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Issues: (i) whether credit taken on glass vials disentitled the importer from exemption under Notification No. 203/92-Cus.; and (ii) whether reversal of credit under the Amnesty Scheme and the consequent penalty were sustainable.
Issue (i): whether credit taken on glass vials disentitled the importer from exemption under Notification No. 203/92-Cus.
Analysis: The appellants admitted availing credit on glass vials. The Tribunal held that the contention that glass vials were not inputs could not be accepted in the facts of the case, as the appellants themselves had treated them as input for availing credit. The cited authorities did not assist the appellants, and the exemption condition was not satisfied.
Conclusion: The denial of benefit under Notification No. 203/92-Cus. was upheld against the assessee.
Issue (ii): whether reversal of credit under the Amnesty Scheme and the consequent penalty were sustainable.
Analysis: The Tribunal held that the Amnesty Scheme could not assist the appellants because the reversal was made after the scheme period was over. The exemption and allied relaxation provisions had to be strictly construed. However, considering that the credit involved was only a small amount, the penalty was found excessive and liable to be reduced.
Conclusion: The demand was sustained, but the penalty was reduced to Rs. 1,000.
Final Conclusion: The appeal succeeded only to the limited extent of reduction of penalty, while the demand and denial of exemption were maintained.
Ratio Decidendi: Exemption notifications and amnesty-based reliefs must be strictly construed, and reversal of wrongly availed credit after expiry of the scheme does not regularize entitlement to exemption, though penalty may be moderated on the facts.
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