TMI Blog1996 (2) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... its Order No. 416/95/E/Stay/169/95 in Appeal No. E/232/95 dated 8-6-1995 confirming the demand of Rs. 2 lakhs as penalty and quash the same and consequently direct the respondents to refund the sum of Rs. 2 lakhs paid by the petitioner as penalty under Rule 173Q." 3. The petitioner herein are manufacturing among other excisable goods, PVC resin, falling under Chapter No. 3904 of Central Excise Tariff Act, 1985, for which major raw material is Vinyl Chloride Monomer (VCM) which is imported by the petitioner right from its inception. The said Vinyl Chloride Monomer is levied with countervailing duty (CVD) from June 1993. VCM, which is imported is stored in the petitioners own storage tank near Tuticorin port from where it is decanted. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been paid in one lump sum and entire quantity is stored in company's own storage tank and was brought and consumed in the petitioners factory which is not disputed. The petitioner also contended that since it is not disputed that the entire VCM is consumed in the manufacture of PVC resin and petitioner have complied with all rules of Modvat for the purpose of availment, they are rightly eligible for Modvat benefit based on the Bill of Entry. 4. During the pendency of correspondence on this issue Assistant Collector of Central Excise, Tuticorin Division, issued a show cause notice dated 16-6-1994 followed it up with three more show cause notices on identical grounds dated 27-6-1994, 4-7-1994 and 26-7-1994 respectively. The petitioners fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,000/-. By his order in Appeal No. 11/95 dated 27-3-1995, the 2nd respondent has reduced the penalty of Rs. 32,000/- to Rs. 2,000/- and the penalty of Rs. 42 lakhs imposed under Rule 173Q was reduced to Rs. 2 lakhs. The second respondent had held that the average period of utilisation of goods was a fortnight and that might have been some marginal benefit by obtaining Modvat credit in advance to the extent of 14 days. This was computed by the appellate authority to be Rs. 1.73 lakhs, the method of computation being as such unclear. Aggrieved by the above order confirming the penalty to the extent of Rs. 2 lakhs under Rule 173Q the petitioner herein preferred an appeal to the 3rd respondent Tribunal being Excise Appeal No. 232/95 together w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts that the appellants are paying duty to the tune of Rs. 35 crores per annum to the Government and there was no need for the appellants to have wrongly availed of the Modvat credit nor was there any compulsion on their part in this regard and the mistake was more on account of mis-understanding and can be considered as bona fide." It is seen from the above finding that the Tribunal has taken note of the plea of the petitioner that they are paying duty to the tune of Rs. 35 crores every year and there was no need for the petitioner to have wrongly availed of Modvat credit nor was there any compulsion on their part in this regard and mistake was more on account of mis-understanding and can be considered as bona fide. Mr. Raman contended t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the imposition of penalty by the lower authority has while upholding the bona fides still caused a stigma on the company and hence, the company is advised to seek the equitable and supervisory jurisdiction of this court. It is settled law as already pointed out that for mere procedural lapse, no penalty is leviable if there is no intention to evade duty. The Tribunal having held that the attempt on the part of the petitioner for having availed Modvat credit may be a mistake which was more on account of mis-understanding and, therefore, can be considered bona fide. Having held so, the Tribunal the 3rd respondent herein ought not have confirmed the penalty imposed by the respondents 1 and 2. However, this court in exercising its jurisdicti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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