ORDER
G.N. Srinivasan, Member (J)
1. Today these 17 stay petitions have been posted for hearing.
2. The issue involved in these stay petitions are regarding waiver of payment of 10% penalty imposed by the Assistant Collector in the Order-in-Original for wrongful availment of Modvat credit. The said orders-in-original were confirmed by the Order-in-Appeal passed by the Appellate authority.
3. When the matters were heard it was felt that the appeals could themselves be disposed of with the consent of both sides. Appeals were taken up for disposal after waiving the pre-deposit of the penalty ordered to be paid by the Collector in the appellate order.
4. The appellants were engaged in the manufacture of MS Ingots falling under chapter sub-heading 7206.90 by electrical/induction furnace. They were availing Modvat credit under Rule 57 A of the Central Excise Rules. A show cause notice dated 15-7-1996 has been mentioned in this batch as an example in the batch of cases. It was mentioned therein that the Modvat credit was obtained by the appellant by breaking of ships defective ingots for manufacturing of steel ingots in terms of Trade Notice No. 20/93, dated 12-9-1993 as amended further by Trade Notice No. 8/96, dated 24-1-1996. The respondents have to follow the prescribed procedure like D3 intimation, separate account in RG 23A Part I etc. They had failed to follow the procedure prescribed under the said trade notice. After hearing the parties Assistant Commissioner confirmed the show cause notices in all 17 nos. and imposed a penalty at the rate of 10% of the duty confirmed. Against the said orders the appellant filed appeals to the Collector (Appeals). In the impugned order, Collector (Appeals) allowed the Modvat credit but upheld order of the Assistant Commissioner imposing a penalty. Hence the present appeals.
5. I have heard Shri K.K. Anand, learned Counsel for the appellants and Shri Kilania, learned DR. Shri Anand submits that when the Commissioner has upheld the contention of the appellants regarding the legality of availment of Modvat credit, it is incomprehensible on the part of the Commissioner to impose a penalty. He stated that a penalty can be imposed only for violation of any rule. Admittedly here there is no violation. Learned DR adopts a reasoning of the lower authorities, order.
6. I have considered the arguments of Shri K.K. Anand. I entirely agree with him that once the availment of Modvat credit has been accepted by the Commissioner (Appeals), it is wrong legally on the part of the Commissioner (Appeals) to uphold the order of the imposing penalty for wrong availment of Modvat credit in terms of Rule 173Q of the Central Excise Rules. The imposition of penalty is for violation or interaction of the rules. Here admittedly there is no violation of any rule hence the question of levy of penalty in these matters does not arise at all. All the 17 appeals are allowed. The 17 stay petitions are also disposed of accordingly with consequential relief, if any, according to law.