2001 (2) TMI 567 - AT - Central Excise

Summary

Issues:
- Contravention of Rule 57GG and imposition of penalty under Rule 173Q.
- Rejection of appeal by Commissioner (Appeals).

Analysis:
1. Contravention of Rule 57GG and Imposition of Penalty under Rule 173Q:
The case involved the appellants, a registered trader under Rule 174 of the Central Excise Rules, 1944, who availed Modvat credit based on a duplicate invoice from a manufacturer. The appellants passed on the Modvat credit to a buyer under Rule 57GG. Subsequently, they lost the duplicate invoice and were issued a show cause notice for contravening Rule 57GG by the Asstt. Commissioner of Central Excise. A penalty of Rs. 25,000 was imposed on them under Rule 173Q. The Asstt. Commissioner's order was challenged, but the appeal was rejected by the Commissioner (Appeals).

2. Rejection of Appeal by Commissioner (Appeals):
The appellants appealed against the Commissioner (Appeals) order, arguing that the department did not deny the Modvat credit availed based on the lost invoice. They contended that the receipt of goods, payment of duty, and passing on of Modvat credit were not in dispute. The appellants maintained that the goods were received under the lost invoice, and since their bona fides were not in question, no penalty should be imposed. The appellants also highlighted that the lower authorities did not specify the specific violation of Rule 57GG or the provision under Rule 173Q for the penalty. The Revenue, represented by the JDR, supported the penalty imposition.

3. Judgment and Decision:
The appellate tribunal, after considering the submissions, noted that the receipt of goods and payment of duty under the lost invoice were undisputed. The Revenue did not challenge the Modvat credit availed and passed on by the appellants. The tribunal observed that the JDR could not identify the specific provision of Rule 57GG violated by the appellants that warranted the penalty under Rule 173Q. It was established that when the main legal provision under the statute was not denied to a party, there was no basis for imposing a penalty. Consequently, the penalty imposed on the appellants was set aside, and the appeal was allowed.

In conclusion, the judgment by the Appellate Tribunal CEGAT, New Delhi, highlighted the importance of substantiating violations of specific legal provisions before imposing penalties and emphasized the need to uphold procedural fairness and genuine transactions in excise matters.