1998 (1) TMI 273 - AT - Central Excise

Summary

Issues:
1. Whether the demand for duty was barred by limitation.
2. Whether the penalty imposed on the assessee should be set aside.

Analysis:
1. Limitation Issue:
The case involved two appeals, one by the Department and one by the assessee, regarding the duty demand and penalty imposed by the Collector of Central Excise. The Department sought to set aside the finding that the demand was barred by limitation, while the assessee appealed against the penalty imposed.

The assessee, a manufacturer of refrigerators, had filed declarations under the Modvat scheme for various inputs used in manufacturing final products. The Department issued a notice proposing to recover credit taken on duty paid on certain inputs. The Collector accepted that the demand was barred by limitation, noting that the assessee had accounted for goods in statutory records and submitted required documents. The Department challenged this finding, arguing that the assessee did not make a true and complete disclosure of relevant information. However, the Tribunal upheld the Collector's decision, stating that the Department was aware of the inputs through monthly returns and gate passes, thus no suppression of facts occurred.

2. Penalty Issue:
Regarding the penalty imposed on the assessee, the Tribunal considered precedents and arguments presented. The assessee contended that the penalty should be set aside, citing previous cases where penalties were not imposed when duty demand was dropped due to no intent to evade duty. However, the Tribunal differentiated the present case, stating that penalties under Rule 173Q could be imposed for wrongly taking credit, irrespective of intent to evade duty. The Tribunal noted that the Modvat scheme was beneficial to reduce duty burden on finished products and that imperfections in declarations made soon after the scheme's introduction should be condoned. Therefore, the Tribunal concluded that the penalty was not justified in this case and set it aside.

In conclusion, the Tribunal allowed the appeal filed by the assessee and dismissed the appeal filed by the Department, setting aside the penalty imposed on the assessee.