2000 (11) TMI 527 - AT - Central Excise

Summary

Issues:
1. Imposition of penalty for wrongful availment of credit barred by limitation.

Analysis:
The case involved the question of whether a penalty can be imposed for wrongful availment of credit as barred by limitation. The appellant, engaged in the manufacture of pharmaceutical products, received bulk drugs at a concessional rate of duty but took a higher notional credit. The department issued a show cause notice proposing the recovery of the modvat credit wrongly taken and the imposition of a penalty. The Order-in-Appeal confirmed the demand but held that the recovery of duty was barred by limitation. However, it upheld the imposition of the penalty on the grounds that limitation does not apply to penalties.

The appellant argued that the imposition of the penalty was unlawful, especially in cases where the breach was technical. Citing a precedent where the demand of duty was dropped, the appellant contended that the invocation of Rule 173Q for imposing a penalty was incorrect. The Collector (appeals) dismissed the department's claim regarding the demand of duties as barred by limitation but upheld the levy of the penalty, leading to the present appeal.

During the hearing, the appellant did not appear, and the Ld. SDR for the Revenue argued that the case at hand differed from the precedent cited by the appellant. Referring to the judgment in a similar case, it was noted that when the demand of duty was dropped due to inadequacy of evidence, the Tribunal held that a penalty cannot be imposed. Despite the argument that limitation may not apply to the levy of penalties, the Tribunal was constrained to follow the precedent decision favoring the assessee. Consequently, the appeal was allowed with any consequential relief according to the law.