2004 (7) TMI 165 - AT - Central Excise

Summary

Issues:
1. Imposition of penalty under Rule 173Q of the Central Excise Rules for passing on Modvat credit.
2. Imposition of penalty under Rule 209A of the Central Excise Rules for involvement in transporting excisable goods.

Analysis:
1. The appeals involved the imposition of penalties on four appellants for allegedly passing on Modvat credit wrongly. The appellants were accused of facilitating the availing of credit of duty by issuing fake invoices without physically receiving the goods. The primary contention was whether penalties could be imposed under Rule 173Q. The appellants argued that prior to 14-7-99, penalties could only be imposed for facilitating excise duty credit, not additional customs duty credit. The Tribunal concurred, citing the amendment to Rule 173Q and Circular No. 472/38/99-CX. As the acts occurred before the amendment, penalties were deemed inapplicable, leading to the penalties being set aside.

2. Additionally, penalties were imposed on two appellants under Rule 209A for involvement in transporting excisable goods. However, it was argued that Rule 209A did not apply as the goods in question were imported, not excisable. The rule required knowledge or belief that goods were liable for confiscation, which was not demonstrated. As the appellants were not involved with excisable goods and did not possess the required knowledge, the penalties were overturned. The judgment emphasized that the penalties were based on facilitating fake invoices, not excisable goods, leading to the dismissal of penalties for all appellants.

In conclusion, all four appeals were allowed based on the findings that penalties under Rule 173Q were not applicable for passing on Modvat credit before the relevant amendment and that Rule 209A penalties did not apply due to the nature of the goods involved. The judgment provided a detailed analysis of the legal provisions and circumstances, resulting in the setting aside of the penalties imposed on the appellants.