried out - denial of credit of the duty paid by the appellants to its customer held that only customer can file an appeal

Summary

Issues:
- Duty payment on PVC rolls
- Appropriation of duty under Section 11D
- Denial of credit to customers
- Imposition of penalty under Rule 173Q(1)(bb)

Analysis:
1. The case involved the appellants engaged in the manufacturing process of printing aluminum foils and glassine polycoated paper. It was discovered that the appellants were clearing PVC rolls without any processing and paying duty on them, even though no duty was required. The Revenue claimed that the duty paid by utilizing Modvat credit should be treated as a deposit under Section 11D. The Joint Commissioner appropriated the duty paid and denied credit to the appellants' customers, imposing a penalty of Rs. 1 Lakh, which was upheld by the Commissioner (Appeals).

2. The appellants argued that they paid duty as a precaution due to uncertainty regarding whether the slitting process constituted manufacturing. They contended that they had availed Cenvat credit for a portion of the raw material used. They also mentioned having non-modvatable inputs in stock, indicating that duty payment was not to utilize unutilized Modvat credit. They requested the duty recovery to be waived and the penalty to be revoked.

3. The Tribunal noted that there was no demand for duty, and the duty was paid voluntarily by the appellants without protest. Therefore, the duty payment could not be set aside. Regarding the denial of credit to customers, the Tribunal ruled that only the customers could appeal for credit denial, not the appellants themselves.

4. The Tribunal considered the penalty imposed on the appellants for the duty paid voluntarily and the denial of credit to customers as sufficient punishment. Consequently, the Tribunal overturned the additional penalty of Rs. 1 Lakh imposed on the appellants. The appeal was disposed of accordingly, with the penalty being set aside.

This detailed analysis covers the duty payment issue, appropriation under Section 11D, denial of credit to customers, and the imposition of penalty under Rule 173Q(1)(bb) in the legal judgment delivered by the Appellate Tribunal CESTAT, Mumbai.