1997 (4) TMI 230 - AT - Central Excise

Summary

Issues:
Appeal against order of Collector (Appeals) regarding Modvat credit benefit and penalty imposition.

Analysis:
The appellant contested the penalty imposed by the Collector (Appeals) despite allowing the Modvat credit benefit. The appellant argued that penalty should only be imposed for proven mala fide intentions, citing precedents like Hindustan Steel Ltd. v. State of Orissa and Collector of Central Excise v. H.M.M. Ltd. The Department, however, defended the penalty imposition under Rule 173Q(bb) due to the appellant's failure to submit required documents, invoking Rule 57G(4).

The Department highlighted the reasons for penalty imposition provided by the Collector in para 13 of the order-in-appeal. The Department also referred to Rule 173Q(bb) concerning penalty for Modvat violations. The Department distinguished the cited cases, emphasizing that penalty is warranted for non-compliance even if the breach is not deliberate, as in the present case where the appellant was aware of the statutory requirements but failed to comply.

The Tribunal acknowledged the Collector's reasoning for the penalty, recognizing the appellant's responsibility to return original documents for defacement. The Tribunal noted the importance of considering all relevant circumstances in penalty imposition, as outlined in previous judgments. The Tribunal reduced the penalty to Rs. 5,000 considering the appellant's acceptance of Modvat credit and the proportionality of the penalty to the offense committed.

In conclusion, the Tribunal upheld the penalty imposition based on the appellant's failure to comply with document submission requirements, despite allowing the Modvat credit benefit. The decision balanced the necessity of penalties for non-compliance with the need for proportionality and consideration of all relevant circumstances, ultimately reducing the penalty amount.