Penalty upheld for violating Central Excise Rules. Compliance emphasized, appeal dismissed.

The Tribunal upheld penal action against the appellants for contravening Central Excise Rules by unauthorized availing and utilization of credit without proper permission. The judgment stressed compliance with procedural requirements and consequences of rule violations, confirming the penalty of Rs. 5,000 and dismissing the appeal.

---

---

Issues:
Violation of Central Excise Rules related to availing proforma credit and transfer of credit without permission leading to penal action under Rule 173Q.

Detailed Analysis:

1. Availing Proforma Credit and Transfer of Credit without Permission:
The appellants, engaged in manufacturing motor vehicle chassis falling under Chapter 87 of Central Excise Tariff Act, 1985, were availing proforma credit under Rule 56A of Central Excise Rules, 1944 before 1-3-1986. They had a balance in their RG-23 Part II account. However, they filed a declaration opting for Modvat under Rule 57A on 12-3-1986 and took credit without proper permission. The Department alleged that the appellants transferred unutilized credit to RG-23A Part II without authorization and utilized it for clearing goods, contravening Rules 9(1), 57A, 173G, and 57H of Central Excise Rules, 1944. This led to penal action under Rule 173Q.

2. Appellants' Defense and Department's Findings:
The appellants contended that they had requested permission for credit transfer and had been reminding the Department. They claimed that they were advised to avail the credit and that the Department did not object during audits until later objections were raised. The Asstt. Collector noted that the appellants had violated the rules by taking credit without permission and clearing goods without sufficient balance in PLA. Consequently, a personal penalty of Rs. 5,000 was imposed, which was upheld by the Collector (Appeals).

3. Judgment and Decision:
The Tribunal observed that the appellants had twice violated the rules by availing credit without permission before reversing it upon objection by the Department. The plea that they were instructed to transfer and utilize credit post facto was not substantiated. Rule 57H(3) mandates permission from the Asstt. Collector for credit transfer, which the appellants bypassed. The Tribunal found no merit in the appeal, confirming the penalty and dismissing the appeal. The violation was deemed clear, and the penalty of Rs. 5,000 was considered appropriate.

In conclusion, the Tribunal upheld the penal action against the appellants for contravening Central Excise Rules regarding the unauthorized availing and utilization of credit without proper permission. The judgment emphasized the importance of complying with procedural requirements and highlighted the consequences of violating such rules, leading to the dismissal of the appeal and confirmation of the penalty imposed.

---