CX - Penalty - When appellant was told that he had illegally availed Modvat Credit benefit, insistence that particular clause sought to be invoked should also have been indicated is like insisting upon an empty formality: HC
By TIOL News Service
KOLKATA, FEB 10, 2013: IN the month of December, 2005, the CESTAT had negatived the contention of the appellant that they were entitled to MODVAT credit. Inasmuch as during the period involved in the case, in terms of notification 5/94-CE(NT), the goods falling under SH 2710.11 & 2710.13 were excluded from the purview of MODVAT benefit. The 57G declaration filed by the appellant indicated that the "inputs" were SOL-90 & SOL-110 & were classified under 2710.11 & 2710.13. The invoice under which the goods were supplied by the dealer also indicated as above. Although the appellant submitted that the goods supplied were Benzene and Toluene and which are entitled for credit, the Tribunal had held that the invoice and the declaration did not indicate the same and since notfn. 5/94-CE(NT) barred availment of credit, the appellant was not entitled to the credit.
Against this order, the appellant is before the Calcutta High Court and reiterated that they had "really purchased Benzene & Toluene" and are entitled for MODVAT credit. It is also submitted that since neither the show cause notice nor the adjudication order indicated as to which clause of Rule 173Q of CER, 1944 was sought to be pressed into service for the purpose of penalising the appellant, the penalty imposed is without the authority of law. Reliance is placed on the decision in Amrit Foods vs. Commissioner of Central Excise, U.P. - (2005-TIOL-164-SC-CX).
The High Court observed -
"We have not been impressed by any of the submissions advanced by Mr.Lahiri. The first submission as regards eligibility of the appellant to claim Modvat Credit is without any merit for the simple reason that the appellant itself has declared the goods, in respect of whereof the Modvat Credit was availed, as special boiling point spirits belonging to Central Excise Classification Nos.2710.11 and 2710.13. It would also appear that the appellant himself in his declaration appearing at page 94 of the paper book did not disclose that it had purchased either Benzene or Toluene. It has described its goods in the manner indicated above and further identified them by referring to the classification numbers as indicated above.
The notification no.5/94 referred to above excludes classification nos.2710.11 and 2710.13 from the benefit. It is true that Benzene and Toluene are not so excluded but it does not appear from the declaration made by the appellant itself that Benzene and Toluene were purchased for the purpose of claiming the aforesaid Modvat Credit. We as such are unable to find any infirmity in the judgment and order holding the appellant guilty."
In the matter of imposition of penalty u/r 173Q of CER, 1944, the Bench held -
"The second submission advanced by Mr.Lahiri is without any merit. In the case of Amrit Foods(supra), the appeal of the Revenue was dismissed in limine on the ground that neither the show cause notice nor the order of the Commissioner specified the particular clause of Rule 173Q which had allegedly been contravened by the appellant. In the case before us, the show cause notice has two parts. The first part deals with the facts and circumstances showing that the appellant had taken irregular Modvat Credit of Rs.1,82,180/-. All the relevant facts have been indicated.
The second limb of the show cause notice is as to why the appellant should not be penalised to pay the equivalent amount of Modvat Credit irregularly availed by him. Therefore, all the necessary facts were made known to the appellant. It is true that Rule 173Q provides for various types of misconduct including a case where Modvat Credit was irregularly obtained. When the appellant was told in no unequivocal terms that he had irregularly or illegally availed himself of the Modvat Credit benefit, the insistence that the particular clause sought to be invoked should also have been indicated is according to us, insisting upon an empty formality. The facts and circumstances of the case in C.A.No.7275 of 2003 forming part of the aforesaid judgment in the case of Amrit Foods have not been discussed. We are satisfied that there has been in the case before us no violation of the principles of natural justice. It cannot be said by any stretch of imagination that the appellant was prejudiced because the particular clause under which he was sought to be penalised was not indicated in the show cause notice.
It is now well settled that violation of principles of natural justice simplicitor is not enough. One has to show the consequent prejudice suffered by him. It is not the case of Mr.Lahiri that if this clause had been indicated his client would have been in a better position to defend his case. Nor is it his case that his client was misled or could not know or did not know the charge he had to meet. We are as such unable to find any fault with the judgment and order under challenge."
The appeal was, therefore, dismissed.
(See 2013-TIOL-106-HC-KOL-CX)
