2001 (12) TMI 112 - AT - Central Excise

Summary

Issues:
1. Challenge against the imposition of penalty under Rule 57U(6).
2. Applicability of mens rea in imposing penalty.
3. Reduction of penalty amount.
4. Levying of interest under Section 11AB.
5. Justification for setting aside interest under Section 11AB.

Analysis:
1. The appellants contested the penalty imposed under Rule 57U(6) due to inadvertently claiming depreciation and Modvat credit. They argued that there was no intention to evade duty, citing the necessity of mens rea for penalty imposition. The appellant's counsel referred to various legal precedents supporting the requirement of mens rea for penalties. They proposed a penalty reduction to Rs. 50,898 or alternatively to the same amount mentioned in the irregular availment of credit.

2. The Revenue representative countered, stating that the mistake was known to the party well before the reversal of credit on 10-6-97. It was alleged that the party intended to avail credit and claim depreciation, which would have gone unnoticed if not detected by the Department. The Revenue's stance was that the party's actions indicated an intention to avail benefits improperly.

3. After considering the submissions and circumstances, the Tribunal decided on a lenient view regarding the penalty quantum. Acknowledging the party's voluntary reversal of credit before the show cause notice and the limited overdrawal amount, the penalty was reduced to Rs. 1,00,000 from Rs. 3,35,023. This reduction was deemed appropriate to serve the ends of justice.

4. The issue of levying interest under Section 11AB was raised, with the Counsel arguing that interest should not be imposed as the adjudication proceedings were not initiated under Section 11A. Legal references were made to support this argument, emphasizing that interest and penalty should not apply when proceedings were not initiated under Section 11A. The Revenue justified the interest levy, citing a Supreme Court decision.

5. The Tribunal ruled that interest under Section 11AB was not applicable since proceedings were not initiated under Section 11A, aligning with the precedent set in a previous Tribunal decision. Consequently, the interest levy under Section 11AB was set aside, and the penalty was reduced to Rs. 1,00,000 under Rule 57U(6). The Tribunal upheld the impugned order with the mentioned modifications.