1996 (3) TMI 309 - AT - Central Excise

Summary

Issues:
1. Classification of goods under Central Excise Tariff Act
2. Duty payment and license requirement
3. Claim for Modvat credit
4. Penalty imposition

Classification of Goods under Central Excise Tariff Act:
The case involved the manufacturing of Automobile coolant liquid cum Anti-Freezing preparation classified under Heading 3820.00 of the Central Excise Tariff Act. The appellants were found to have cleared goods without a Central Excise license and without paying duty until a certain date. The duty demand was calculated based on the value of clearances, and the Principal Collector of Central Excise imposed duty and a penalty on the appellants.

Duty Payment and License Requirement:
The appellants claimed they had no intention to evade duty and had sought advice from the department regarding obtaining a Central Excise license. They argued that the duty on imported raw material was higher than on the final product, indicating their willingness to pay duty. The Commissioner denied their claim for Modvat credit, stating it was belated. However, the tribunal upheld the duty demand, emphasizing the appellants' obligation to pay duty exceeding the exemption limit as a Small Scale Industries Unit.

Claim for Modvat Credit:
The tribunal found that the rejection of the appellants' claim for Modvat credit was unfounded. It directed the Commissioner to consider the claim, provided the raw material had suffered duty and was used in the production of the final product during the relevant period. The appellants were advised to satisfy the Commissioner with supporting documents for the claim. The tribunal acknowledged the appellants' compliance with certain procedural requirements under the modvat scheme and reduced the penalty imposed.

Penalty Imposition:
The tribunal decided to reduce the penalty imposed on the appellants from Rs. 1,00,000 to Rs. 10,000, considering the facts and circumstances of the case. The appeal was disposed of by upholding the duty demand, directing the Commissioner to review the Modvat credit claim, and reducing the penalty amount. The decision aimed to balance the duty payment obligations of the appellants with the procedural requirements under the Central Excise Tariff Act.