Customs, Excise and Gold Tribunal - Mumbai
Gujarat Alkalies And Chemicals Ltd. vs Cce on 11 December, 2003
Equivalent citations: 2004(165)ELT183(TRI-MUMBAI)
ORDER
K.K. USHA, J. (President)
1. Challenge in this appeal at the instance of the assessee is against the imposition of penalty under Rule 173Q of the Central Excise Rules for the reason of interest loss suffered by the Revenue on account of delayed payment of duty. Original authority had imposed a penalty of Rs. 3,00,000 7 which was reduced to Rs. 1,00,000 by the Commissioner (Appeals).
2. Appellant is manufacturing different chemicals classified under Chapter 28 and 29 of the Schedule to the Central Excise Tariff Act, 1985. The product caustic soda manufactured by the appellant at its caustic soda plant is required as input in the neighbouring sodium cyanide plant in the manufacture of sodium cyanide. The price of caustic soda being different for different buyers at the factory gate it was cleared to sodium cyanide plant on payment of duty at the price arrived at on the costing data. R.T.12 Returns and connected documents indicating the aforesaid price were being regularly filed by the assessee but no objection was being raised. During the visit by the Assistant Commissioner of Central Excise (Preventive) Vadodara of the appellants factory premises on 8.11.95 it was pointed out that caustic soda cleared to the sodium cyanide plant should be assessed at the highest price charged to customers on factory gate sale. Appellant immediately debited differential amount of duty. The total differential duty thus paid for the period from April 1994 to August 1996 came to Rs. 27,68,566. Thereafter show cause notice dated 21.6.96 was issued proposing to initiate action under Rule 173Q for breach of Rule 173-C. In spite of detailed reply submitted by the appellant that there was no motive to evade duty on their part particularly when they were availing modvat procedure, duty paid 6n caustic soda can be taken as modvat credit in the sodium cyanide plant, the original authority imposed a penalty of Rs. 3,50,000 and held that the delayed payment had resulted in loss of interest to the Government. The quantum of penalty was reduced to Rs. 1,00,000 by the Commissioner (Appeals).
3. It is contended on behalf of the appellant that no penalty can be imposed under Rule 173Q for the reason of loss of interest to the Revenue due to delayed payment. In support of the above contention reliance was placed on the decision of the Madras High Court in DCW Ltd. v. Asst. Collector of Central Excise, Tuticorin 1996 (88) ELT 31.
4. It was submitted that the entire amount paid as differential duty, had been taken as modvat credit by sodium cyanide plant. Under these circumstances there could not have been any intention on the part of the assessee to evade the duty. Appellant placed reliance on the decision of this Tribunal in G.K.Steels(CBE) Ltd. v. CCE, Coimbatore 2002 (53) RLT 1065 to contend that no penalty could be imposed under Section 11AC or Rule 173Q when demand amount was paid before issue of show cause notice. Reliance was also placed on the decision of this Tribunal in Gujarat State Fertilizers and Chemicals Ltd. v. CCE 2002 (53) RLT 1088 where the Bench held that no penalty under Rule 173Q could be imposed when credit taken in respect of caprolactum captively used in the manufacture of exempted final product was reversed immediately on being pointed out.
5. We heard the Departmental Representative also. It is contended that ^ since the assessee itself admitted the default and paid the differential duty there is no reason to set aside the penalty. We find merit in the contention raised by the appellant. In the facts of the case there is nothing to show that the assessee was valuing caustic soda on cost of production basis with an intention to evade duty. Apart from the fact that the appellant immediately paid the differential duty it is seen that it could take credit of the equivalent amount in its sodium cyanide plant. Under these circumstances the appellant cannot be found guilty of entertaining an intention to evade duty.
6. In the result, we set aside the order impugned and allow the appeal. (Operative part of the order was pronounced in the Court on 30.10.2003.)