2001 (8) TMI 412 - AT - Central Excise

Summary

Issues:
1. Imposition of penalty for taking Modvat credit twice.
2. Reduction of penalty by the Commissioner (Appeals).
3. Appeal against the reduced penalty by the Revenue.

Imposition of Penalty for Taking Modvat Credit Twice:
The case involved the respondents taking Modvat credit of the additional duty of Customs paid twice due to two entries made on the same date in 1992. Upon realizing this error, they voluntarily reversed the credit. Subsequently, a show cause notice was issued seeking penalty imposition. The Asstt. Commissioner initially imposed a penalty of Rs. 13 lakhs, which was later reduced to Rs. One lakh by the Commissioner (Appeals). The appeal by the Revenue challenged this reduction, arguing that penalty imposition does not require culpability but mere non-compliance with rules.

Reduction of Penalty by the Commissioner (Appeals):
The Commissioner (Appeals) provided detailed reasoning for reducing the penalty. Referring to a Supreme Court case, it was highlighted that penalty is imposed for the breach of civil obligations under the Act, irrespective of guilty intention. The Commissioner considered mitigating factors such as the respondents' corrective actions, absence of repeated wrong credits, and absence of mala fide intentions. Citing precedents, the Commissioner concluded that a penalty of Rs. 1 lakh was appropriate, considering the ends of justice. This analysis was not refuted by the Revenue in their appeal memorandum.

Appeal Against the Reduced Penalty by the Revenue:
The Appellate Tribunal upheld the Commissioner's reasoning and decision to reduce the penalty. The Tribunal dismissed the Revenue's appeal, noting the absence of any challenge to the logic presented by the Commissioner. By accepting the analysis and upholding the reduced penalty, the Tribunal concluded the case in favor of the respondents.