TaxTMI 
TaxTMI 
2011 (2) TMI 1161
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....ing authority in exercise of the powers under Rule 173Q of erstwhile Central Excise Rules, 1944 has been set aside. While the appeal filed by the Department relates to setting aside of the penalty, the appeal by the assesese is in relation to the merits of the case. 2. The assessees were engaged in the manufacture of S.S. flats classifiable under Tariff Heading 7220.10 of the Schedule to the Central Excise Tariff Act, 1985 and were availing the facility of modvat credit under Rule 57A of the Central Excise Rules, 1944. On the allegation that the scrutiny of RT-12 returns for the month of June 1999 disclosed that the modvatable inputs on which modvat credit under Rule 57A had been availed, were in fact discarded inputs, a show cause ....
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....evant time as the assessees were under the bona fide impression that the credit in respect of such quantity is available, however, the credit so availed was subsequently debited and there was no cause for imposing penalty and therefore, the same should be set aside. 4. The Commissioner (Appeals) has observed that "the appellants have a point in their favour that they have no mala fide intention in this case about non-reversal of the amount of modvat credit on the waste/discarded material and if they had mala fide intention they would not have shown the figures of the discarded/waste material in their RT-12 return or RG-23A Part I register. The case is merely of interpretation of law about applicability of the provisions of Rule 57A ....
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....d by the assessee, the learned Advocate for the appellants tried to point out to us that the appellants were not at all at fault and confirmation of demand was thoroughly uncalled for. However, being pointed out that the order passed by the Commissioner (Appeals) which clearly disclosed that the assessee had specifically given up their right to challenge the order passed by the adjudicating authority in relation to confirmation of the demand and the appeal in that regard filed by the assessees having been restricted to the point of penalty only, the learned Advocate fairly submitted that the present appeal is by way of mercy petition. 7. As far as the appeal by the assessee is concerned, the question of Tribunal going into the merit....
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....taken by the Bombay High Court in Asian Paints (India) Ltd. 9. The law on the point of penalty aspect under Rule 173Q being abundantly clear in view of the decision of the Apex Court, it is not permissible for the authorities not to impose penalty under Rule 173Q once the default in compliance of the provisions of law comprised under Central Excise Act/or under Central Excise Rules is established. There is no discretion left to the authority in that regard. Undoubtedly, the quantum of penalty has to be decided by the authorities in its discretion which obviously to be exercised judiciously. 10. The records disclose that the adjudicating authority in exercise of his discretion had imposed penalty of Rs. 5 lakhs in a case wher....