LLOYDS STEEL INDUSTRIES LTD. Vs. CCE, NAGPUR

JUDGEMENT

(1.) BY the order, the Commissioner of Central Excise has (a) confirmed the demand of reversal of credit of Rs. 1,70,111/ - under Rule 57 -I of the Central Excise Rules, 1944, (b) imposed a penalty of Rs. 5,00,871/ - under Rule 57 -I(4) of the Rules and (c) imposed a penalty of Rs. 1,50,000/ - under Rule 173 -Q of the Rules. The penalty under Rule 57 -I(4) has been imposed for irregular availment of modvat credit of Rs. 2,94,705/ - on 333 MT of sponge iron and irregular availment of credit of Rs. 36,055/ - on 23.386 MT of sponge iron and skull scrap received short for which debit notes have been issued and credit on which has been reversed subsequently, while penalty under Rule 173 -Q has been imposed for irregular availment of credit of Rs. 26,17,005/ - on Electrolytic grade copper and ship breaking scrap. The duty demand has been confirmed by way of direction for recovery of credit on pig iron received short in the factory of the appellants and penal action for this reason has also been proposed and confirmed. We have heard Shri V.K. Jain, C.A. and Shri S.V. Parelkar. Ld. DR.

(2.) THE notice proposed the following: - -

(3.) THERE is no proposal in the notice of deny modvat credit wrongly availed on sponge iron, skull scrap and Electrolytic grade copper and ship breaking scrap. In these circumstances, reliance placed by the appellant on the Tribunal's order in the case of Dhillon Kool Drinks Beverages ( : 2000 (120) ELT 81) is well founded. In that case it was held that for determination of penalty, there should be a determination of duty liability, which in turn is dependent upon the issue of a show cause notice.