2003 (11) TMI 380 - AT - Central Excise

Tribunal upholds duty demand on goods, reduces penalty, remands Modvat credit claim for re-examination.

The tribunal upheld the duty demand on non-notified goods and reduced the penalty amount imposed on the appellants for contravening Central Excise Rules. ... Demand - Cenvat/Modvat - Clearance of non-notified goods - Penalty - Mens rea Issues:1. Rectification of mistakes in interim stay order.2. Applicability of Compounded Levy Scheme to non-notified goods.3. Modvat credit claim on inputs.4. Penalty imposition for contravention of Central Excise Rules.Issue 1: Rectification of mistakes in interim stay orderThe appellate tribunal dismissed a miscellaneous application seeking rectification of alleged mistakes in an interim stay order. The compliance with the stay order was noted, and the appeal was heard, determining that the stay order did not impact the appeal's merits. The application lacked citation of the invoked law provision and was filed by the consultant without the party's affidavit, leading to its dismissal.Issue 2: Applicability of Compounded Levy Scheme to non-notified goodsThe appellants, engaged in manufacturing various goods under the Compounded Levy Scheme, were found to have cleared non-specified goods without paying duty at normal tariff rates. The jurisdictional Commissioner confirmed the duty demand on non-notified goods and imposed a penalty. The tribunal upheld the duty demand, emphasizing the appellants' liability to pay excise duty on non-notified goods, as communicated by the department, despite the appellants' late request to be excluded from the scheme.Issue 3: Modvat credit claim on inputsThe appellants claimed Modvat credit on inputs used for manufacturing non-notified goods, but the Commissioner disallowed it due to procedural non-compliance and lack of evidence of duty-paid inputs. The tribunal directed a re-examination of the Modvat credit claim in line with a previous decision, allowing the appellants to present evidence and be heard, while emphasizing the duty payment with interest.Issue 4: Penalty imposition for contravention of Central Excise RulesThe penalty imposed on the appellants for contravening Central Excise Rules was deemed excessive by the tribunal. While acknowledging the lack of intent to evade duty payment, the tribunal held the appellants liable for a reduced penalty amount, directing payment of Rs. 3 lakhs and setting aside the excess penalty imposed by the Commissioner.In conclusion, the tribunal upheld the duty demand on non-notified goods, remanded the Modvat credit claim for re-examination, and reduced the penalty amount imposed on the appellants, emphasizing compliance with duty payment and procedural requirements.