2005 (7) TMI 548 - AT - Central Excise

Tribunal Reduces Penalty in Tax Rule Violation Case

The Tribunal reduced the penalty imposed under Rule 57AH(2) of the Modvat Rules from Rs. 17,09,754/- to Rs. 1,00,000/- due to the appellant's voluntary ... Penalty Issues:Application under Section 35F of the Central Excise Act, 1944 for dispensing with pre-deposit order and granting stay for recovery of penalty imposed under Rule 57AH(2) of the Modvat Rules.Analysis:The appeal challenged the Order-in-Appeal confirming a penalty of Rs. 17,09,754/- imposed by the Commissioner of Central Excise (Appeals). The appellant argued that the penalty and interest were not justified, citing precedents like CCE v. M/s. Machino Montell (I) Ltd. and M/s. Emmellen Biotech v. CCE, Mumbai-VII. They contended that since they had reversed excess credit before the Show Cause Notice, no penalty or interest should be levied. The Tribunal noted the appellant's voluntary reversal of credit and lack of evidence of Departmental intervention in the reversal process.The Tribunal acknowledged the appellant's proactive reversal of excess credit and their claim of no suppression of facts regarding filing requirements under the new CENVAT Rules. It observed that the appellant was a professionally managed company with qualified officers, implying no intentional non-compliance with Central Excise law. The Tribunal differentiated Modvat credit from duty, stating that the decision in M/s. Machino Montell (India) Limited's case did not directly apply. Consequently, the Tribunal reduced the penalty from 100% to Rs. 1,00,000/-, considering the recovery already made with interest.In conclusion, the Tribunal found that a 100% penalty imposition was unjustified given the circumstances, especially with the recovery already effected with interest. Therefore, the penalty was reduced to Rs. 1,00,000/-, and the appeal was disposed of accordingly.