ORDER
V.K. Agrawal, Member (T)
1. The issue involved in this appeal filed by M/s. Maruti Udyog Ltd., is regarding the duty chargeable on the inputs cleared as such.
2. Shri Ravi Raghvan, learned Advocate, submitted that the Appellants manufacture motor vehicle and avail of CENVAT Credit on the duty paid on inputs; that in the case of shortage of parts in their spare parts division which is situated outside the factory premises, the parts obtained for the manufacturing division are transferred to the spare parts division that differential demand has been confirmed against them besides imposing penalty on the ground that the duty of excise is payable on the selling price of the spare parts division. The learned Advocate further submitted that the demand of duty is for the period from 20-1-2001 to 31-5-2001; that during the relevant period the inputs were cleared to spare parts division (SPD) on reversal of CENVAT Credit in terms of provisions of Rule 57AB; that w.e.f. 1-3-2001 in view of the amendment carried out to Rule 57AB of the Central Excise Rules, 1944 they were liable to discharge duty on the basis of value determined under Section 4; that on noticing the omission they voluntarily paid the differential duty amounting to Rs. 15,46,826/- and intimated to the department on 25-6-2001. Further, they have not paid any differential duty in respect of clearances effected during the period from 20-1-2001 to 28-2-2001 in view of the provisions of Rule 57AB read with the decision of the Larger Bench in the case of CCE v. Asia Brown Boveri Ltd., 2000 (120) E.L.T. 228; that the Commissioner has confirmed the demand on the ground that the amendment carried out in Rule 57AB w.e.f. 1-3-2001 is retrospective which is erroneous inasmuch as it was clearly indicated in notification No. 6/2001-CE. (N.T.) by which Rule 57AB was amended that the amendment would be effective from 1-3-2001. Finally, he submitted that no penalty is imposable on them as they had deposited the entire amount of differential duty payable by them before issue of show cause notice on 18-7-2001. He relied upon the decision in the case of Arun Presstressed Concrete Products Pvt. Ltd. v. CCE, Bangalore, 2002 (150) E.L.T. 542 (T) = 2002 (51) RLT 949 (CEGAT) wherein the penalty was set aside in view of the fact that duty had been paid before issue of show cause notice and the same was appropriated in the order. Reliance has also been placed on the following cases :-
(a) Amritsar Crown Caps (P) Ltd. v. CCE, Chandigarh - [2002 (140) E.L.T. 437 (T)] = 2001 (46) RLT 169(CEGAT-Del.) (b) Sub-Zero Ice-cream Pvt. Ltd. v. CCE. Bangalore - 2001 (132) E.L.T. 623 (Tri.-Bang.)
3. Countering the arguments Smt. Krishna A. Mishra, learned SDR, submitted that the provisions of Rule 57AB were not similar to the provisions of Rule 57F which were interpreted by the Larger Bench in the case of Asia Brown Boveri Ltd. She, further, submitted that in view of the Supreme Court decision in the case of Z.V. Nagarkar v. U.O.I. – 1999 (112) E.L.T. 772 penalty is imposable as the Appellants themselves admitted their liability to pay the differential duty of excise w.e.f. 1-3-2001.
4. We have considered the submissions of both the sides. Explanation to Rule 57AB of the Central Excise Rules, 1944 before its amendment w.e.f. 1-3-2001 reads as under :-
“Explanation – When the inputs or capital goods are removed from the factory the manufacturer of the final product shall pay the appropriate duty of excise leviable thereon as if such inputs or capital goods have been manufactured in the said factory, and such removal shall be made under the cover of an invoice prescribed under Rule 52A.”
Rule 57F(1) which was interpreted by the Larger Bench of the Tribunal in the case of Asia Brown Boveri Ltd. reads as under :-
“Inputs in respects of which Credit of duty has been allowed under Rule 57A may-
(i) …………
(ii) shall be removed after intimating the Asst. Commissioner of Central Excise, having jurisdiction over the factory and obtaining dated acknowledgement of the same from the factory for consumption or for export under bond as if such inputs have been manufactured in the said factory.”
5. The Larger Bench of the Tribunal held that “the requirement of Rule 57F(1)(ii) is for payment of duty on the inputs received for home consumption where the inputs have not been used by the manufacturer. The legal fiction of treating the inputs as having been manufactured by the recepient of the inputs was only to see that the manufacturer restores the original position by debiting the same rate of duty at which he had taken the Credit. The proviso to rule 57F(1) clearly explains the rational for creating the legal fiction by providing the duty of excise payable at the time of removal for home consumption shall not be less than the amount of Credit that has been allowed in respect of inputs under Rule 57A”. We agree with the learned Advocate that the said Larger Bench decision is applicable for the period before the amendment of Rule 57AB. We do not find any reason in absence of any specific mention in the notification which substituted Rule 57AB that it has retrospective effect. Accordingly the demand of duty for the period from 20-1-2001 to 28-2-2001 is not maintainable. As far as the demand for the period from 1-3-2001 to 31-5-2001 is concerned the Appellants have not challenged the same and, in fact, have discharged duty liability even before the issue of the show cause notice. We do not agree with the learned Advocate that as they have discharged the duty liability before the issue of show cause notice no penalty is imposable on them. It has been held by the Supreme Court in Z.V. Nagarkar case that the person concerned shall be liable to penalty up to the amount specified in Rule 173Q and it is difficult to accept the arguments of the Appellants that the levy of penalty is discretionary. It is only the amount of penalty which is discretionary. In view of this coupled with the fact that the goods were removed without payment of appropriate duty the penalty is imposable on the Appellants. However, taking into consideration the facts that they had discharged their duty liability on noticing the omission, a nominal penalty will meet the end of justice. We, therefore, reduce the amount of penalty to Rs. 15,000/-. The Appeal is disposed of in above manner.