Customs, Excise and Gold Tribunal Bangalore Bharat Electronics Ltd. vs Commissioner Of C. Ex. on 30 November, 2005 ORDER S.L. Peeran, Member (J) 1. The appellant is a PSU Unit. They had obtained permission from the Committee of Secretaries. They are contesting the imposition of penalty and interest in the matter. The appellants have already reversed Modvat credit of 8% to the extent of Rs. 92,63,374.40. The allegation against the appellant was that they had not maintained registers with regard to the inputs used for dutiable and exempted components. During the relevant period, there was no machinery created for recovery of 8% of the price of all goods cleared for Defence use in terms of the Exemption Notifications prevailing then. The Tribunal, in the case of Pushpaman Forgings Pvt. Ltd. v. CCE, Mumbai VII 2002 (48) RLT 107 (CEGATMum.) held that the amount of 8%, which is required to be reversed in terms of Rule 57CC, is neither 'Modvat credit nor a duty of excise'. Therefore, it was held that the said amount cannot be recovered in terms of Section 11A or Rule 571(1). It was further held that there was no mechanism to recover such duties and the same cannot be enforced This judgment was upheld by the Apex Court in 2003 (153) E.L.T. A89 (S.C.). However, the Government of India amended the provisions of Rule 57CC in terms of Clause 82 of the Finance Act, 2005. The amended provisions provide for recovery of the amounts retrospectively. The amended Rule introduced through Clause 82 of the Finance Act, 2005 itself carved out an explanation as follows : Explanation : For the removal of doubts, it is hereby declared that no act or omission on the part of any person shall be punishable as an offence which would not have been so punishable if this section had not come into force. 2. It is the contention of the appellants that in this circumstance, as there was no fraud, wilful misstatement, collusion or suppression of facts or contravention of any of the provisions of the Act, or the Rules made thereunder with intention to evade payment of duty, therefore, the question of invoking larger period or imposing penalty or recovery of interest is not as per law. They pray for setting aside the imposition of penalty and interest. It is further submitted that the Apex Court itself, in the case of Chandrapur Magnet Wires (P) Ltd. v. CCE, Nagpur, has clearly held that Modvat credit cannot be denied for failure to maintain registers. The relevant portion of the said judgment is noted hereinbelow : The case of the Excise Department is that the reversal of credit entries is not permitted by the rules. The assessee is not entitled to remove the copper wires without payment of duty since credit of the duty paid on the inputs used in the manufacture of copper wire had already been taken in accordance with Rule 57 A. Once appropriate entries have been made in the register, there is no rule under which the process could be reversed. It is true that the assessee has not maintained separate accounts or segregated the inputs utilized for manufacture of dutiable goods and duty free goods, as should have been done. But our attention was drawn to a departmental circular according to which in a case where the manufacturer produces dutiable final products and also final products which are exempt from duty and it is not reasonably possible to segregate inputs utilized in the manufacture of the dutiable final products from the final products which are exempt from duty. In such a case, the manufacturer mm/ take credit of duty paid on all the inputs used in the manufacture affinal products on which duty will have to be paid. In view of this clarification by the Department, we see no reason why the assesses cannot make a debit entry in the credit account before removal of the exempted final product. In such a situation, it cannot be said that the assessee has taken credit for the duty paid on the inputs utilized in the manufacture of the final exempted product under Rule 57A. In other words, the claim for exemption of duty on the disputed goods cannot be denied on the plea that the assessee has taken credit of the duty paid on the inputs used in the manufacture of these goods. The learned Counsel, in the circumstance, submits that there was no suppression of facts and hence larger period was not invokable in the present case for imposition of penalty and interest. He relies on the judgment of the Tribunal rendered in similar case setting aside penalty and interest as in the case of Tube Investments of India Ltd. v. CCE, Madurai 2004 (177) E.L.T. 880 (Tri.Chennai). He submits that the appellant is a PSU Unit and they would not have gained anything by suppressing any facts. Therefore, in terms of the Explanation to Clause 82 of the Finance Act, 2005, penalty is also not leviable. 4. The learned Counsel further submitted that the matter was delayed before the Commissioner for want of clearance certific