2004 (9) TMI 205 - AT - Central Excise

Summary

Issues:
1. Appeal against order-in-appeal passed by the Commissioner (Appeals).
2. Availing Modvat credit for inputs used in final product.
3. Allegations of returning inputs without reversing credit and clearing goods without payment of duty.
4. Imposition of penalty on the firm and Commercial Manager.
5. Contention regarding duty payment prior to show-cause notice.
6. Application of penalty based on facts and circumstances of the case.

Analysis:
The appellant filed appeals against the order-in-appeal passed by the Commissioner (Appeals) regarding the availing of Modvat credit for inputs used in the final product. It was found that the appellants were receiving inputs, taking credit for duty paid on them, and returning defective inputs without reversing the credit. Additionally, they were clearing goods without paying duty and maintaining parallel sets of invoices. The adjudicating authority confirmed the demand and imposed penalties on the firm and the Commercial Manager.

The appellant did not contest the duty demand but argued that duty was paid promptly upon the Revenue's pointing out, even before the show-cause notice was issued. Citing a precedent, the appellant contended that if duty is paid before the show-cause notice, penalties cannot be imposed. However, in this case, the duty was not voluntarily paid, and the allegations of returning inputs without reversing credit and clearing goods without duty payment warranted penal action. The Tribunal reduced the penalty on the firm to Rs. 20,000 considering the case's circumstances.

Regarding the Commercial Manager, the Tribunal noted that the impugned order lacked findings on any omission or commission by the Commercial Manager. As a result, the appeal filed by the Commercial Manager was allowed, and the penalty imposed on them was set aside. The Tribunal disposed of the appeals accordingly, reducing the firm's penalty but absolving the Commercial Manager due to lack of specific findings against them.