MARMAGOA STEEL LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) This appeal is filed by M/s. Marmagoa Steel Ltd. (hereinafter referred to as the appellant') under Section 35G of the Central Excise Act, 1944 raising the following substantial question of law :

(2.) Brief facts relevant for this appeal are that, some time in November, 1994 M/s. Essar Gujarat Ltd. imported a consignment of 4426.796 M.T. of shredded scrap and cleared the same under three bills of entry on payment of duty. Out of the said 4426.796 M.T., M/s. Essar Gujarat Ltd. gave on loan 3314.159 M.T. of shredded scrap to the appellant. On receipt of the said goods, the appellant took credit of duty amounting to Rs. 27,83,198/- being the amount equivalent to the customs duty paid by M/s. Essar Gujarat Ltd. on 3314.159 M.T. of shredded scrap.

(3.) On 23rd November, 1995 a show cause notice was issued to the appellant on the ground that the appellant had taken credit of duty on the basis of delivery challans issued by M/s. Essar Steel (a division of Essar Gujarat Ltd.) and that on the basis of delivery challans, credit of duty cannot be taken under Rule 57G of the Central Excise Rules. By the said show cause notice, the appellant was called upon to show cause as to why action should not be taken for wrongly availing Modvat credit on the basis of documents which are not covered under Rule 57G of the Central Excise Rules. By its reply letter dated 29th February, 1996, the appellant denied the allegations contained in the show cause notice and submitted that the credit of duty has been taken in accordance with the provisions of Central Excise Act and Rules made thereunder. On adjudication, the Commissioner of Customs & Central Excise, Panaji, Goa by his Order-in-Original dated 26-9-1997 confirmed the demand for Rs. 27,83,198/- and also levied penalty of Rs. 7,00,000/- under Rule 173Q and penalty of Rs. 1,00,000/- under Rule 173G of the Central Excise Rules. Being aggrieved by the aforesaid order, the appellant filed an appeal before the CESTAT and by its order dated 11-8-2004, the CESTAT confirmed the duty demand, but reduced the penalty from Rs. 7,00,000/- to Rs. 2,00,000/- levied under Section 173Q and set aside the penalty of Rs. 1,00,000/- levied under Rule 173G of the Central Excise Rules, 1944 . Hence this appeal.