Modvat credit penalty upheld where Rule 57-I(4) governed the levy and no apportionment between provisions was required.

Penalty for wrong availment of Modvat credit was upheld where the levy was made under Rule 57-I(4), which expressly authorises a penalty equal to the credit wrongly claimed or availed. Section 11AC operated only as a supplementary reference, so no separate apportionment of penalty between Rule 57-I, Section 11AC and Rule 173Q was required. The earlier precedent relied on by the appellate authority was distinguished because it concerned a different penalty framework. The setting aside of the penalty was therefore unsustainable, and the penalty order was restored.

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Issues: Whether the penalty imposed for wrong availment of Modvat credit could be set aside on the ground that there was no apportionment of penalty between Rule 57-I and Section 11AC and Rule 173Q.

Analysis: The penalty had been imposed under Rule 57-I(4), which specifically authorises levy of penalty equal to the amount of Modvat credit wrongly claimed or availed. Section 11AC was referred to only as a supplementary provision. In such a statutory scheme, the question of apportionment of penalty between the provisions did not arise. The earlier decision relied upon by the appellate authority was held inapplicable because it concerned penalty imposed under Section 11AC and Rule 173Q without the specific framework of Rule 57-I(4).

Conclusion: The setting aside of the penalty was unsustainable; the penalty order was restored and the objection to non-apportionment failed.

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