Bona fide credit on accepted classification declaration defeats penalty under central excise rules.

Penalty under Rule 57U(6) of the Central Excise Rules, 1944 was held unsustainable where the supplier's classification declaration had already been accepted by the department. Because the credit was taken on documents reflecting that accepted classification, and no suppression could be attributed to the supplier, there was no basis to impute mala fides to the appellant. The appellant's availment of credit was treated as bona fide, and the penal consequence was set aside.

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Issues: Whether penalty under Rule 57U(6) of the Central Excise Rules, 1944 was sustainable where the supplier's classification declaration had been accepted by the department and the credit was taken on the basis of such documents.

Analysis: The classification declaration filed by the supplier showing the bins under heading 8474.90 had already been accepted by the revenue. In the related proceedings, the finding that suppression could not be alleged against the supplier removed the foundation for attributing mala fides to the appellant. As the appellant availed credit on documents reflecting the accepted classification, the conduct was held to be bona fide and not deserving of penal consequences.

Conclusion: Penalty under Rule 57U(6) was unsustainable and was set aside in favour of the appellant.

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