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TMI Blog2000 (3) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants had availed of modvat credit of duty, in the re-rubberisation of old and used rollers on which no duty had been paid, had never been intimated to the Department by any means, and the matter was detected only when the Central Excise Officers visited their factory on 8-8-1996. The intimation had only been given about the entry of the duty paid old and used rollers, but the use of modvated inputs on re-rubberising such exempted rollers had at no stage been given. As regards the role of the Director, it was found that it was he who was looking after the day-to-day affairs of the company and was aware of the mis-utilisation of modvat credit. He confirmed the demand of Rs. 22,63,884.75, imposed a penalty of Rs. 6 lakh on M/s Jay Rapid Rollers Ltd. and a penalty of Rs. 2.5 lakh on Shri Sukhbir Singh, Managing Director. The Revenue in their appeal had pleaded that the order of the 'Commissioner in not imposing mandatory penalty under Rule 57-I(4) of the Central Excise Rules,1944 (hereinafter referred to as the 'Rules'), and in not demanding interest on the duty evaded under Rule 57-I(5),was not correct, legal and proper. 2. The matter was heard on 10-12-1999 when Shri J.S. Agar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were in force. He referred to the Tribunal's Larger Bench decision in the case of M/s. Atma Steels Pvt.Ltd. CCE, Chandigarh,1984 (17) E.L.T. 331 (T), and Josts Engg. Co. Ltd. v. CCE, Mumbai-III, 1998 (99) E.L.T. 662 (T) = 1998 (78) ECR 233 (T). The learned advocate replied that the visit by the Central Excise Officers was paid on 8-8-1996 and the period was upto August, 1996. The provisions of Rule 57-I(4) came into force on 25-7-1996. Thus, he pleaded that there was no ground for imposing penalty under that Rule. 3. We have carefully considered the matter. The assessee was doing re-rubberisation of the old rollers received from the various customers. These re-rubberised old rollers were removed without payment of central excise duty. The assessee was using the raw-materials on which they had availed modvat credit for the re-rubberisation of the old rollers which were removed without payment of central excise duty. No intimation of such utilisation of modvated inputs in exempted goods was given to the Central Excise Department. While information had been given of the receipt of old and, worn out rollers for purposes of repairs, no intimation had been sent about the use of Modv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on inputs on which they had availed Modvat credit of duty. This fact was never intimated by the party and even they have not claimed it evidently because no such intimation was given by the party. I observe that in their replies the party has indirectly admitted the allegation of using inputs on which they had taken credit of duty. The department has also demanded central excise duty under Rule 57-I of the Central Excise Rules, 1944 which deals with the wrong availment of Modvat credit of duty. The party has failed to produce evidence showing purchase of sufficient inputs on which they did not avail credit of duty and which were used in the re-rubberising of old rollers. By not carrying the Balances in R.G. 23-A Part-I, the party has committed the procedural mistake and such a lapse cannot be claimed as a benefit to the party. This claim of the party makes mockery of law that they had not completed the records as they wanted to establish that they had sufficient balance of inputs on which they did not take Modvat credit of duty. Had the party been fair and sincere in their deeds, they should have kept all the records complete as per the provisions of the central excise law and reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods. It was also mentioned that reversal of the credit in respect of exempted final products is implied in the Modvat scheme. The Hon'ble High Court also observed that the modvat credit taken in respect of the inputs which are in stock has to be reversed if the product is exempted from excise duty from a particular date. The credit in respect of the inputs that have been used in the manufacture of final product which have become exempt also become inadmissible and have to be reversed. 8. In view of the discussion, we confirm the demand of duty of Rs. 22,63,884.75. The amount of penalty of Rs. 6 lakh imposed under Rule 173Q on M/s. Jay Rapid RollersLtd. is reduced to Rs. 3 lakh (rupees three lakh only). No specific role of Shri Sukhbir Singh, Managing Director, had been discussed in the impugned order-in-original. The only ground for imposing penalty of Rs. 2.5 lakh is that he was looking after the day-to-day affairs of the company and was aware of the fact that inputs on which credit had been taken were being used in re-rubberisation of old rollers cleared without payment of excise duty. Taking note of the nature of the dispute and in the facts and circumstances of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng interest under Rule 57-1(5) of the Rules is not to be interfered with, and the facts and circumstances of the case do not justify any interference in the order already passed on this score. 11. The learned SDR had referred to the Tribunal's decision in the case of Atma Steels Pvt. Ltd. v. CCE, Chandigarh, 1984 (17) E.L.T. 331 (T), wherein it has been observed that the proceedings initiated with reference to Rule or Provision validly subsisting at the time of initiation of proceedings can continue in spite of repeal or substitution of original provisions. Here it is not a case of any repeal or substitution. Penal provisions have to relate to specific contraventions and when the goods were cleared, the penal provisions were not in force and, therefore, no penalty was imposable. Similarly, the observations in the case of Josts Engg. Co. Ltd. v. CCE, Mumbai-III, supra, are also not applicable to the facts and circumstances of the present case. In that case the Tribunal had observed that the provisions of Section11-AB are applicable only in cases where show cause notices are issued after the enactment of those provisions. 12. On behalf of the appellants, reference has been ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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