Customs, Excise and Gold Tribunal - Mumbai
Godrej Industries Ltd. vs Commissioner Of Central Excise on 27 November, 2007
Equivalent citations: 2008(126)ECC26, 2008(152)ECR26(TRI.-MUMBAI)
ORDER M.V. Ravindran, Member (J)
1. This appeal is directed against the Order-in-Appeal No. AT/746/M.II/2006 dt. 5.12.2006.
2. The relevant fact that arise for consideration are that the appellants had availed modvat credit on computer imported vide Bill of Entry dt. 31.8.1998, after availing of credit is capital goods, the said computer was put to use for some time, it was found computers turned out to be faulty, and returned to the supplier as 9.10.1998 without preparing any duty paying documents. On a query from the Superintendent Office on 8th January 1999, the credit so availed was reversed by the appellant on 12th January 1999. Show cause notice was issued to the appellant for appropriation of the amount debited by him and for imposition of penalty and recovery of interest. In the first round of litigation matter traveled up to the Tribunal and Tribunal remanded the matter back to the adjudicating authority to re-consider the issue afresh, specifically with reference to reducing the penalty and interest. The adjudicating authority on the contrary enhanced the penalty and also sought interest from the appellant. On an appeal the Ld. Commissioner (Appeals) also upheld the same, hence this appeal.
3. The Ld. Counsel appearing on behalf of the appellant submits that the penalty which has been imposed on the appellant is under the provisions of Rule 57U(6) and (4) without specifically mentioning under which clause penalty has been imposed. It is his submission that the penalty is imposed under Rule 57I(4). The penalty has been imposed on the appellant for wrong availment of credit on inputs. It is his submission that it is not disputed credit availed on the computer is as per the provisions of Central Excise Rules, 1944. As regards the penalty imposed under Rule 57I(6), it is his submission that there is no allegation in the show cause notice that the credit has been taken on the capital goods by reason of fraud, willful mis-statement, collusion or suppression of facts. He also submits that the provisions of Rule 57U(4) & (5) gets attracted, as the entire amount of duty was reversed by appellant. It is his submission that provisions of Section 11AB will not be attract in this case for the reason that show cause notice does not indicate the fraud, willful mis-statement, collusion or suppression of fact. Etc. for imposition of interest under Section 11AB.
4. The Ld. SDR submits that the invocation of the provisions of Rule 57I(4) in the case show cause notice will itself indicate that there is allegation of fraud, willful mis-statement, collusion or suppression of facts etc. with an intent to evade payment of duty. It is his submission that, but for being pointed out by the officers, this error would not have been brought to notice and the appellant would have continued to use the credit. It is also his submission that the provisions of Rule 57U will not be applicable. It is the submission that once it has been considered that the appellant has availed the credit with an intent to evade payment of duty, the provisions of Section 11AB gets automatically attracted.
5. Considered the submissions made by both sides and perused the records. It is undisputed that the modvat credit availed by the appellant on the goods would fall under the head "capital goods". It is very clear that provisions of Rule 57Q to Rule 57U of the Central Excise Rules were specifically meant for the credit availed on the capital goods. As such, the provisions of Rule 57I(4) would not apply to the issue of capital goods. Since the appellant are not challenging the amount of duty paid by them the impugned order to that extent is upheld.
6. As regards the interest to be charged on the appellant under the provisions of Section 11AB, I find that the appellants had availed credit on capital goods on proper duty paying documents. The only error which has been committed by the appellant is of not reversing amount of the credit availed on such capital goods, which they removed after noticing that they are defective, but the same was rectified, as soon, it was intimated by the Range Officers. This fact to my mind, will not attract the provision of Section 11AB at it stood during the relevant period as there cannot be any intention to evade payment of duty by the appellant, as they had correctly availed the credit based on the duty paying document. Hence the impugned order to the extent it upholds the imposition of penalty under the provisions of Section 11AB is in-correct and liable to be sat aside and I do so.
7. As regards the penalty imposed under Rule 57-I(4)/57U(6) of the Central Excise Rules, 1944, I find that the provisions of Rule 57I will not get attracted in this case. It has been correctly pointed out by the Ld. Counsel that under the provisions of Rule 571(4) penalty can be imposed only if modvat credit has been taken in respect of inputs. As regards the imposition of penalty under Rule 57U(6), I find that the appellants have correctly followed the provisions of Rule 57U(4) and (5). I may read the rules:
Rule 57U(4) "If any capital goods in respect of which credit has been taken are not fully accounted for as having been disposed off in the manner specified in this section the manufacturer shall, upon a written demand being made by the Assistant Commissioner of Central Excise, pay the duty leviable on such capital goods within three months of the receipt of the notice of demand.
Rule 57U(5) Where a manufacturer or an assessee fails to pay the amount determined under Sub-rule (3) or under Sub-rule (4), as the case may be, within three months from the date of receipt of notice of demand, he shall pay, in addition to the amount so determined, interest at such rate as may be fixed by the Board under Section 11AA of the Act, from the date immediately after the expiry of the said period of three months till the date of payment.
8. It can be noticed from the above reproduced Rule 57U (4) & (5), that if an assessee discharged duty liability on the capital goods within three months from receipt of demand, the question of penalty doses not arise. It is undisputed in this case, that as soon as it was pointed out by range officers the appellant discharged entire duty liability before the issuance of the show cause notice. As such, to my mind imposition of penalty under Rule 57U(6) does not arise because the provisions of Rule 57U(6) would arise only when there is element of fraud, willful mis-statement, collusion or suppression of facts or contravention of any of the provisions of Act or the Rules made there under with an intent to evade payment of duty. As such, the penalty imposed on the appellant under Rule 57U(6) is liable to be set aside, I do so.
9. Accordingly, I find that the impugned order to the extent it upholds imposition of penalty and the charging of interest is liable to be set aside, and I do so. The appeal is allowed, in above terms.