Full Judgment
2. The ld. Counsel for the appellant Shri S.J. Vyas contended that the appellants were availing Modvat credit on their finished products. The Department found that they had availed the Modvat credit for paying duty on transformation during 1988 but that they had not declared transformer as a finished product for the purposes of Modvat credit under Rule 57G. On this being pointed out to them by the Departmental Officers visiting their factory in 1988, the appellants had paid up the consequential amount of duty of Rs. 49,629.60. Proceedings were initiated subsequently by a show cause notice issued in 1989 for confirming the demand and proposing to impose penalty on the appellant.
After considering their reply the present impugned order has been passed by the Additional Commissioner of Central Excise. The ld.Counsel submitted that the penalty on them is unjustified because they had mentioned utilisation of Modvat credit of transformer in their RT 12 monthly returns and there was also mention about it in their classification list filed under Rule 173C only Excise Rules.
Elaborating on the bona fides of the appellant ld. Counsel further pointed out that the appellants on realising that they wrongly availed of Modvat credit had even without waiting for show cause notice debited the duty in their Personal Ledger Account. The ld. Counsel further submitted that after making debit in PLA they approached the Deptt. for corresponding restoration of credit in their Modvat account RG 23A which also the department had allowed. In these circumstances the ld.Counsel relied upon the precedent decisions of the Tribunal in Plastichemix Industries Co. v. Commissioner of Central Excise -1996 (84) E.L.T. 467 holding that non-filing of declaration under Modvat credit cannot attract the extended period for recovering the credit.
There was another decision of the Tribunal in Commissioner of Central Excise v. Asia Insulated Wires (P) Ltd. -1992 (62) E.L.T. 812 holding that non-filing of declaration can be considered as failure or omission but not suppression and that extended period on demanding the duty is not invokable. The ld. Counsel pointed out that the appellant had in fact not resisted the demand at all who had already paid it. Therefore he pleaded that the penalty on them should be set aside.
3. Shri S.V. Singh the ld. JDR contended that for imposing penalty under the Rule men?, rea is not a necessary ingredient. So long as the violation of provisions of rules is established penalty can be imposed without reference to mens rea. There is also no time limit for imposing penalty. The conduct of the appellant is also to be noted because they had been under the Modvat scheme for a year by the time this event occurred and they should have been aware of the statutory necessity of filing declaration for the final product before availing of Modvat credit. Therefore, the ld. DR supported the order penalising the appellant.
4. On a careful consideration of the submissions, we are of the view that the precedent decisions cited by the appellants would support their case for waiver of penalty; these decisions also were similar on facts where the Tribunal found the assessee had taken Modvat credit on undeclared input/final product. Yet the Tribunal had taken a view that where intimation had been given about such availment in the statutory monthly returns enclosing the invoices for the related transactions, demanding the duty under the extended time limit and imposing penalty on the appellants will not be justified. The facts of the present case are parallel and we respectfully follow the precedent decisions and set aside the penalty, but, at the same time we would hold that as an assessee working under the Central Excise Rules, 1944 they cannot run away from their responsibilities. The appeal is disposed of in the above terms.