2005 (11) TMI 121 - AT - Central Excise

Summary

Issues:
Imposition of penalty and interest for non-maintenance of registers regarding inputs used for dutiable and exempted components; Applicability of amended provisions of Rule 57CC introduced through Clause 82 of the Finance Act, 2005; Invocation of larger period or penalty in absence of fraud or contravention; Delay in obtaining clearance certificate affecting the sustainability of demands; Relief sought by the appellant against penalty and interest.

Analysis:
The appellant, a PSU Unit, contested the imposition of penalty and interest for not maintaining registers of inputs used for dutiable and exempted components. The Tribunal referred to the case of Pushpaman Forgings Pvt. Ltd. v. CCE, where it was held that the 8% reversal under Rule 57CC is not Modvat credit or excise duty, thus not enforceable under Section 11A or Rule 57-I(1). Despite the Apex Court upholding this judgment, the Government amended Rule 57CC through the Finance Act, 2005, allowing retrospective recovery. The appellant argued that as there was no fraud or contravention, invoking a larger period or imposing penalty/interest was not lawful.

The appellant cited Chandrapur Magnet Wires (P) Ltd. v. CCE, where the Apex Court ruled that failure to maintain registers does not warrant denial of Modvat credit. The appellant emphasized that no suppression of facts occurred, seeking relief based on the Tribunal's decision in Tube Investments of India Ltd. v. CCE, Madurai. The appellant's counsel contended that penalty should not apply, especially as a PSU Unit would not benefit from suppressing facts.

The delay in obtaining a clearance certificate was highlighted as a factor affecting the demands' sustainability under prevailing judgments. The Tribunal noted that the absence of a recovery mechanism for the 8% amount led to the retrospective amendment of Rule 57CC. The explanation in Clause 82 of the Finance Act clarified that no punishment could be imposed retrospectively for non-compliance. Considering the lack of suppression of facts and the appellant's PSU status, the Tribunal allowed the appeal, setting aside the penalty and interest. The appellant had already reversed the 8% amount, further justifying the decision to waive penalty and interest.