ORDER
A.C.C. Unni, Member (J)
1. The appellants have challenged the Order-in-Appeal passed by the Commissioner (Appeals), Chandigarh by which a penalty of Rs.10, 000/- had been imposed on them. In paragraph 5 of the impugned order, the Commissioner (Appeals) had held as under :
“The Modvat credit is allowed and the orders regarding imposing of penalty for non-compliance of procedure are upheld.”
2. In the impugned order Commissioner (Appeals) has mentioned that Trade Notice No. 20/93, dated 29-10-1993 had prescribed that in respect of inputs like steel ingots, billets, etc. D-3 intimation has to be filed whereas the appellants had availed of the credit on duty on inputs (which were nothing but melting scrap) the requirement of intimating jurisdictional Superintendent was not attracted. It is the appellant’s case that even though the Commissioner (Appeals) had allowed Modvat credit he had nevertheless wrongly confirmed the penalty imposed by the adjudicating authority for non-compliance of the Trade Notice No. 20/93. The appellants pray for setting aside of the order of penalty.
3. Ld. Advocate for the appellants Shri Kulwinder Singh submits that no such penalty could have been imposed on the appellants after allowing the Modvat credit and the grounds on which the penalty has been imposed, namely, non-observance of Trade Notice No. 20/93 was not sustainable since even under Rule 173Q, contravention of a Trade circular was not a valid cause for imposing the penalty. He refers to the Tribunal decision in CCE v. Didar Steel Complex Pvt. Ltd. 1996 (87) E.L.T. 702 (Tri.) in which it was held that Modvat credit cannot be denied on a procedural lapse like nonconformity with the Trade Notice No. 20/93-C.E. He also draws attention to the Tribunal’s Final Order Nos. A/56-57/99-NB(SM), dated 27-1-1999 in the appellant’s own case where the Tribunal had set aside the penalty imposed on the appellants for a previous period relying on the decision in Didar Steel Complex Pvt. Ltd. case (supra).
4. Ld. JDR Shri T.A. Arunachalam submits that in terms of Rule 173H, the Commissioner is competent to impose conditions on an assessee for bringing into or for retaining in his factory/warehouse excisable goods or parts thereof. The Trade Notice issued by the Commissioner laying down conditions for bringing in inputs and providing for D-3 information was very much within the scope of Rule 173H. He also draws attention to the Apex Court decision in the Subhash Photographic v. U.O.I. 1993 (66) E.L.T. 3 (S.C.) wherein in paragraph 15 the Apex Court had observed that in statutes like the Customs Act, it has to be kept in mind that such legislation can be properly administered only by constantly adjusting it to the needs of the situation and this called for a good amount of discretion allowed to the delegated authority. In that case the Question arose whether the Proejct Import Regulations, 1986 issued under the Customs Act amounted to excessive delegation. It was while upholding the said regulations that the Apex Court had made the above observations. I find that the said observations are not applicable to the issue at hand.
5. On careful consideration of the cases cited and perusal of the record, I find the Commissioner’s order imposing penalty for non-compliance of the conditions of Trade Notice No. 20/93 cannot sustain for the reason that Trade circulars issued by the Commissionerate under Rule 233 cannot have the same status as Rules, the contravention of which is visited with penal consequences under Rule 173Q.
6. In the above view of the matter, the appeal is allowed and the penalty imposed on the appellant set aside.