K.K. Bhatia, Member (T)
1. This appeal is against imposition of penalty of Rs. 93,214/- by the Assistant Commissioner, Central Excise, Ghaziabad under rule 57-I(4) of the Central Excise Rules, 1944. The brief facts are that the appellants imported Acetic Anhydride and cleared the same under Bill of Entry No. 11053, dated 22-9-1997 from ICD, Tuglakabad. In this B/E under the column ‘Additional Duty’ two amounts viz. Rs. 1,30,596.73 and Rs. 93,214.20 were reflected but the amount of Rs. 1,30,596.73 was only payable and paid as CVD. However, the party took the credit of Rs. 2,23,8117- in the Modvat account which included the inadmissible amount of Rs. 93,214/-.
2. The proceedings were drawn against the appellants and vide show cause notice dated 2-3-1998 they were called upon to show cause why the aforesaid in-admissible amount should not be recovered from them and also why a penalty equivalent to this amount should not be imposed on them under Rule 57-I (4) of the Central Excise Rules, 1944. In the Order-in-Original dated 13-11-1998, the Assistant Commissioner of Central Excise confirmed this amount and also imposed a penalty of the equivalent amount on the appellants. On appeal the Commissioner (Appeals), Ghaziabad upheld the order passed by the original authority and rejected the appeal of the party.
3. The appellants are in appeal against the aforestated amount of penalty imposed on them. I have heard Shri S.C. Kamra, Advocate for the appellants and Shri A.K. Jain, JDR, for the respondents. The ld. Advocate has stated that though the amount of Rs. 93,214.20 was not paid under the said B/E but the credit of the same was taken by mistake in their RG 23 Part-II, account as it was also reflected in the B/E. However, it is stated that this mistake was detected at their own and they debited the amount on 4-11-1997 – after 40 days. Therefore, it is contended that the provisions of Sub-rule (4) of rule 57-I are not applicable in their case. The ld. DR appearing for the Revenue has, however, submitted that the party had enjoyed the fruits of this illegal gains for 40 days. He, further relied on the Order-in-Original wherein it is stated that the party was verbally asked to reverse the Modvat credit and they were also reminded in writing on 15-1-1998. Therefore, the imposition of penalty equivalent to the amount of wrongly availed credit in called for in this case.
4. I have carefully considered the submission made before me. It is provided under Sub-rule (4) of Rule 57-I – where the credit of duty paid on inputs has been taken wrongly by reason of fraud, wilful mis-statement, collusion or suppression of facts or contravention of any of provisions of the Act or the rules made thereunder with the intent to evade payment of duty, the person who is liable to pay the amount equivalent to the credit dis-allowed, shall also be liable to pay a penalty equal to the credit so disallowed. Out of all the expressions used in this sub-rule, only the expression, ‘contravention of rule with the intention to evade the payment of duty’ has been invoked against the party in the Show Cause Notice. It is a fact that the appellants themselves voluntarily reversed the said amount of Modvat credit wrongly taken after 40 days when they came to know of their mistake. By this evidence on record, I am of the view that the allegation of ‘contravention of rules with the intent to evade the payment of duty’ is not sustainable against the appellants. They are denying that they were verbally told by the department to reverse this amount and there is no evidence to sustain this averment in the Show Cause Notice and the Order-in-original. The appellants have also paid an amount of Rs. 2,988/- as the interest for the period, this amount was wrongfully held by them. I am, therefore, of the view that the imposition of the penalty equivalent the credit amount dis-allowed to them is not sustainable against the appellants. I am of the view that in the facts and circumstances of the case, a penalty Rs. 5,000/- will meet the ends of justice and I order accordingly. The appeal is thus partly allowed.