SAI ELECTRICALS Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THIS appeal is filed against the order in appeal dated 16 -7 -2004 which upheld the order in original and sustained the confirmation of duty and penalty on the appellant.

(2.) THE relevant fact that arise for consideration are the appellants are availing Modvat credit on the inputs i.e. transformer oil in their factory. The appellants are engaged in the manufacture of transformers and were also repairing transformers sent by UPSEB and other Government Department. From the scrutiny of the records, it was noticed by the revenue that the appellants were consuming modvatable inputs i.e. transformer oil in the transformers that were repaired and cleared without payment of duty. Show cause notice was issued to the appellant for the reversal of the proportionate Modvat credit on the quantity of transformer oil which were consumed in the repairs and for imposing penalty. The adjudicating authority confirmed the demand and also imposed penalty. On an appeal, Commissioner (Appeal) set aside a part of the demand and confirmed the demand of Rs. 1,47,674/ - (Rupees One Lakh Forty Seven Thousand Six Hundred and Seventy Four only) and imposed equivalent amount of penalty under Section 11 AC. Hence this appeal.

(3.) THE learned consultant appearing for the appellants submits that, the appellant is not disputing that they are liable to pay the amount of duty on the transformer oil used for repairing of transformer. His contention is against the penalty that has been imposed on the appellant. It is his submission that the learned Commissioner (Appeal) has upheld the penalty imposed on the appellant under Rule 173Q but reduced the same. It is his submission that the penalty imposed on the appellant under Rule 173Q and Section 11AC is not sustainable as the appellant had always kept the department informed about the activity of repairs being carried out by them, on the transformers sent by the Government agencies.