INDIAN PETRO CHEMICALS Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) This appeal is directed against imposition of penalty of over Rs. 11 lakhs and demand for interest. The demand arises for wrong availment of Modvat credit by the appellants. The credit was availed twice in respect of the same goods, once on invoices issued by the supplier, namely, Indian Oil Corporation Ltd. and second time on 57E Certificate issued by Indian Oil Corporation Ltd.

(2.) We have perused the records and heard both sides. It is the contention of the appellants that credit was taken both the times against stipulated documents, invoices and 57E Certificates. It is also pointed out that once the mistake in taking the credit was pointed out, immediately the credit was reversed. It is their contention that there was no intention on their part to avail themselves of excess credit or to commit any fraud on the Revenue. The credit was taken as permissible under the rules against stipulated documents and the mistake was the result of mistake committed by IOCL in issuing 57E Certificate. Further, that certificate had been countersigned by the Jurisdictional Superintendent also. The learned Counsel for the appellants emphasized that in a case of bona fide error no penalty under Rule 57AH or Section 11AC is permissible. Same is the position with regard to demand for interest under Section 11AB of the Central Excise Act also. As against this, the learned SDR has pointed out that there was considerable time lag between taking of the credit second time and its reversal and that their reversal took place only upon being pointed out by the Central Excise Authorities. He, therefore, submitted that the provisions of Rule 57AH are attracted.

(3.) The facts of the case point only to a bona fide error by all parties. The credit was taken both times against documents stipulated in the Central Excise Rules, namely, invoices and 57E Certificate. Credit was taken for the second time against 57E Certificate which had been issued by the appellants' supplier and which had been countersigned by the Jurisdictional Superintendent of the supplier company. In these circumstances, we are of the opinion that allegation of violation of Rules with intention to evade duty by the appellant is not sustainable. The imposition of penalty and demand for interest cannot be upheld. In the result appeal is allowed with consequential relief to the appellants.