Customs, Excise and Gold Tribunal - Calcutta
Prabhat Zarda Factory (I) Ltd. vs Commissioner Of Central Excise, Patna on 6 August, 2001
JUDGMENT
G.R. Sharma
1. After hearing the argument of both sides for some time and finding that the appellants had followed the directions of the Tribunal in its Final Order No.A-125 dated 13.2.98 had paid the duty and taken Modvat credit and also finding that the amount of duty now demanded is actually the amount of money taken as Modvat credit, we decided to hear the appeal itself with the consent of both the parties.
2. The facts of the case in brief are that the appellants were manufacturing Unbranded Chewing Tobacco on which duty was demanded. The appellants did not pay duty. Accordingly, the Department confirmed the demand of duty. When the assessee came to this Tribunal, this Tribunal in its aforesaid order, inter alia, held. "We have carefully considered the pleas advanced from both sides. We observe as rightly pointed out by the learned Advocate that this very issue in respect of other units of the appellants has already come before the Tribunal at Delhi Bench which vide Final Order No. 727-728/96-D dated 11.12.98 confirmed the Commissioner (Adjudication) Order dated 29.3.96. Relevant extract from which has already been set out above. We also observe that Revenue has not gone in appeal against the Order of the Commissioner(Adjudication) Delhi. Keeping in view the aforesaid facts and circumstances of the case, we dismiss this appeal of the appellants herein with the following directions -(i) Rs. 3,12,27,638.40 will be paid by the appellants either in cash or through PLA. Simultaneously, they can take credit of the same amount in the Modvat account for utilisation towards the payment of duty on BCT subject to following of the procedure of Modvat Scheme as directed in Commissioner (Adjudication) Order Delhi at para 9. In view the facts and circumstances of the case, we do not find that there is a case for imposition of penalty. Consequently, we set aside the penalty of Rs. 1,00,000/-". Following this order the Deputy Commissioner in terms of his Order No. 34-/99 dated 29.11.99 held that, "In view of aforementioned findings, in pursuance of power conferred upon me under C.Ex. Rules, 1944 I hereby disallow Modvat credit of Rs. 3,12,27,638.40 and also ask them to pay the amount under Rule 57I of the C.Ex. Rules". The Deputy Commissioner also imposed a penalty of Rs. 25,000/-.
3. Arguing the case for the appellants Shri K. Narasimhan and Shri K.K. Banerjee, learned Advocates submitted that pursuant to direction of this Tribunal order dated 13.2.98 the appellants had deposited the amount of duty and taken credit. He submitted that the deposit of duty and taking credit thereof, was specifically ordered by this Tribunal. He submits that since Modvat credit was taken in terms of the direction of the Tribunal, therefore, there was no question of its being taken without following any procedure as alleged by the learned Deputy Commissioner. The Counsels submitted that since the Tribunal had held that duty was payable and since duty was paid by the appellants, the directions in regard to taking credit were also followed. Pursuant to the directions of the Tribunal there was nothing wrong done by the assessee. The learned Counsels, therefore, submitted that credit of the aforesaid amount has wrongly been disallowed and prayed that the appeal may be allowed.
4. Regarding imposition of penatly the learned Counsel submitted that the Tribunal had set aside the imposition of penalty looking to the facts of the case. There was no change in the facts of the case and therefore, imposition of penalty was also not warranted. It was submitted by the learned Counsels that Modvat credit was taken only when they were so permitted by the Tribunal. Therefore, non-following of procedure set out for taking Modvat credit did not arise in their case. It was therefore, prayed order imposing penalty also may be set aside.
5. Shri B.R. Tripathi, learned Commissioner, Patna assisted the departmental Representative in presenting the case. He submits in his fairness that disallowance of Modvat credit is not warranted in the present case but penalty was warranted inasmuch as the assessee was not a new assessee and that duty was imposed on unbranded chewing tobacco by the Finance Act, 1994; that the appellants full well knew that duty was payable and did not pay duty, therefore, penalty was warranted. It was also contended by the learned Commissioner that by not paying duty in time the appellants were benefitted to the extent of interest on the amount of duty as also had they paid duty the value of the final product would been higher and the duty amount on the final product would have been larger. He therefore, pleaded that imposition of penalty of Rs. 25,000/- may be retained as it is nominal amount.
6. On careful consideration of the submissions made by both sides as also the order of the Tribunal pursuant to which the present case arose we find that the Tribunal had held that duty was payable. We note that duty was paid by the assessee. The Tribunal had directed that Modvat credit may be taken be following the procedure set out for the purpose. We not that the assessee followed the procedure by filing declaration and producing duty paying documents for taking Modvat credit. We therefore, note that disallowance of Modvat credit was not warranted, therefore, the order disallowing Modvat credit is not sustainable in law.
7. In so far as the imposition of penalty of Rs. 25,000/- is concerned, we note that nothing new has arisen. There has been no doubt non-observance of procedure set out for the purpose(for taking Modvat credit) but this is not a lapse inasmuch no duty was being paid on the final product there was no question of taking Modvat credit for following the procedure thereof then in the circumstances we observe and hold that no penalty was imposable. In the circumstances the order imposing penalty is set aside.
8. The appeal is allowed in the above terms. Consequential relief, if any, shall be admissible to the appellants in accordance with law.
9. (Pronounced in Court)