2000 (11) TMI 177 - AT - Central Excise

Modvat credit denial for removal of capital goods without intimation; credit reversal ordered and penalties reduced on mitigation.

Removal of capital goods to an affiliated unit without required intimation and without issuing a taxable invoice defeated entitlement to input (MODVAT) ... Modvat credit - Capital goods - Input tax credit - Removal without intimation - Penalty for contravention - HELD THAT:- We find that the capital goods had been shifted to the sister unit of the company, namely, Amtek India Ltd. without raising any modvatable invoice and the machines were removed under the cover of photostat of original invoice duly endorsed in the name of Amtek India Ltd. on 25-2-98 and 26-2-98. Since the machines were removed without intimation to the proper officer and without observing the procedure as laid down under Rule 57 S of Central Excise Rules, credit on the goods is .not admissible to them. They have already reversed a sum of Rs. 15,31,938. We therefore hold that they are liable to reverse the balance credit. Penalty is also warranted for contravention of the Rules. However, having regard to the totality of facts and circumstances, including the fact that the credit of Rs. 15,31,938 was reversed on 28-2-98 i.e., immediately after detection of the contravention, we reduce the penalty on Amtek Auto Ltd. to Rs. 3 lakhs and the penalty on Shri M.P. Gupta to Rs. 10,000. Appeals are thus partly allowed. The Appellate Tribunal CEGAT, New Delhi allowed the appeal partially regarding disallowed Modvat credit of Rs. 22,20,301 on capital goods not found physically in the premises. The goods were shifted to a sister unit without proper procedure, leading to penalties imposed on the company and the Deputy Manager (Accounts). The penalties were reduced considering the reversal of a portion of the credit immediately after detection of the contravention.