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2003 (4) TMI 136 - AT - Central Excise
Issues:
Challenge to penalty imposed by Commissioner on M/s. Grasim Industries Ltd. for removal of inputs as such and payment of duty. Analysis: The appeal involved a challenge by M/s. Grasim Industries Ltd. against the penalty imposed by the Commissioner for the removal of inputs as such and payment of duty. The Appellant argued that they were reversing Cenvat credit on yarn removed to their factories, following the rules for fortnightly basis reversal. The Commissioner imposed the penalty, contending that the payment for removal of inputs as such is not excise duty. The Appellant emphasized the provisions of Rule 57AB (1B) allowing Cenvat credit for payment of duty on inputs removed as such. The Appellant argued that the payment at the time of clearance of inputs as such is indeed duty. The Commissioner relied on sub-rule (1C) effective from 1-3-2001, stating that the payment at the time of removal of goods as such is not excise duty but an amount equal to it. The Appellant contended that sufficient credit was available even for daily payment of duty on inputs removed as such. Counterarguments were presented by the Senior Departmental Representative, stating that the payment on clearance of inputs as such was no longer considered duty post the law change on 1-3-2001. It was argued that the penalty could be imposed under Rule 173Q (1)(a) without requiring mala fide intention for contravention of the Rules. The Tribunal analyzed the submissions and provisions of Rule 57AB. It was noted that the payment at the time of removal of inputs or capital goods as such is considered duty, as per Rule 57AB(1B). The Tribunal found that sub-rule (1C) does not indicate that the payment on removal of inputs/capital goods as such is not excise duty. Additionally, it was acknowledged that the Appellants had a sufficient balance in their Cenvat credit account at the relevant time. Consequently, the Tribunal did not find any justification for imposing a penalty on the Appellants and allowed the appeal.
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