AMITAVA LALA, RAJES KUMAR, JJ. - (1.) THIS appeal has been preferred by the Commissioner of Customs and Central Excise Meerut -I under section 35 -G (1) of the Central Excise Act, 1944 (hereinafter referred to as the "Act").
(2.) THE relevant questions placed before the Court are as follows : "(a) Whether the unit can claim MODVAT credit twice under trte law, given the fact that provisions of Rule 57 -U of the erstwhile rulea and section 11 -A of the Central Excise Act, 1944 were duly invoked in the said show cause notice dated 23.1.2001? (b) Any other question of law which Hon'ble Court deem fit and proper in the circumstances of the case." Therefore, let us go through the order impugned. The order impugned at follows : - "Credit of Rs. 1,57,846/ - : -It has been alleged in the show cause notice that the appellants cleared the damaged capital goods to M/s, Triveni Engineering Industries Ltd. without reversal of the credit under Rule 57 -T (7) during the warranty period. It has further been alleged that M/g. Triveni Engineering Industries Ltd. supplied the capital goods to the ap ­pellants which shows that the goods supplied under the cover of invoice by the supplier and the goods supplied after rectification or replacing of the original goods which had been taken as damaged. Commissioner (Appeals) observed that appellants received the new goods on payment of duty from the supplier. He also observed that MODVAT credit is admissible on the impugned goods. However, the appellant did not reverse the credit by clearance of the damaged goods and therefore, the Commissioner (Appeals) directed that the impugned MODVAT credit is admissible subject to reversal of MODVAT credit since there cannot be double credit on the same capital goods. I have perused through the findings of the Commissioner (Appeals). It is seen from the order that Commissioner (Appeals) held that the appel ­lants received new capital goods under the cover of Central Excise invoice from the supplier. Therefore, there is no scope of availment of double credit on the same capital goods. The learned D.R. submitted that they were li ­able to reverse the credit at the time of clearance of damaged capital goods under Rule 57 -T (7) of the said Rules. To my mind, the revenue at best, made demand of duty on the clearance of the damaged goods cleared under Rule 57 -T challan if it was not returned back. However, there is no provision for adjustment of credit against the clearance of the damaged goods and the re ­ceipt of new capital goods. Therefore, denial of credit of Rs. 1,57,846/ - is set aside."
(3.) IN view of the aforesaid, the Appellate Tribunal consequently held re ­garding penalty as follows : - "Regarding penalty, it is seen that the Commissioner (Appeals) has observed that there is no mala fide to misuse the MODVAT facility. I find that when there is no mala fide intention and the issue involved is inter ­pretation of MODVAT Rules, and the imposition of penalty is not justified. Accordingly, penalty is set aside. The appeal is disposed of in the above terms." ;