Customs, Excise and Gold Tribunal - Mumbai
Commissioner Of C. Ex. & Cus., Surat-Ii vs Jyoti Plastic Works Pvt. Ltd. on 1 February, 2002
Equivalent citations: 2002(143)ELT585(TRI-MUMBAI)
ORDER Gowri Sankar, Member (T)
1. Appeal admitted and taken up for disposal with consent.
2. Notice issued to the respondent to this appeal proposed to impose a penalty on it under Sub-clause (bbb) of Clause (1) of Rule 17Q on the ground that it had intentionally paid duty in excess of that payable on five consignments of plastic parts manufactured and cleared by it between 20-7-98 and 17-8-98. The notice observed that the reduction in duty from the present level took place in July, 1998 and despite the officers advising the respondent to verify the correctness of the duty, it continued to pay the duty in excess. The Asstt. Commissioner found in favour of the department and imposed a penalty of Rs. 5,000/- on the manufacturer.
3. The manufacturer appealed this order. The Commissioner (Appeals) found that the penalty was based on an assumption that the assessee paid duties in excess so as to enable the purchaser down the line of these goods to take credit. He found this assumption to be unjustified and he therefore allowed the appeal and set aside the order. He also noted that the provisions of Rule 57E would be invoked in order to prevent taking inadmissible credit on the goods. This appeal is against that order.
4. There is some justification for the claim in the appeal in order that the provisions of Rule 57E will not apply to the facts of the present case. Where an assessee has paid duty in excess of that payable and does not seek refund of that duty paid in excess. It is debatable whether the provisions of Rule 57E will apply so as to limit the Modvat credit to the duty correctly payable. However, I find myself unable to interfere with the Commissioner (Appeals)'s conclusion for a different reason. Sub-clause (bbb) of Clause (1) of Rule 173Q requires a wilful act on the part of the manufacturer to enter any wrong or incorrect particulars in the invoice issued by him with intent to facilitate the buyer to avail of the Modvat credit in respect of such goods which is not permissible. The amount of duty that the assessee wrongly paid was around Rs. 28,000/-. No person would intentionally pay duty in excess on the goods that he cleared solely in order to enable the other person to take Modvat credit in excess unless he had an interest other than the ordinary commercial interest in that other person. In other words, unless there was a close relationship between the manufacturer and the buyer of the goods as a result of which the manufacturer would feel that he was benefited by the other person taking credit to an extent that he was ready to sacrifice his own money, it would be unacceptable to say that the duty was paid in excess to facilitate to taking of credit. No such allegation is made in the notice. It is therefore reasonable to accept the claim of the manufacturer that he paid the amount by mistake and when he came to know of the mistake, it stopped paying the duty in excess. Therefore penalty was not imposable.