2004 (96) ECC 495 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

New Delhi -- Bench-NB(C)

Shri V.K. Agrawal, Member (T) and Shri P.G. Chacko, Member (J)

CCE, Ghaziabad

Versus

Goyal M.G. Gases Ltd.

Appeal No. E/347/2004-NB(C)

[Arising out of Order-in-Appeal No. 449-CE/GZB/2003 dated 27.10.2003 passed by the Commissioner (Appeals), Central Excise, Ghaziabad]

Final Order No. 256/2004-NB(C), dt. 22.3.2004, Certified on 5.4.2004

Penalty (Excise)

Modvat credit taken on capital goods -- Some delay in removing capital goods on payment of fine -- Revenue has not brought any material/evidence to show that the credit taken by the respondents of the duty paid on the impugned goods was used towards payment of duty on finished goods at all -- Penalty not imposable -- CER -- Rr. 57Q(8) & 57S.

Revenue appeal rejected.

PRESENT :

Shri Kumar Santosh, SDR for the appellant.

Shri Rajesh Chibber, Advocate for the respondent.

Case Cited :

Janta Ballbearing v. CCE, 2001 (45) RLT 291............................................... [Paras 2 & 3]

Per : V.K. Agrawal

The Revenue has filed this appeal praying for imposition of penalty on the Respondents M/s. Goyal M.G. Gases Ltd.

2. Shri Kumar Santosh, learned SDR, submitted that the Respondents manufacture oxygen & nitrogen gases and avail of Modvat Credit of the duty paid on inputs and capital goods; that the Respondents had taken Modvat Credit of Additional Customs duty on the strength of Bill of Entry dated 14.1.98; that subsequently they had reversed the credit as capital goods were not installed by them in the factory and the Bill of Entry was in the name of their unit that they had again taken the credit on 8.1.2000 without installation of the capital goods; that they had subsequently transferred the said capital goods to their another unit situated at Burdwan under invoice dated 15.1.2000 after debiting the duty amount; that part of the said capital goods were removed in January and February, 2000 on various dates after debiting the duty amount; that the Dy. Commissioner under Order-in-Original No. 62/2001-02 dated 31.7.2001 imposed penalty of Rs. 40,000 under Rule 173Q and penalty of Rs. 2000 under Rule 57T (10) of the Central Excise Rules, 1944 for wrongly availing the Modvat Credit on 8.1.2000; that however, on appeal the Commissioner (Appeals) under the impugned Order has set aside the Order-in-Original on the ground that action of the department to impose penalty for improper availment of Credit without proposing denial of Credit was contrary to the legal provisions and the reliance has been placed on the decision in the case of Janta Ballbearing v. CCE, 2001 (45) RLT 291. The learned SDR, further, submitted that at the material time the Credit of the capital goods could be availed of only after the capital goods have been installed or used for manufacture of excisable goods; that in the present matter it is admitted fact that the impugned capital goods were not installed; that further as per the provisions of Sub-rule (8) of Rule 57Q at the material time the manufacturer intending to remove the capital goods from his factory for home consumption prior to their being installed or use can take credit of the duty on the date on which such capital goods are so removed by him from his factory on payment of appropriate duty of excise leviable thereon as provided in Rule 57S; that in the present matter contrary to the provision of Rule 57Q(8) the Respondents took the credit on 8.1.2000 whereas the goods were transferred in January and February 2000, and therefore, the penalty is imposable on them.

3. Shri Rajesh Chibber, learned Advocate, countered by submitting that they had reversed the credit initially in 1998 as soon as they realized that the Modvat could be availed only after installation of the capital goods; that during the period they had not used any part of the credit taken in RG 23-C, Part-I; that subsequently in 2000 they took the credit following the Rule 57Q(8) before removing the capital goods; that the Modvat taken by them was utilized by them for paying the Excise duty on the capital goods removed to their Burdwan unit; that under their letter dated 6.1.2000 they had sought permission of the Asst. Commissioner to remove the capital goods though as per Rule 57S(1) only intimation was required to be given; that they had removed the capital goods immediately after taking the credit; that penalty is not imposable when credit is not proposed to be denied as held by the Appellate Tribunal in the case of Janta Ballbearing Store (supra).

4. We have considered the submissions of both the sides. No doubt Rule 57Q(8) of the Central Excise Rules clearly provided that the Credit shall be taken of the duty on the date on which the capital goods are removed by the manufacturer from his factory on payment of appropriate duty of excise leviable thereon as provided in Rule 57S. The Respondents had taken the credit of the duty paid on the capital goods on 8.1.2000 whereas the capital goods were removed on 15.1.2000 and in February 2000. No doubt there has been some delay in removing the capital goods on payment of fine. However, the fact remains that Revenue has not brought any material/evidence to show that the credit taken by the Respondents of the duty paid on the impugned goods was used towards payment of duty on finished goods at all. In view of these facts the present matter does not warrant imposition of any penalty on the Respondents. We, therefore, reject the appeal filed by the Revenue.

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