2000 (6) TMI 288 - AT - Central Excise

Appeal Dismissed for Ineligible Proforma Credit Claim, Penalty Upheld

The Tribunal dismissed the appeal, upholding the impugned order due to the ineligibility of the appellants to claim proforma credit without specific ... Interpretation of Statute - Exemption notification Issues:1. Dismissal of appeal for non-production of proof of payment of compliance with stay order.2. Claim of proforma credit by the appellants under Notification 7/94(NT) dated 1-3-1994.3. Interpretation of provisions of law regarding proforma credit eligibility.4. Comparison of transitional credit under Rule 57H of Modvat Scheme with proforma credit provisions.5. Imposition of penalty and rejection of reduction argument.Issue 1:The appeal was filed against the dismissal of the appellants' appeal for not providing proof of payment of compliance with a stay order. The appellants had complied with the directive to furnish a bank guarantee for 50%.Issue 2:The appellants, engaged in manufacturing yarn and fabrics falling under specific chapters of the CETA, claimed proforma credit under Notification 7/94(NT) dated 1-3-1994. The jurisdictional AC sought to deny this credit on the ground of lacking prior permission.Issue 3:The Tribunal considered the contentions regarding the eligibility for proforma credit. The AC's order highlighted that Rule 56A did not allow credit on material in stock on the date of the notification. The Tribunal differentiated this case from Zuari Agro Chemicals, emphasizing the lack of eligibility discussion in the latter.Issue 4:Comparison with Rule 57H of the Modvat Scheme was made to determine the eligibility for proforma credit. The absence of similar provisions in proforma credit rules led to the conclusion that the appellants were not entitled to claim such credit, upholding the impugned order.Issue 5:Regarding the penalty imposition, the Tribunal noted that the absence of specific provisions enabling proforma credit akin to Rule 57H indicated the correctness of the penalty imposition. The rejection of the reduction argument was based on the lack of mens rea and the clear leviability of the penalty.In conclusion, the Tribunal dismissed the appeal, upholding the impugned order due to the ineligibility of the appellants to claim proforma credit without specific provisions akin to Rule 57H of the Modvat Scheme. The penalty imposition was deemed correct, considering the absence of mens rea and the clear leviability of the penalty.