TMI Blog1993 (11) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... of this Bench Order No. 742/93-WRB, dated 25-5-1993, whereunder, the respondents were allowed the modvat credit, which was sought to be denied by the lower authorities. In the aforesaid order, we observed that there was a deliberate violation of the provisions of the Modvat Rules in storing the modvat inputs in the unlicenced premises and their utilisation in their final products which were cleared from the unlicenced premises, on account of which a penalty of Rs. 5 lakhs was sustained. A cross-objection has also been filed, which is to be considered as a reference application, suggesting reference of certain questions on the point of imposition of penalty. The questions framed by the revenue are as below : (i) Whether notwithstanding the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is a clear and knowing contravention of manufacture, storage and removal of excisable goods from unlicensed premises particularly since the Central Excise law procedures have been followed otherwise at the Chinchwad factory? (4) Whether the Appellate Tribunal was right in observing that there was an overt attempt to show that the goods which are manufactured in unlicensed premises were done in the licensed premises by making gate entries in the Chinchwad factory in the absence of any material whatsoever, since undisputedly the gate entries in the Chinchwad factory were part of the private records of the company which were of the nature never to be looked into by the Excise and hence entries therein could not have been made with an at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the declaration did not cover the premises situated 500 yards away from the unit. This Bench took into account the peculiar circumstances of this case and held that so long as there was no dispute that the declared inputs had been utilised in the declared final product and they had been treated as the manufacturers of these goods for purpose of both the duty payment as well as for accepting the modvat declaration, the aforesaid violation was more of procedural nature and there had been a substantive compliance of the provisions of Rule 57G not warranting denial of modvat benefit, especially in the context of the objection behind in the modvat scheme. 5. Under Rule 57G, a declaration is necessary in respect of the inputs for utilisat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 6. As regards the questions framed in the cross-objection, there is no dispute that the respondents are the established manufacturers and they are admittedly well-versed with provisions of the Central Excise Law. They did not include the premises, where manufacturing activity has reportedly taken place and brought modvat inputs in such premises. There is likelihood of potential danger to revenue in receiving modvat inputs in the premises not under licensing control. On a specific question put to Shri Madhav Rao as to whether Rule 173Q permits imposition of penalty for violation of the Modvat Rules, he agrees to this position but contends that when there is no duty evasion, there cannot be any mens rea and hence penalty cannot be impose ..... X X X X Extracts X X X X X X X X Extracts X X X X
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