2000 (1) TMI 472 - AT - Central Excise

Summary

Issues: Disallowance of Modvat credit under Rule 57-I and imposition of personal penalty under Rule 173Q for contravention of Rule 57G(5).

Analysis:
1. The appellate tribunal addressed the disallowance of Modvat credit amounting to Rs. 6,30,387.72 under Rule 57-I of the Central Excise Rules and the imposition of a personal penalty of Rs. 50,000 under Rule 173Q for contravening Rule 57G(5).

2. The appellant's advocate argued that although the credit was taken after six months from the issuance of documents, the goods were warehoused in West Bengal under the impression that the date of issuance of challans for clearance was the relevant date for calculating the six-month period as per Rule 57G(5). The advocate did not press the grounds related to Rule 57H.

3. In response, the SDR contended that Rule 57G(5) explicitly prohibits taking credit after six months from the issuance of specified documents and should not be extended. The SDR justified the penalty imposition citing past decisions that do not require mens rea for imposing penalties.

4. The tribunal acknowledged that the credit was availed after the six-month period specified in Rule 57G(5). It emphasized that the rule does not allow for the inclusion of additional documents like challans from the warehouse corporation, as argued by the appellant's advocate. The tribunal held that foreign words cannot be introduced into clear and unambiguous legal provisions.

5. Consequently, the tribunal upheld the denial of Modvat credit amounting to Rs. 6,30,387.72 due to contravention of Rule 57G(5).

6. Regarding the personal penalty of Rs. 50,000, the tribunal noted that the appellant's mistake stemmed from a misinterpretation of Rule 57G. The tribunal considered the appellant's lack of expertise in excise matters and their bona fide belief that the clearance date from their godown was relevant for the six-month period calculation. As no malice was attributed to the appellants, the tribunal set aside the personal penalty.

7. In conclusion, the tribunal rejected the appeal except for modifying the personal penalty, which was overturned due to the appellant's genuine misunderstanding of the rule.