1999 (10) TMI 202 - AT - Central Excise

Summary

Issues:
1. Reference Application by Revenue to refer question of law to High Court regarding contravention of Central Excise Rules by M/s Steel Products Ltd.
2. Tribunal setting aside personal penalty on respondents due to cases made against dealers being allowed.
3. Consideration of evidences, admission of irregular Modvat credit, and reliance on previous Tribunal decision in the case.

Issue 1: Reference Application by Revenue
The Revenue filed a Reference Application seeking to refer a question of law to the High Court concerning the contravention of Central Excise Rules by M/s Steel Products Ltd. The case involved the fraudulent availing of Modvat credits based on fictitious invoices without receiving the actual input materials. The Revenue argued that this action violated Rules 57A, 57F, and 57G of the Central Excise Rules, 1944. The Commissioner's Order-in-Original supported the allegation of irregular credit availed by the assessee. However, the Tribunal found that the penalty imposed on the assessee did not stand as the cases against the dealers who issued the fraudulent invoices were allowed in separate proceedings. Despite evidence and admission of irregular credit availed, the Tribunal concluded that no question of law merited reference to the High Court.

Issue 2: Tribunal Setting Aside Personal Penalty
The Tribunal, in its order, set aside the personal penalty on the respondents as the basis for imposing the penalty did not hold due to the cases against the dealers being allowed. The Tribunal considered the evidence on record, including the show cause notice and the fact that the assessee voluntarily paid the irregular Modvat credit. The respondents had admitted to availing the irregular credit, but the Tribunal relied on a previous decision regarding the statutory rights of an assessee not being affected by voluntary actions. Citing a case upheld by the Supreme Court, the Tribunal found that the voluntary deposit of Modvat credit did not prejudice the assessee, leading to the rejection of the Revenue's Reference Application.

Issue 3: Consideration of Evidences and Previous Tribunal Decision
The Tribunal considered the evidences on record, the admission of irregular Modvat credit by the assessee, and the reliance on a prior Tribunal decision in the case of Marcandy Prasad Radha Krishna Prasad (P) Ltd. The Tribunal's decision in the referenced case emphasized that an assessee's statutory rights could not be undermined by voluntary actions, a principle upheld by the Honorable Supreme Court. Based on this precedent, the Tribunal concluded that the voluntary payment of Modvat credit did not prejudice the assessee and, therefore, did not warrant a reference to the High Court. The Tribunal's decision was influenced by the legal principles established in previous cases and the specific circumstances of the present case.