2004 (97) ECC 645 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

New Delhi -- Bench-NB(S)

Shri P.S. Bajaj, Member (J)

CCE, Chandigarh

Versus

Bazpur Co-op. Sugar Factory Ltd.

Appeal No. E/2229/2003-NB(S)

[Arising out of Order-in-Appeal No. 77-CE/MRT-II/2003 dated 21.5.2003 passed by the Commissioner of Central Excise (Appeals), Meerut-II]

Final Order No. A/1142/2004/NB/(SM) dt. 11.6.2004,
Certified on 18.8.2004

Modvat Credit

Availability -- Disputed amount of Rs. 143, 735 -- Having availed the credit wrongly, the respondents are liable to pay the penalty under the law. The imposition of penalty in a case of wrongful availment of credit by an assessee, is must unless the circumstances otherwise warrant. Having tried to take the modvat credit on the same capital goods twice without justification, the respondents are burdened with the penalty on an amount equal to the credit amount disallowed to them i.e. Rs. 1,43,737.

Appeal is disposed of accordingly

PRESENT :

Shri S. Bhatnagar, JDR for the appellant.

Shri R.K. Maheshwari, Conslt. for the respondent.

Cases Cited :

1. CCE, Meerut v. Uttar Pradesh State Sugar Corporation Ltd., 2004 (167) ELT 45 (T) [Paras 3 & 6]

2. Kerala State Electronics Corporation v. Commissioner of Central Excise, Cochin, 1996 (84) ELT 44 (T) [Paras 1, 3 & 6]

Per : P.S. Bajaj

In this appeal, the issue relates to the availability of the Modvat Credit to the respondents of the disputed amount of Rs. 1,43,735. The modvat credit of this amount was availed by the respondents on an invoice issued by the job worker to whom the goods were sent earlier by them for conversion/repair purposes. The adjudicating authority disallowed the credit as the same could not be availed by the respondents under Rules 57-Q and 57-S. The Commissioner (Appeals) has reversed that Order-in-Original of the adjudicating authority by referring to the ratio of the law laid down in the case of Kerala State Electronics Corpn. v. CCE, Kochin, 1996 (84) ELT 44 (T).

2. The learned JDR has reiterated the correctness of the Order-in-Original and argued that the Commissioner (Appeals) had wrongly reversed that order as the credit could not be availed by the respondents under Rules 57-Q and 57-S.

3. On the other hand, the learned consultant has contended that the credit was available to the respondents under Rule 57-Q(2) as well as 57-S. In support of his contention, he has referred to the ratio of the law laid down in the case of Kerala State Electronics Corpn. v. CCE, Kochin, supra, which has been relied upon by the Commissioner (Appeals) and another judgment of the Tribunal in the case of CCE, Meerut v. U.P. State Sugar Corpn. Ltd., 2004 (167) ELT 45 (T).

4. I have heard both sides and gone through the record. From the record, it is evident that the respondents have cleared old and used `Brass Tubes' without payment of duty to M/s. Multi-metals Ltd. Kota (Rajasthan), for job work. Earlier to this removal, they had already availed the credit on these goods under Rule 57-Q. It is also evident that while clearing the goods under a challan, the provisions of Rule 57-S were never complied with by them as under the said rule, the capital goods can be removed as such or after use for home consumption, for export under a bond on payment of duty, for test repairs and reconditioning etc. after intimation to the jurisdictional Deputy/Assistant Commissioner of Central Excise or as waste or scrap on payment of duty. But none of these conditions stands fulfilled in the present case as the respondents removed the capital goods without payment of duty. Therefore, on receipt of the goods back from the job worker, no credit could be again taken by the respondents of the entire amount which the job worker allegedly paid and which included fabrication charges also. Similarly, the credit under Rule 57-Q too cannot be claimed by the respondents being not manufacturer of the goods and moreover they had earlier once taken the credit on the goods in question as capital goods.

5. However, since the job worker paid the duty on the fabrication, of Rs. 41,550, credit to that extent only could be taken by the respondents as even conceded by the Revenue in the ground No. 3(b) of the grounds of appeal. But beyond that, no credit could be taken for the simple reason that the job workers had paid the duty, while sending back the goods to the respondents. The view taken by the Commissioner (Appeals) that the respondents were entitled to take the credit as the goods were cleared by them under Rule 57-S(2), is wholly erroneous and cannot be accepted, in the light of the facts and circumstances, detailed above. The respondents are entitled to the credit of only Rs. 41,550 and not of the balance amount of Rs. 1,43,735 which was the duty paid on the `Brass Tubes' by the job workers for the reasons stated above.

6. The ratio of the law laid down in the case of Kerala State Electronics Corpn. v. CCE, Kochin, supra, referred to by the learned consultant, is not applicable to the facts of the present case. In that case Kerala State Electronics Corpn. v. CCE, Kochin, all that has been observed is, that there could not be re-assessment of the duty on the inputs and the credit was allowable as per the amount of duty indicated in the duty paying documents, while in the case of CCE, Meerut v. U.P. State Sugar Corpn. Ltd., supra, the capital goods sent to the job worker for the machines and which were cleared through the invoice under Rule 52A on payment of duty. But such is not the position in the present case. For having availed the credit wrongly, the respondents are liable to pay the penalty under the law. The imposition of penalty in a case of wrongful availment of credit by an assessee, in my view, is must unless the circumstances otherwise warrant. But the instant case is not a case of bona fide working of the respondents. They had tried to take the modvat credit on the same capital goods twice without justification. Therefore, they are burdened with the penalty on an amount equal to the credit amount disallowed to them i.e. Rs. 1,43,737.

7. In view of the discussion made above, the impugned order of the Commissioner (Appeals) is set aside and the Order-in-Original of the adjudicating authority, with the above-said modifications in the credit amount as well as penalty, is restored. The appeal of the Revenue stands disposed of in the above terms.

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