1996 (2) TMI 227 - AT - Central Excise

Summary

Issues: Disallowance of modvat credit on CRGO Steel coils, disallowance of duty on M.S. Plates, imposition of personal penalty

Analysis:
1. Disallowance of Modvat Credit on CRGO Steel Coils:
The appellants contested the disallowance of modvat credit on CRGO Steel coils and the subsequent disallowance of duty by the Department. The Department's rationale for disallowing the modvat credit was the lack of maintained records to correlate the imported items with those sent to job workers for conversion. The appellants, engaged in transformer manufacturing, imported CRGO steel coils, sent them to job workers, and received CRGO cores in return. The appellants argued that the total quantity of CRGO steel coils on which modvat credit was taken did not exceed the quantity sent to job workers, thus challenging the Department's claim of no correlation. The Tribunal found in favor of the appellants, citing the lack of evidence to support the denial of modvat credit and referencing a previous decision supporting their stance.

2. Disallowance of Duty on M.S. Plates:
Regarding the disallowance of duty on M.S. Plates, which were actually M.S. Sheets with a thickness less than 5 mm, the appellants claimed deemed modvat credit based on challans received. The Department rejected this claim, emphasizing the distinction between plates and sheets in the Tariff and the absence of thickness indication in the challans. Despite the supplier's certificate confirming the thickness of the material, the Tribunal upheld the Department's decision, ruling that the description discrepancy and lack of thickness specification on the challans justified the denial of modvat credit.

3. Imposition of Personal Penalty:
The lower authorities imposed a personal penalty of Rs. 12,000 on the appellants, which the appellants argued was excessive given the total disallowance amount. The Tribunal upheld the penalty, citing the mandatory maintenance of records under Rule 57F(2) and the failure to obtain permission for availing the procedure. Consequently, the penalty imposition was deemed justified, and the impugned order was upheld except for the modification regarding the denial of modvat credit on CRGO Steel coils and M.S. Plates.

In conclusion, the Tribunal ruled in favor of the appellants concerning the disallowance of modvat credit on CRGO Steel coils but upheld the denial of modvat credit on M.S. Plates and the imposition of the penalty. The judgment emphasized the importance of maintaining accurate records and complying with procedural requirements in availing benefits under relevant rules.