2000 (9) TMI 491 - AT - Central Excise

Summary

Issues:
Disallowed Modvat credit due to failure to file declaration under Rule 57G of Central Excise Rules for specific inputs. Imposition of penalty on the appellants.

Analysis:
1. The appellant contested the denial of Modvat credit amounting to Rs. 19,563 due to an alleged failure to file a declaration under Rule 57G of the Central Excise Rules for certain inputs. The appellant denied the allegation but acknowledged a discrepancy in the nomenclature of inputs between the Modvat declaration and the invoices.

2. The primary issue at hand is whether the disallowance of Modvat credit for the mentioned inputs was justified and if the penalty imposed on the appellants was appropriate. The appellant's representative argued that the discrepancy in nomenclature should not result in the denial of the benefit, citing various Tribunal decisions to support this stance.

3. The appellant's advocate emphasized that the penalty of Rs. 5,000 was unwarranted as there was no evidence of mala fides on the part of the appellants. Referring to legal precedents, the advocate highlighted that penalties should not be imposed for technical breaches without establishing mens rea, as per judgments from the Hon'ble Supreme Court.

4. On careful consideration of the arguments presented by both sides and examining the evidence, the judge concluded that the infractions noted by the Revenue were not substantial enough to deprive the appellants of their statutory rights under the Modvat credit scheme. The judge emphasized that the Department should adopt a lenient approach in such matters, barring serious violations aimed at defrauding revenue.

5. The judge found the alleged infractions to be technical and inconsequential, lacking evidence of malafides on the part of the appellants. Consequently, the imposition of the Rs. 5,000 penalty was deemed unjustified and improper. Therefore, the judge set aside the impugned order, providing consequential relief to the appellants in this matter.