ASHOK LAYLAND LTD. Vs. COMMISSIONER OF CEN. EXCISE

JUDGEMENT

(1.) THE issues in these appeals are inter - connected and the appeals are hence heard together and disposed of by this common order.

(2.) THE brief facts of the case are that the appellants herein are engaged in the manufacture of Commercial Motor Vehicles, Chassis and Parts thereof falling under Chapter 87 of the Schedule to the Central Excise Tariff Act, 1985 and are availing the benefit of modvat credit of excise duty paid on tyres, tubes and flaps (inputs) falling under Chapter 40. During the scrutiny of RT.12 returns filed by the assessee for the month of November 1999, it was observed that they had availed irregular credit of Rs. 8,11,950/ - vide RG 23A Entry dated 29.11.1999. While returning the inputs, the assessee paid excise duty in excess; M/s. CEAT tyres had raised a debit note dated 28.4.1998 for the excess duty paid; the assessee had suo motu availed credit in Nov. 1998; reversed the same on 28.5.1999; and once again took suo motu credit on 29.11.1999. The department was of the view that suo motu taking of credit was irregular as procedure required to be followed was that of refund in terms of Section 11B of the Central Excise Act, 1944; and therefore, the credit was liable to be recovered under Rule 57I of the Central Excise Rules. Show cause notice proposing recovery of the credit and also imposition of penalty was therefore issued on 14.3.2000; the notice was adjudicated by the Asstt. Commissioner of Central Excise who disallowed the credit and also imposed penalty of Rs. 1000/ - under Rule 173Q(1)(bb). The Commissioner (Appeals) upheld the adjudication order this has given rise to Appeal No. E/1956/2001.

(3.) VIDE the Order -in -Original dated 29.9.1997, the Asstt. Commissioner of Central Excise disallowed modvat credit of Rs. 23,35,070/ - on the ground that credit availed on the strength of Bill of Entry beyond the statutory period of six months was not admissible and he also imposed a penalty of Rs. 15,00,000/ - under the provisions of Rule 173Q of the Central Excise Rules, 1944. The assessee filed an appeal before the Commissioner (Appeals) and during the pendency of the appeal they paid the penalty under protest vide TR -6 challan dated 22.1.1998. The Commissioner (Appeals) upheld the denial of modvat credit but reduced the penalty to Rs. 2,50,000/ - and thus the assessee became entitled to refund of Rs. 12,50,000/ - and the matter was carried further in appeal to the Tribunal which vide the final Order No. A/1539/WZB/2005/CIII dated 20.07.2005 remitted the matter for fresh decision to the Adjudicating authority. While sanctioning the refund, the Asstt. Commissioner adjusted interest of Rs. 3,76,832/ - in respect of demand of Rs. 4,47,643/ - confirmed under Order -in -original dated 19.4.2000 and an amount of Rs. 8,12,950/ - confirmed under Order -in -Original dated 24.5.2000, the subject matter of Appeal No. E/1956/2001, and refunded the balance amount to the appellants. In appeal, the Commissioner (Appeals) upheld the adjustment of interest on the refund eligible and due to the appellants by his order dated 20.3.2002. This has given rise to Appeal No. E/2114/02.