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of <h1>Appellate Tribunal rejects penalty, allows Modvat credit, and finds department's appeal lacking merit.</h1> <h3>COMMISSIONER OF CENTRAL EXCISE, PUNE Versus INDIAN SEAMLESS METAL TUBE LTD.</h3> COMMISSIONER OF CENTRAL EXCISE, PUNE Versus INDIAN SEAMLESS METAL TUBE LTD. - 2006 (196) E.L.T. 418 (Tri. - Mumbai) Issues:1. Imposition of penalty for infraction of rules.2. Eligibility for Modvat credit on inputs sent to job workers.3. Maintainability of the department's appeal.Issue 1: Imposition of penalty for infraction of rulesThe Adjudicating Commissioner dropped the duty demand but imposed a penalty of Rs. 5 lakhs for rule infraction. However, the Tribunal in a previous case set aside the penalty. The Appellate Tribunal noted that the respondents consistently provided statements and returns, and sent inputs to job workers for processing, with subsequent value addition and duty payment. As there was no suppression of facts or misstatement, the penalty was unjustified, leading to the dismissal of the penalty imposition.Issue 2: Eligibility for Modvat credit on inputs sent to job workersThe department contended that the respondents were not entitled to Modvat credit on inputs sent to job workers for processing as they were not engaged in manufacturing the goods. However, the Tribunal found that the department had already collected a substantial amount of duty from the respondents, indicating their manufacturing activity. Moreover, no action was taken against the job workers. Citing a Supreme Court decision and the Tribunal's previous ruling in favor of the respondents, it was held that the department's claim was unsustainable, and the appeal was dismissed.Issue 3: Maintainability of the department's appealThe Tribunal determined that the department's appeal was not maintainable. This decision was based on various factors, including the previous allowance of the respondents' appeal against the impugned order by the Tribunal before the Board's review order. Considering the lack of action against the job workers and the substantial duty collection from the respondents, the Tribunal concluded that the department's appeal lacked merit and was therefore dismissed.---
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