RAJASHREE CEMENT Vs. COMMISSIONER OF C. EX., BELGAUM

JUDGEMENT

(1.) THIS stay application and appeal is taken up for final decision, after the consent of both the parties, since the issue involved revolves around a narrow compass, i.e. whether a penalty of Rs. 1,00,000/ - was called for, in the facts and circumstances of the case. The issue involved is that cement manufacturers were availing credit of duty on furnace oil and LDO at the rate of 15%. From 1 -4 -1998, under notification No. 5/94, credit at 15%, which was the duty recovered from the cement manufacturers and paid by them was restricted to 10% under Rule 57A of the Central Excise Rules, 1944. The cement manufacturers assosiation took up the matter with the concerned authorities and the present appellant vide their letter, dated 2 -5 -1998 informed the department that they will raise credit to the extent of 15% of the duty which they have discharged by paying it to the suppliers but will not utilise 5% of the credit unless the matter was finally settled. The department, however, on 9 -6 -1998 informed the appellants, that this procedure was not permissible and they should restrict themselves to credit of 10% of the duty as shown in the documents and reverse the excess 5% credit taken by them. The appellants on 9 -11 -1998, thereafter under protest reversed the same after informing the department that even though credit to the extent of 15% as shown in the documents was taken in the RG 23 A registers, the same was not utilised and was in balance. Thereafter reversed the credit much before the issue of show -cause notice dated 3 -5 -1999. the Asstt. Commissioner, however, observed that this conduct of the appellants to be : Assessee was acting in an autocratic manner as if they can get the statutes changed to serve their own interest as and when they desire. This attitude of the assessee shows clear disregard for the law of the land. The assessee is a large manufacturer and they are bound to be aware of the rules and regulations. They cannot take their representation as the basis and avail excess Modvat credit and that too after being informed by the department. Nothing prevented the assessee, for obtaining any clarification on this count from the department. He thereafter was convinced, that the availment of excess Modvat credit was utilised by the assessee and thereafter he confirmed the differential excess Modvat credit of Rs. 4,79,668/ - availed on furnace oil and LDO and reversed on 3 -11 -1998 and imposed a penalty of Rs. 4 lakhs under Rule 173Q(1)(bb) of Central Excise Rules, 1944. In appeal, the Commissioner (Appeals) after hearing the account and going through the submissions observed It is observed that the appellants had filed the credit but had not utilised the same and therefore imposition of penalty of Rs. 4 lakhs is too harsh and is required to be reduced....I accordingly, reduce the amount of penalty from Rs. 4 lakhs to Rs. 1 lakh. The appeal is otherwise rejected. The present appeal is against this penalty of Rs. 1 lakh.

(2.) WE have heard learned consultant Shri R.G. Utagikar who reiterated the submissions in the grounds taken in the appeal and stay application and submitted that as the admitted position is that the excess credit were reversed prior to the issue of show -cause notice and the Commissioner (appeals) has come to a finding that even if the credits were taken, they were not availed inasmuch as they were not utilised, no penalty is called for and he relied on the decisions in the case of Siemens Limited - 1999 (34) RLT 831 and Standard Organics - 1999 (112) E.L.T. 541 (Tribunal) and Piaggio Greaves Vehicles Ltd. - 1999 (35) RLT 195 and DCW Ltd. - 1996 (81) E.L.T. 381 (Tribunal) and Sagar Crystals - 2000 (89) ECR 509 to submit that the conduct and the intentions of the appellants are also relavant for the determination of the quantum of penalty and in this case no penalty was called for.

(3.) SHRI George appearing for the department submits that even if the Collector has come to a finding that the credits have been taken but not utilised, that will not absolve the appellants from a penalty under Rule 173Q (1)(bb) as the rules read, it is clear that the penalty is liable. The amount of credit which is involved in this case is Rs. 4,79,668/ -. It is a considerable sum and the Collector (Appeals) had already taken a lenient view and no new case for reasons have been brought on record by the appellants to reduce the penalty any further. He therefore, requested that the appeal should be dismissed.