CCE Vs. PUNJAB WOOL COMBER LTD.

JUDGEMENT

(1.) THE Revenue has preferred this appeal against the order dated 16.06.2005 made by the Commissioner (Appeals) setting -aside the penalty imposed on the appellant under the order -in -original and holding that no interest was chargeable as was held by the adjudicating authority.

(2.) THE respondent, Punjab Wool Combers Ltd., was availing modvat credit facility on inputs as well as capital goods. It was noticed during the course of visit by the Excise Staff on 10.02.2000, that the assessee had sold one dyeing machine to original noticee No. 2, i.e, Malwa Cotton & Spg. Mills, under invoice no. 143 dated 31.03.1999. Earlier, by entry dated 01.05.1995, modvat credit was taken of an amount of Rs. 5,97,478/ - on the said dyeing machine by the respondent. The dyeing machine was cleared without giving any intimation as required by Rule 57 -S(ii) of the Central Excise Rules, 1944 and without payment of duty. The said dyeing machine was a used one and was removed as such and, therefore, according to the Revenue, as per the provisions of Rule 57 -S(ii) of the Central Excise Rules, 1944, a duty amount of Rs. 3,58,487/ - was required to be paid after making deduction of 2.5% of credit taken for each quarter of a year of use or fraction thereof, from the date of availing credit. Later on, the assessee debited the said amount by entry dated 17.02.2000. A show cause notice dated 09.02.2000 was issued and duty demand was sought to be confirmed and penal action proposed. The adjudicating authority confirmed the demand of duty and adjusted the same against the amount already deposited. Penalty was imposed under Rule 173 -Q in the context of violation of Rules 52 -A and 57 -S on the assessee, and a penalty was also imposed of an amount of Rs. 3,58,487/ - under Rule 57 -U(6) read with Section 11 -AC of the Act on the assessee. A penalty of Rs. 1 lac was imposed on the original noticee no. 2 under Rule 209 -A.

(3.) ADMITTEDLY , the confirmation of the demand of duty was not contested as recorded by the Appellate Commissioner. The contest was against the imposition of penalty, which has been set -aside relying upon the Larger Bench decision of the Tribunal in the case of CCE, Delhi v. Machino Montell (I) Ltd. (supra). The said decision has been reversed by the Hon'ble High Court of Punjab & Haryana by its decision in CCE, Delhi v. Machino Montel (I) Ltd. reported in . In paragraph 7 of the judgment, the Hon'ble High Court has held as under: