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Judgment
The court: This appeal is directed against a judgment and order dated December 30, 2005 by which the learned Tribunal negatived the contention of the appellant that the latter was entitled to Modvat credit. The views expressed by the learned Tribunal as far as relevant for our purpose are as follows:
(4) Heard both the sides, I find that the declarations which have been filed by the appellant mentions the tariff description of SOL-90 and SOL-110 as 2710 13 and 2710 11, respectively. The dealer who has supplied the above goods under his invoices has also shown the classification of this product under 2710 13. The invoice does not show that the inputs are benzene and toluene as claimed by the appellant. The invoice shows the description of the goods as SOL-90 or SOL-110 and they have specifically mentioned to avail of under Tariff Item 2710 11 or 2710 13 as the case may be. The goods falling under sub-headings 2710 11 and 2710 13 of the Central Excise Tariff are specifically excluded from the purview of Modvat benefit during the relevant period under Notification No. 5/1994-CE (N.T.) as amended from time to time. I agree with the finding of the Commissioner (Appeals) that the provision is so clear that there was no scope of any misconstruction of the notification and doubt about the Modvat eligibility in respect of the excisable goods in question.
Mr. Lahiri, learned senior advocate, appearing in support of the appeal has taken two points:
(a) The appellant had really purchased benzene and toluene but the Department has wrongfully disallowed the Modvat credit. He has drawn our attention to page 97, which is a copy of Notification (No. 5/1994) by which various articles, indicated therein, attract the benefit of Modvat credit.
From page 102 of the paperbook, it appears that benzene and toluene attract such benefit. Mr. Lahiri contended that the appellant had in fact purchased benzene and toluene and, therefore, the benefit of Modvat credit was attracted. The appellant did not do anything wrong in taking the benefit thereof.
(b) The next submission advanced by Mr. Lahiri was that neither the show-cause notice nor the adjudication order indicates as to which clause of rule 173Q of the Central Excise Rules was sought to be pressed into service for the purpose of penalising the appellant. Therefore, the penalty imposed is without the authority of law.
He in support of his submission drew our attention to a judgment in the case of Amrit Foods v. CCE reported in [2006] 6 RC 435 : [2005] 190 ELT 433 (SC), wherein there Lordships took the following view (page 438 of 6 RC):
The Revenue has preferred an appeal from the order of the Tribunal setting aside the imposition of penalty under rule 173Q of the Central Excise Rules, 1944. The Tribunal has set aside the order of the Commissioner on the ground that neither the show-cause notice nor the order of the Commissioner specified which particular clause of rule 173Q had been allegedly contravened by the appellant. We are of the view that the finding of the Tribunal is correct. Rule 173Q contains six clauses the contents of which are not same. It was, therefore, necessary for the assessee to be put on notice as to the exact nature of contravention for which the assessee was liable under the provisions of rule 173Q. This not having been done the Tribunal''s finding cannot be faulted. The appeal is, accordingly, dismissed with no order as to costs.
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 whereof the Modvat credit was availed of, 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 paperbook 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.
Notification No. 5/1994 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.
The second submission advanced by Mr. Lahiri is without any merit. In the case of Amrit Foods [2006] 6 RC 435, 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 of 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 [2006] 6 RC 435 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.
This appeal is dismissed. Interim order, if any, is vacated.
After the appeal came up for hearing before us we were told that the appeal is yet to be admitted. Considering that without even admission, an interim order had been passed on July 3, 2006, we decided to hear out the matter once for all and, accordingly, the matter has been heard in the presence of the learned advocates for both the parties.
After the order and judgment was dictated, Mr. Lahiri, learned senior advocate, pointed out that his client has already furnished a bank guarantee for a sum of Rs. 5 lakhs and has also deposited in cash a sum of Rs. 1 lakh. The duty and penalty together aggregate to a sum of Rs. 5,49,024. Mr. Lahiri submitted that the Department is at liberty to encash the bank guarantee and to pay back the balance to the appellant. This is a fair submission. Ms. Sarkar did not raise any objection either. The Department shall, therefore, be at liberty to encash the bank guarantee and within thirty days from the date of encashment the balance amount shall be refunded to the appellant by an account payee cheque. Parties shall bear their own costs.