Biological E. Ltd. Vs. Cce

Biological E. Ltd. vs Cce

Type Court Judgment Court Customs Excise and Service Tax Appellate Tribunal CESTAT Hyderabad Decided Oct 23, 2000

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Citation: sooperkanoon.com/19513
Court: Customs Excise and Service Tax Appellate Tribunal CESTAT Hyderabad
Judge: S Peeran, S T S.S.
Decided On: Oct 23, 2000
Subject: Service Tax

Case Summary

AI-generated summary - not the official court judgment text.

Service Tax

Key legal issue: Service Tax

Parties & Advocates

Appellant / Petitioner

Biological E. Ltd.

Advocate Shri. C.T. Krishnamurthy

Respondent

Cce

Legal References

Reported In: (2001)(94)LC696Tri(Hyd.)erabad

Excerpt

.....accounts went below by rs. 22,296/-. the excess credit taken was reversed by the appellants on 9.7.1998. therefore, he submits that the amount of rs. 25,000/- paid by the appellants towards penalty as pre-deposit should be refunded to them in the facts and circumstances of the case.4. shri section kannan, learned dr submits that the conduct in reversing the excess credit taken only on being pointed out by the range supdt. would induce to conclude that the penalty imposed is adequate. he submits that no further reduction in the penalty is necessary.5. we have considered the rival submissions and we find that the penalty is not a necessary corollary to infringement in the accounting error in the modvat record. rule 173q(bb) prescribes that if the appellant takes credit of duty which he knows or which he has reason to believe is not permissible under these rules, or does not utilize the inputs or the capital goods in the manner provided or utilize in contravention of any of the provisions of these rules, and does not render proper and true account of the receipt or dispose of the goods, then he shall be liable for payment of penalty under the above said rules. in the present case we find that the appellants are a professionally managed company and are paying regularly large amount of duty through their pla, rg 23a and other modvat account. they are regular importers of goods and are routinely taking modvat credit of the duty paid under be. therefore, in support of their plea of clerical mistake in the light of the material evidence that the clerk who had committed the so-called error was new to the job and also the management had failed to apprise and instruct the clerk in the required manner evidence is necessary, no such material evidence has been placed before us. we are therefore, of the view that penalty could be imposed in this case. however, the quantum of the same should be reduced to rs. 25,000/- under rule 173ql(bb) which would serve the requirement of.....

Full Judgment

1. This appeal has been filed by the appellants who are a reputed and professionally managed company and are availing Modvat credit on various items including items of imported goods. They took credit of the entire amount of duty shown in the Bill of Entry as paid by them, on 8.5.1998. The amount of credit which was not eligible was the basic customs duty paid as shown in the Bill of Entry amounting to Rs. 2,85,808/-. The excess amount of Modvat credit availed by the assessee was detected by the Range Office only in 7/98 and on their intimation to the appellants, they reversed the credit, of the basic customs duty as ineligible, of the said amount.

2. The appellants are aggrieved by the imposition of penalty of Rs. 50,000/-on them under Rule 173Q by the original authority and confirmed in appeal by the Commissioner (Appeals).

3. We have heard Shri C.T. Krishnamurthy, learned Counsel for the appellants who submitted that there was an error of accounting by a newly recruited Excise Clerk and their bona fides should be considered inasmuch as they are paying duty of more than rupees one crore per month as per the work sheet given in the paper book. The observation regarding the utilisation of excess credit of Rs. 2,85,808/- taken by the appellants was made on 15.6.1998, when the credit in their books of accounts went below by Rs. 22,296/-. The excess credit taken was reversed by the appellants on 9.7.1998. Therefore, he submits that the amount of Rs. 25,000/- paid by the appellants towards penalty as pre-deposit should be refunded to them in the facts and circumstances of the case.

4. Shri Section Kannan, learned DR submits that the conduct in reversing the excess credit taken only on being pointed out by the Range Supdt. would induce to conclude that the penalty imposed is adequate. He submits that no further reduction in the penalty is necessary.

5. We have considered the rival submissions and we find that the penalty is not a necessary corollary to infringement in the accounting error in the Modvat record. Rule 173Q(bb) prescribes that if the appellant takes credit of duty which he knows or which he has reason to believe is not permissible under these rules, or does not utilize the inputs or the capital goods in the manner provided or utilize in contravention of any of the provisions of these rules, and does not render proper and true account of the receipt or dispose of the goods, then he shall be liable for payment of penalty under the above said rules. In the present case we find that the appellants are a professionally managed Company and are paying regularly large amount of duty through their PLA, RG 23A and other Modvat account. They are regular importers of goods and are routinely taking Modvat credit of the duty paid under BE. Therefore, in support of their plea of clerical mistake in the light of the material evidence that the clerk who had committed the so-called error was new to the job and also the management had failed to apprise and instruct the clerk in the required manner evidence is necessary, no such material evidence has been placed before us. We are therefore, of the view that penalty could be imposed in this case. However, the quantum of the same should be reduced to Rs. 25,000/- under Rule 173Ql(bb) which would serve the requirement of the rules for infraction of the same as brought out in this case.

6. We, therefore, reduce the penalty to Rs. 25,000/- (Rupees Twenty Five Thousand). The appeal is thus partially allowed as modified herein. Any penalty in excess of Rs. 25,000/- paid should be refunded.

Same Court & Year Customs Excise and Service Tax Appellate Tribunal CESTAT Hyde... Same Parties Biological E. Ltd. vs Cce Same Subject Service Tax Same Judge S Peeran, S T S.S.