2000 (3) TMI 819 - AT - Central Excise

Summary

Issues:
1. Applicability of mandatory penalty and interest provisions under Rules 57U(6) and 57R(8) to situations arising before 1-3-1997.

Detailed Analysis:
1. The central issue in this case revolves around the applicability of the provisions of Rules 57U(6) and 57R(8) to a situation that arose before 1-3-1997. The respondent had availed Modvat credit on capital goods and claimed depreciation of income tax/revenue expenditure during the period 3-5-1994 to 4-10-1994. The show cause notice proposing imposition of penalty and interest under the said rules was issued on 17-8-1998. The Commissioner (Appeals) held that as the provisions were not in existence when the credit was wrongly availed, no penalty or interest could be levied. Citing a Tribunal decision, the matter was remanded for fresh consideration.

2. The Revenue, represented by Shri R.K. Roy, argued that the Board's Circular dated 6-1-1997 clarified that penalties could be imposed where show cause notices were issued after the enactment of Sections 11AB and 11AC. As the notice in this case was issued in 1998, the provisions of Rules 57U(6) and 57U(8) were rightly invoked. Referring to Supreme Court decisions and the Circular, the Revenue sought to set aside the Commissioner (Appeals) order and allow the appeal.

3. On the other hand, the respondent's representative, Shri S.K. Bagaria, contended that mandatory penalty and interest under Sections 11AB and 11AC apply only to contraventions committed after the enactment of the rules, not to prior periods. Citing various Tribunal decisions, the representative argued that Rules 57U(6) and 57U(8) should be interpreted similarly. Referring to specific Tribunal cases and a Supreme Court confirmation, it was argued that penalties should not apply to periods predating the enactment of the relevant provisions.

4. The Adjudicating Authority considered both sides' arguments and the binding nature of the Board's Circular. While the Revenue relied on the Circular, the Authority noted that assessees can challenge such administrative orders. Citing a Madras High Court judgment, it was highlighted that quasi-judicial authorities are not bound by administrative directions. The Commissioner (Appeals) was deemed justified in following Tribunal precedents instead of the Circular, remanding the case for fresh consideration in line with Tribunal decisions.

In conclusion, the judgment upheld the decision of the Commissioner (Appeals) to remand the case for a fresh decision based on Tribunal precedents, rejecting the Revenue's appeal regarding the imposition of penalties and interest for a period predating the relevant provisions' enactment.