Tribunal upholds decision on Modvat credit for industrial cooling fans manufacturer. Penalties waived due to lack of deliberate evasion.

The Tribunal upheld the decision of the lower appellate authority, dismissing both appeals filed by the appellant/assessee and the revenue. The appellant, a manufacturer of industrial cooling fans, availed Modvat credit on capital goods without permission due to a procedural lapse during a factory strike. While the duty equivalent to the credit taken was upheld, penalties were waived as there was no deliberate intent to evade duty. The Tribunal found that penalties are warranted only in cases of intentional evasion, which was not established in this instance.

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Issues:
Appeal against order-in-appeal regarding Modvat credit on capital goods without permission and imposition of penalty.

Analysis:
The case involves two appeals, one by the appellants and the other by the revenue, arising from a common order regarding the availing of Modvat credit on capital goods without permission. The appellant, a manufacturer of industrial cooling fans, availed Modvat credit on moulds and dies which were removed to a job worker without departmental permission. The adjudicating authority issued a notice for reversal of the Modvat credit, confirmed by the Commissioner (Appeals) with penalties waived due to lack of deliberate intent to evade duty.

The appellant argued that the failure to inform the department and seek permission was due to a procedural lapse caused by a factory strike, during which the goods were eventually brought back. The revenue contended for the imposition of penalties. The Tribunal considered Rule 57S of the Central Excise Rules, requiring prior permission for removal of capital goods and imposing duty if not returned within the specified period. As the appellant did not seek permission or return the goods within the stipulated time, the duty equivalent to the credit taken was upheld.

Regarding the penalty, the Tribunal agreed with the lower appellate authority that penalties were not warranted as there was no deliberate defiance of the law. Penalties are deemed necessary only in cases of intentional evasion, which was not established in this instance. Consequently, the Tribunal upheld the lower appellate authority's decision, dismissing both appeals filed by the appellant/assessee and the revenue.

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