2003 (10) TMI 457 - AT - Central Excise

Summary

Issues:

1. Denial of Modvat credit and demand for duty on seized goods.
2. Imposition of penalties and redemption fine on the parties involved.

Analysis:

Issue 1: Denial of Modvat credit and demand for duty on seized goods

The case involved Uniflex Cables Ltd., a manufacturer of insulated electric wire and cable, and Vinay Enterprises engaged in cutting galvanized wire. A shortage of inputs was found at Uniflex Cables Ltd., leading to the denial of Modvat credit and demand for duty on seized goods. The Asstt. Commissioner confirmed the denial of Modvat credit, duty demand, and penalties. However, on appeal, the Commissioner (Appeals) set aside the demand for duty on seized goods, reducing penalties and redemption fine.

Issue 2: Imposition of penalties and redemption fine

The contention raised was the absence of mala fide intent and procedural failure to obtain permission under Rule 57F(3). The representative cited the Hindustan Steel case in support. The departmental representative highlighted that the inputs did not reach Uniflex Cables Ltd. directly, raising concerns about the lack of proper record-keeping. The argument that the process at Vinay Enterprises did not amount to manufacture was deemed unacceptable. The Tribunal's decision in 1990 was referenced, emphasizing that credit should not be denied except for inputs found short. The judgment upheld the reduction of penalties on employees but maintained penalties on Uniflex Cables Ltd. and Vinay Enterprises. The penalties on employees were reduced, while the penalty on Vinay Kumar Baid was set aside. The fine for redemption of goods was also reduced.

In conclusion, Appeal E/652/98 was allowed, Appeal E/655/98 was dismissed, and other appeals were allowed in part, addressing the issues of denial of Modvat credit, duty demand, penalties, and redemption fine comprehensively.