Customs, Excise and Gold Tribunal - Bangalore
Rikvin Floors Ltd. vs Commissioner Of C. Ex. on 30 August, 2002
Equivalent citations: 2002(84)ECC274, 2002(146)ELT382(TRI-BANG)
ORDER S.S. Sekhon, Member (T)
1. M/s Rikvin Floors Ltd., the appellants are the manufacturers of Quartz Reinforced Vinyl Flooring falling under Heading 68.07 of the Central Excise Tariff since 1991. On the raw material procured, they availed Modvat credit as per the rules. During the year 1992-93 the party started operating under DEEC QABAL scheme, wherein they exported materials prior to importation of the raw materials by quoting the DEEC licence number on shipping bills. They obtained advance licences as per the Exim Policy during the period 1992-93, 93-94 and 94-95. They fulfilled export obligations against each such licence before the raw materials were imported. Out of the licences obtained, they got 19 licences transferred to M/s. Tirumala Rerolling Pvt. Ltd., Secunderabad with the concurrence of the Jt. DGFT, Hyderabad and on 3 licences they imported 59 MT of PVC for their own use.
2. It was learnt by them that the facility of transferring the advance licences was not available, since Modvat credit on indigenous raw material used in the product exported was availed by them. Since the licences were already transferred, they suo moto, initiated action to rectify the error, by re-crediting the Modvat credits, by debit entries in PLA and informed the Bombay Customs, Range Superintendent and Assistant Collector, Central Excise in-charge. However, a show cause notice was issued on 24-5-1995 requiring them to show cause as to why :-
(i) Rs. 25,46,30/- so far debited by the appellants till 28-4-95 should not be confirmed under Rule 57-1 of Central Excise Rules, 1944 read with Section 11A of Central Excise Act, 1944.
(ii) Rs. 15,10,578.80 being the balance of proportionate credit availed on the goods exported under DEEC Scheme should not be demanded under Rule 57-1 of Central Excise Rules, 1944 read with the provisions of Section 11A(I) of C. E. Act, 1944; and
(iii) Penalty should not be imposed on them under Rule 173Q of Central Excise Rules, 1944 for contravention of Rules 57A, 57G, 57F(4) and Rule 9(1) ibid and also penalty should not be imposed under Section 112 of Customs Act, 1962 for contravention of provisions of Notification No. 204/92, dated 19-5-92 and violating the Para 67 of import and export policy.
3. After considering the submissions and granting a hearing wherein they submitted that the raw materials covered by all the 21 licences, the credit availed was Rs. 33,94,283/- and not Rs. 40,56,958/- as alleged in the Show Cause Notice; they had debited by 18-5-95 i.e. before the Notice, an amount of Rs. 33,94,283/- (Rs. 31,46,881/- in PLA and Rs. 2,47,402/- in RG 23A). As regards the credit availed on raw materials included in two licences whose transferability was not applied by them, credits were not required to be reversed. As regards the 19 licences, transfer entries in favour of M/s. Tirumal Rerolling Pvt. Ltd. were got cancelled since they had some more export order negotiating import of raw materials. They used these partly utilised licences for their own imports by getting the licences re-transferred from Jt. DGFT; an amount of Rs. 2,57,945/- on two licences was excess debit, they requested permission for the credit of the same. As regards penalty; for violation of Notification No. 204/92-Cus., dated 19-5-1992 they submitted that the Government had announced an amnesty scheme whereby cases where credits were reversed before 15-7-1995, no penal proceedings would be initiated.
The appellants enclosed press cuttings of the Government assurance in this regard. The Commissioner passed the impugned order confirming the demand to the extent of Rs. 33,94,283/- without giving any finding on reversal of Rs. 2,57,945/- and imposed penalty of Rs. 5 lakhs under Rule 173Q of Central Excise Rule, 1944 and Section 112 of Customs Act, 1962. Hence this appeal.
3. We have considered the submissions made by both sides and find :-
(a) The Commissioner has found contravention of Rules 57A, 57G, 57F(4) and Rule 9(1) of the Central Excise Rules, 1944 and Notification No. 204/92, dated 19-5-92 read Para 67 of the Import & Export Policy to be proved. We fail to find as to how the Provisions of Rules 57A, 57G and 57F(4) in the facts of this case are contravened. There is no allegation that credit availed was not eligible in any respect stipulated use in the manufacture of final end products initially exported was not permissible in the Mod-vat Rules. Stipulation of a customs duty exemption notification not being eligible, if Modvat credit on inputs was availed, as in this case, are no reason to conclude, that the Modvat credit scheme as laid down by law has been violated. At the most, the benefits of customs Notification could be denied and imports not permitted under that Customs Notification. Therefore we cannot find, any liability for penalty under Rule 173Q(l)(bb) in availing and utilizing the credits.
(b) We also find that the Commissioner has come to a finding that contravention of Rule 9(1) of the Central Excise Rules, 1944 has been proved. We cannot find how a provision of Rule 9(1) has been arrived at, since that rule stipulates the time and payment of duty and penalty can be imposed only under Rule 9(2) up to Rs. 2000/- could only be imposed for violation of Rule 9(1). This order has been passed only to cause and to confirm a penalty, when no such penalty is called for since there is no clandestine removal of excisable goods alleged or determined. Therefore no penalty under Central Excise Rules, 1944 is called for.
(c) When the credit suo moto has been reversed even before the issue of Notice and certain quantity of the licences with transferability endorsement were got re-endorsed in the appellants favour much before the Show Cause Notice was issued, we cannot find any reason for imposition of penalty under Section 112 of the Customs Act, 1962 as arrived at by the Commissioner. The Commissioner in any case has not held any goods which are liable for confiscation. A penalty under Section 112 can be imposed only if a finding is arrived at regarding certain goods imported to be liable for confiscation under Section 111 of the Customs Act, 1962. There are no imports made in this Commissioner's jurisdiction. The Commissioner appears to have exercised powers under the Customs Act, 1962 in this case which were not available. In this view of this matter, we cannot uphold any reason to sustain penalty under Section 112 of the Customs Act, 1962.
(d) When we find no penalty under 173Q and/or other Central Excise Rules, 1944 viz. 9(2) is called for, nor penalty is liable under Section 112 of the Customs Act, 1962. We cannot, therefore, sus tain the penalty of Rs. 5 lakhs as arrived at in the impugned or der. The same is required to be set aside.
(e) As regards the plea for reversal of credit of Rs. 2,57,945/- for two licences not transferred, no material has been placed before us to substantiate that claim nor has the same been considered by the Commissioner. The claim if any may be preferred before the appropriate authority, once again by the appellants and that authority should deal with the same as provided under law.
4. In view of our above findings, the appeal is allowed with consequential relief.