Penalty for seeking reclassification to claim Modvat credit fails without an express statutory basis.

A request to reclassify a machine so that Modvat credit could be claimed was examined as potentially dubious, and the machine was indicated to fall under Heading 84.24. Even so, seeking a different classification to obtain a statutory benefit was not treated as punishable because no specific provision in the Act or Rules authorised such a penalty, and none was identified by the department. The penalty was therefore not sustainable and was set aside in favour of the assessee.

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Issues: Whether penalty could be imposed merely because the assessee sought a change in classification of the machine to enable availment of Modvat credit.

Analysis: The request for reclassification was found to arise in dubious circumstances, and the machine was indicated to be rightly classifiable under Heading 84.24. However, an attempt to seek a different classification in order to obtain a benefit under the law was held not to be punishable in the absence of any specific provision in the Act or the Rules authorising such penalty. No such enabling provision was cited in the impugned order or shown by the department.

Conclusion: Penalty was not sustainable and was set aside in favour of the assessee.

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