COMMISSIONER OF C. EX. Vs. IND-SWIFT LTD.

JUDGEMENT

(1.) RESPONDENT is a manufacturer of medicine. It received several inputs which were eligible for Modvat credit. Accordingly, credit was also taken. However, for various reasons, the credit taken inputs could not be utilised for production for about 2 years. Thereupon, Revenue authorities asked the appellant to reverse the credit taken on those inputs and the appellant reversed the credit as well as paid interest. All the same, show cause notices were issued proposing to impose penalties on the respondent and in adjudication, penalties proposed were confirmed under Rule 173Q read with Rule 13 of Cenvat Credit Rules, 2002. When the matter went in appeal before Commissioner (Appeals), he set aside the penalties on the ground that, before the issue of show cause notices, the appellant had reversed the credit and in such a case, no penalty was imposable in view of the decision of the Larger Bench of this Tribunal in the case of Machino Montell (1) Ltd. 2004 (168) E.L.T. 466 (Tri. -LB): 2004 (62) RLT 709. The present appeals of the revenue are against those orders whereunder penalties were set aside.

(2.) IT is being pointed out that there was violation of Rule 13 in taking credit on inputs which were not used in the manufacture of final products. Revenue relied on Rule 13 of Cenvat Credit Rules, 2002, which reads as under: Rule 13. Confiscation and penalty. - (1) If any person, takes CENVAT credit in respect of inputs or capital goods, wrongly or without taking reasonable steps to ensure that appropriate duty on the said inputs or capital goods has been paid as indicated in the document accompanying the inputs or capital goods specified in Rule 7, or contravenes any of the provisions of these rules in respect of any inputs or capital goods, then, all such goods shall be liable to confiscation and such person, shall be liable to a penalty not exceeding the duty on the excisable goods in respect of which any contravention has been committed, or ten thousand rupees, whichever is greater. The above rule clearly has no application to the facts in the present case. The credit was not wrongly taken inasmuch as, the inputs were required for the proposed future manufacture.

(3.) IN the result, the appeals are rejected as having no legal or factual basis.