Customs, Excise and Gold Tribunal - Bangalore
M/S. Rajashree Cement vs Commissioner Of Central Excise, ... on 8 January, 2001
Equivalent citations: 2001(74)ECC144, 2001(129)ELT267(TRI-BANG)
ORDER
Shri S.S. Sekhon
1. This stay application and appeal is taken up for final decision after the consent of both the parties, since the issue involved revolves around a narrow compass,i.e. whether a penalty of Rs. 1,00,000/- was called for, in the facts and circumstances of the case. The issue involved is that cement manufacturers were availing credit of duty on furnace oil and LDO at the rate of 15%. From 1.4.98, under notification No. 5/94, credit acts 15%, which was the duty recovered from the cement manufacturers and paid by them was restricted to 10% under rule 57-A of the central excise rules 1944. The cement manufacturers association took up the matter with the concerned authorities and the present appellant vide their letter dated 2.5.98 informed the department that they will raise credit to the extent of 15% of the duty. which they have discharged by paying it to the suppliers but will not utilise 5% of the credit unless the matter was finally settled. The department, however, on 9.6.98 informed the appellants, that this procedure was not permissible and they should restrict themselves to credit of 10% of the duty as shown in the documents and reverse the excess 5% credit taken by them. The appellants on 9.11.98, thereafter under protest reversed the same after informing the department that even though credit to the extent of 15% as shown in the documents was taken in the RG 23 A registers, the same was not utilised and was in balance. Thereafter reversed the credit much before the issue of show-cause notice dated 3.5.99. The Asstt Commissioner, however, observed that this conduct of the appellants to be:-
"Assessee was acting in an autocratic manner as if they can get the statutes changed to serve their own interest as and when they desire. This attitude of the assessee shows clear disregard for the law of the land. The Assessee is a large manufacturer and they are bound to be aware of the rules and regulations. They cannot take their representation as the basis and avail excess modvat credit and that too after being informed by the department. Nothing prevented the assessee, for obtaining any clarification on this count from the department."
2. He thereafter was convinced, that the availment of excess modvat credit was utilised by the assessee and thereafter he confirmed the differential excess modvat credit of Rs 4,79,668/- availed on furnace oil and IDO and reversed on 3.11.98 and imposed a penalty of Rs. 4 lakhs under Rule 173 Q(1) (bb) of central excise rules, 1944. In Appeal, the Commissioner Appeals after hearing the account and going through the submissions observed.
"It is observed that the appellants had filed the credit but had not utilised the same and therefore imposition of penalty of Rs. 4 lakhs is too harsh and is required to be reduced...I accordingly, reduce the amount of penalty from Rs. 4 laksh to Rs. 1 lakh. The appeal is otherwise rejected".
The present appeal is against this penalty of Rs. 1 lakh.
2. We have heard learned consultant shri R.G. Utagikar who reiterated the submissions in the grounds taken in the appeal and stay application and submitted that as the admitted position is that the excess credit were reversed prior to the issue of show-cause notice and the Commissioner (appeals) has come to a finding that even if the credits were taken, they were not availed in as much as they were not utilised, no penalty is called for the he relied on the decisions in the case of Siemens Limited-1993 (34) RLT 831 and standard organics 1999 (112) ELT 541 and Piaggio Graves Vehicles Ltd-1999(35)RIT 195 and DCW Ltd 1996(81) ELT 381 and Sagar Crystals-2000(89) ECR 509 to submit that the conduct and the intentions of the appellants are also relavant for the determination of the quantum of penalty and in this case no penalty was called for.
3. Shri George appearing for the department submits that even if the collector has come to a finding that the credits have been taken but not utilised, that will not absolve the appellants from a penallty under Rule 173 Q(1) (bb) as the rules read, it is clear that the penalty is liable. The amount of credit which is involved in this case is Rs. 4,79,668/- It is a considerable sum and the collector (appeals) had already taken a lenient view and no new case for reasons have been brought on record by the appellants to reduce the penalty any further. He therefore, requested that the appeal should be dismissed.
4. We have considered the submissions and the facts. After considering the same we find:
(a) The Assistant Collector has resorted to impose the penalty on the grounds as brought out herein above considering the act of taking 15% of the amount as credit to be 'autocratic manner.' Rule 173(bb) does not permit the imposition of penalty for behaving in an autocratic manner. We find that the appellants has written to the department and there was a matter, taken up by the cement manufacturers association as the 15% duty which was levied on the imports was reduced to 10% by a notification on 1.4.98. The very fact of representing against a levy and taking credit and not utilising the same and thereafter on being directed by the departmental authorities reversing the same under protest to our mind is not an act of an autocrat. It appears to be the act of a commercial enterprise seeking redressal in the proper form. When the collector (Appeals) have found the credit availed was not utilised, no adverse view could arise.
(b) we find that the appellants have not acted in a manner unbecoming. We also observed that Rule 226 of the Central Excise Rules cast, an obligation on the person who is required to maintain entry books, stock accounts etc., and this rule provides that when such registers and books are not maintained in the manner prescribed therin, there shall be a liability to a penalty which may extend to Rs. 2000/- In the present case, we find that credit in excess of 10% was not eligible, after the issue of notification there was no provision to take credit entry of 15% if taken , it would be a clear violation of Rule 226. We have considered the provisions of Rule 173 Q(1) (bb) and find that this rule provides that if a manufacturer takes credit of duty, which he knows or has reasons to believe was not permissible, then the penalty in this rule could be imposed.Therefore, we uphold the invocation of Rule 173 Q(1) (bb), but when we see the nature of offence in its totality, i.e. under rule 226 in this case which fixes the maximum liability tobe only Rs 2000/-, We would consider reducing the penalty in the facts of this case to an amount of Rs 2000/- from Rs. 1 lakh as determined by the learned Commissioner under rule 173 q(1) (bb).
5. In view of our finding, we would confirm the penality under rule 173 q(1) at Rs 2000/- This appeal is allowed to the extent only. Appeal and stay petitions disposed off accordingly.