1999 (8) TMI 382 - AT - Central Excise

Summary

Issues:
Appeal against disallowance of Modvat credit and penalty reduction.

Analysis:
The appeal was filed against the Commissioner (Appeals)'s decision upholding the disallowance of Modvat credit but reducing the penalty amount from Rs. 10,000 to Rs. 5,000. The appellants, engaged in manufacturing metal containers, claimed Modvat credit under Rule 57 of the Central Excise Rules for invoices issued by a registered dealer. The Asstt. Commissioner alleged that the Modvat credit of Rs. 30,243 was wrongly availed as the invoices were not authenticated by the Central Excise officer as required. The Asstt. Commissioner raised a demand and imposed a penalty of Rs. 10,000 on the appellants, which was later reduced by the Commissioner (Appeals) to Rs. 5,000. The appellants contended that the authentication of invoices was a procedural requirement and they should not be penalized for the dealer's lapse. However, the Tribunal held that non-compliance with Rule 57G(2)(h) disentitles the assessee from claiming Modvat credit, even if the invoices were issued by a registered dealer. Since the invoices were not authenticated, the appellants were directed to refund the Modvat credit claimed.

The Tribunal found the penalty amount imposed on the appellants not excessive or exorbitant. The penalty was reduced by the Commissioner (Appeals) to Rs. 5,000 to realize the appellants of their lapse. The Tribunal rejected the argument that the appellants' ignorance of Rule 57G(2)(h) should be a basis for interference, stating that ignorance of the law is not an excuse. As manufacturers of metal containers, the appellants were expected to be aware of the Central Excise Act and relevant rules. Therefore, the penalty was justified. In conclusion, the Tribunal held that the appeal lacked merit and ordered its dismissal, as the appellants were rightfully directed to refund the Modvat credit and the penalty was deemed appropriate to enforce compliance with the law.