2002 (9) TMI 606 - AT - Central Excise

Summary

Issues:
- Appeal filed by Revenue against dropping proceedings and appropriation of deposited amount
- Cross appeal by the assessee against confiscated raw material and penalty imposition

Analysis:
1. Appeal by Revenue:
- The Revenue filed an appeal against dropping proceedings initiated against M/s. Padmini Polymers Ltd. and individuals, challenging the appropriation of Rs. 50 lakhs deposited towards the duty demanded in the Show Cause Notice (SCN).
- The case involved the alleged wrongful availment of duty-free clearances by M/s. Padmini Polymers under Notification No. 4/97. The Revenue contended that the exemption was subject to specific conditions, including the non-availment of Modvat credit on inputs used for exempted goods.
- The Revenue argued that the manufacturer failed to comply with Rule 57CC regarding maintaining separate inventory for dutiable and exempted goods, leading to a violation of the notification and rules.
- However, the Tribunal upheld the decision of the Commissioner, stating that there was no violation as the assessee did not claim Modvat credit on inputs used for exempted products. The judgment referenced the case law of Agarwal Brothers Steel Rolling Mills to support this position.

2. Cross Appeal by Assessee:
- The assessee filed a cross-appeal against the confiscation of raw material and the imposition of a penalty. They contended that they maintained separate records for inputs used in the manufacture of exempted and dutiable goods, as required by the law.
- The Tribunal noted that there was no statutory requirement for separate storage of raw materials for exempted and dutiable products under Rules 57C and 57CC. The decision highlighted the necessity of maintaining separate inventory and accounts for exempted goods, which the assessee had complied with.
- Ultimately, the Tribunal rejected both appeals, affirming the decision of the Commissioner in favor of M/s. Padmini Polymers and individuals. The nominal redemption fine and penalty imposed were deemed acceptable, leading to the rejection of the cross-appeal by the assessee.

In conclusion, the Tribunal upheld the decision of the Commissioner, ruling in favor of M/s. Padmini Polymers and individuals, while rejecting the appeals filed by both the Revenue and the assessee. The judgment emphasized the importance of compliance with statutory requirements and the maintenance of separate records for exempted goods to avoid violations of excise duty regulations.