SRI GANGADHARAM APPLIANCES Vs. CCE

JUDGEMENT

(1.) IN the impugned order passed by the Commissioner in adjudication of show -cause notice dated 25.5.98, a demand of duty of Rs. 12,52,736/ - was confirmed against the assessee under Rule 571 of the Central Excise Rules, 1944 and another demand of duty of Rs. 11,17,500/ - was also confirmed against them under the proviso to Section 11A(1) of the Central Excise Act and a penalty of Rs. 3 lakhs was imposed on them under Rule 173Q of the said Rules. The larger period of limitation was invoked in the impugned order on the basis of suppression of facts found against the assessee. However, the Commissioner did not impose any penalty on the party under Section 11AC of the Act as the offence found against them related to a period prior to 28.9.96 (the date on which Section 11AC was enacted). In the department's appeal, one of the grievances is about this non -imposition of penalty. The department has also challenged the grant of certain Modvat credits to the assessee by the Commissioner. In the assessee's appeal, the denial of some Modvat credits under Rule 571 and the demand of duty under the proviso to Section 11A(1) are under challenge.

(2.) AFTER examining the records, we find that Modvat credit to the extent of Rs. 1,39,333/ - taken on paints was denied to the assessee on the ground that the said input was used exclusively for the manufacture of exempted products and similarly credit of Rs. 11,064/ - was denied to them in respect of HVLP system on the same ground. Both these credits were reversed by the party and learned Counsel has submitted that they are not pressing their challenge against denial of the said credits. In respect of 0.80 mm SS coils (input), Modvat credit was denied to the extent of Rs. 3,00,695/ -. This liability has also been admitted by the assessee represented by counsel. In respect of 0.40 mm, 0.50 mm and 0.63 mm coils, credit was denied to the extent of Rs. 8,01,644/ -. In this regard, however, we find that the assessee's appeal does not contain any specific challenge. As regards the demand of duty of Rs. 11,17,500/ -, we find that this is based on a finding to the effect that there was no exemption of tools and dyes from payment of duty during the period 1.3.94 to 16.3.95. It is the submission of the assessee's counsel that the ground raised by the assessee against this demand of duty is that Exemption Notification No. 67/97 -CE dated 16.3.97 was clarificatory and retrospective so that the benefit thereunder was available to tools and dyes for the above period. They have also raised a plea, albeit feeble, that the tools and dyes in question had not reached marketable stage and hence were not dutiable. None of these contentions has been substantiated by them. In the result, on merits, the assessee has no case. Learned Commissioner invoked the extended period of limitation on the basis of suppression of facts. The assessee has challenged this by submitting that the relevant facts were available on record. This plea also has not been substantiated. However, in regard to the penalty imposed on them by the Commissioner under Rule 173Q, the counsel for the party has raised a valid objection. It was submitted that penalty of Rs. 3 lakhs was, in any case, too high to match the offence found against the party. We have to accept this contention in the facts and circumstances of this case. In the result, the assessee's appeal is allowed only to the extent of reducing the quantum of penalty to Rs. 1,00,000/ - (Rupees One lakh only).

(3.) IN the Revenue's appeal, though grievance has been raised against grant of certain credits to the assessee, no cogent reason has been stated by the appellant as to why such credit should not have been allowed. For instance, the computation of the quantity of input used in flasks is under challenge and it is stated thus : "it is not known as to why the weight of inner body of flask is taken into consideration while computing the weight of outer body of flask". There is no attempt by the appellant to show that the quantity of input used in the flask could be computed without taking the weight of inner body into account. The nature of challenge by the department against other aspects of the Commissioner's decision is also similar. Hence we are unable to sustain the department's challenge against grant of Modvat credits to the assessee by the Commissioner. The period of dispute in this case is prior to 28.9.96 (date on which Section 11AC came into force) as also prior to 23.7.96 (date on which Rule 57I (4) came into force). Hence no penalty under any of these provisions was liable to be imposed on the assessee. Hence the decision taken by the Commissioner on the applicability of these provisions to the facts of the case cannot be faulted. In the result, Revenue's appeal gets dismissed.