2002 (2) TMI 693 - AT - Central Excise

Tribunal upholds duty recovery, remits penalty, partly allows appeal in insulation tapes case.

The tribunal upheld duty recovery but remitted the penalty in full, partly allowing the appeal in a case involving the manufacturing of insulation tapes ... Modvat credit on packing material - non-declaration of packing materials under Rule 57F(3) - treatment of packing material as cleared without payment of duty - inclusion of packing charges in assessable value - penalty for wrongful availment of creditModvat credit on packing material - non-declaration of packing materials under Rule 57F(3) - treatment of packing material as cleared without payment of duty - Modvat credit taken on PVC cups (packing material) sent to a job worker without specifying packing material in the Rule 57F(3) intimation could be recovered as clearance of packing material without payment of duty. - HELD THAT: - The assessee sent tapes to a job worker and filed intimations under Rule 57F(3) that mentioned only the tapes, not the packing material (PVC cups). The assessee relied on a challan and a declaration that packing charges were included in the assessable value of the tapes, but the intimations on record did not indicate that packing material was being sent and the related movement challans are not in evidence. The Tribunal found that the declaration of inclusion of packing charges alone did not establish that the value of the PVC cups was included or that the packing material had been properly declared. On the documents before it, the Tribunal held that the recovery of duty on the packing material as cleared without payment of duty is justified and upheld the recovery order.Recovery of duty on the packing material (PVC cups) upheld.Penalty for wrongful availment of credit - inclusion of packing charges in assessable value - Sustainability of penalty imposed for the disputed Modvat credit. - HELD THAT: - Although the Tribunal upheld the recovery of duty, it examined the circumstances and evidence and concluded that imposition of penalty was not justified on the material before it. The Tribunal therefore exercised its discretion to remit the penalty in full while upholding the duty recovery.Penalty remitted in full; appeal partly allowed.Final Conclusion: On the material before it the Tribunal upheld recovery of duty on the PVC cups as undeclared packing material sent to the job worker, but quashed the penalty and remitted it in full, allowing the appeal partly. The judgment concerns the manufacturing of insulation tapes packed in PVC cups by a job worker outside the factory. The issue was the clearance of packing material without mentioning it in the required documents. The tribunal upheld duty recovery but remitted the penalty in full, partly allowing the appeal.