2003 (12) TMI 631 - AT - Central Excise

Court rules in favor of Burman Labs Pvt. Ltd., rejects penalty for Modvat credit; highlights specific notification criteria.

The court rejected the Revenue's appeal to impose a penalty on M/s. Burman Laboratories Pvt. Ltd. for availing Modvat credit on inputs while claiming ... - Issues involved:Whether penalty is imposable on M/s. Burman Laboratories Pvt. Ltd.Analysis:The issue in this appeal is centered around the imposability of a penalty on M/s. Burman Laboratories Pvt. Ltd. The respondents availed Modvat credit on duty paid inputs and capital goods while manufacturing various excisable goods. They also manufactured plastic containers under a specific heading and claimed exemption under a particular notification. The Joint Commissioner confirmed the duty demand on the plastic containers and imposed a penalty, which was later set aside by the Commissioner (Appeals) as the duty was deposited before the show cause notice. The Revenue contended that the penalty should be imposed as the respondents wrongly availed the benefit of the notification. The respondents argued that they were eligible for the notification's benefit as they were not availing Modvat credit on the products mentioned in the notification. They also cited a previous tribunal decision to support their stance.Upon considering the arguments, it was observed that the respondents were denied the benefit of the notification due to their availing of Modvat credit on inputs, not complying with the notification's conditions. A previous tribunal decision highlighted that the condition was specific to not availing credit on products manufactured in the same factory, not on inputs used for other products. The respondents did not challenge the duty demand initially and had paid the duty even before the show cause notice. Based on the precedent set by the previous tribunal decision, the respondents would not have been liable to pay the duty. Consequently, it was concluded that no penalty should be imposed on the respondents, leading to the rejection of the Revenue's appeal.