2004 (3) TMI 292 - AT - Central Excise

Tribunal rules on Modvat Credit disallowance and penalties, reduces fines for improper usage.

The Tribunal upheld the disallowance of Modvat Credit but set aside the duty demand, stating that if Modvat Credit was disallowed, it couldn't be claimed ... Cenvat/Modvat - Demand Issues:Challenge of Central Excise duty confirmation, penalties imposition, confiscation of Acrylic Staple Fibre, and disallowance of Modvat Credit.Central Excise Duty and Modvat Credit Issue:The appeals challenged the confirmation of Central Excise duty, penalties, confiscation of Acrylic Staple Fibre, and disallowance of Modvat Credit. The Appellants argued that the shortage of acrylic fibre was due to storage in the registered office before being brought to the factory for manufacturing. They contended that the shortage calculation was incorrect as it did not consider material stored in the blend register. The Revenue's stand was deemed contradictory as they demanded duty on the allegedly manufactured yarn from the shortage of fibre while denying Modvat Credit for the same quantity. The Tribunal upheld the disallowance of Modvat Credit but set aside the duty demand, stating that if Modvat Credit was disallowed, it couldn't be claimed that the short inputs were used in manufacturing goods.Confiscation of Acrylic Staple Fibre Issue:Acrylic staple fibre found in the factory without bills and statutory records entry was deemed liable for confiscation. The Tribunal reduced the redemption fine to Rs. 20,000.Penalties Imposition Issue:Penalties were imposed on the Appellant company for taking Modvat Credit without receiving inputs, which was reduced to Rs. 3 lakhs from a higher amount. The penalty on the Managing Director was also upheld but reduced to Rs. 20,000 due to his evident role in dealing with excisable goods. The Tribunal concluded both appeals in the above manner.