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2011 (3) TMI 133 - HC - Central ExciseRule 26(2) - Quantum of penalty - Question for consideration is whether penalty could be levied on the person who did not actually deliver the goods and merely issued a fake invoice which enabled wrong availing of cenvat credit and the extent of penalty which could be levied. - Held that - amended provisions will not apply to the acts committed prior to 1.3.2007. Inspite of non applicability of rule 26(2), penalty could be levied as the appellant was concerned in selling or dealing with the goods which were liable to confiscation inasmuch as the appellant claimed to have sold the goods in respect of which the cenvat credit was taken. In such a case, rule 25(1)(d) and 26(1) are also applicable. The person who purports to sell goods cannot say that he was not a person concerned with the selling of goods and merely issued invoice or that he did not contravene a provision relating to evasion of duty. The appellant issued invoices without delivery of goods with intent to enable evasion of duty to which effect a finding has been recorded and which finding has not been challenged. Quantum of penalty - The penalty prescribed is admittedly not the minimum. Its quantum will thus be in discretion to be exercised having regard to mitigating or aggravating circumstances. - Since in the present case the Tribunal has not considered the issue of quantum of penalty, the matter may require fresh consideration of the Tribunal to determine the quantum of penalty which ought to be levied on the appellant.
Issues:
1. Interpretation of penalty provisions under Central Excise Act, 1944. 2. Applicability of penalty rules to acts committed prior to the amendment. 3. Distinction in culpability for penalty imposition. 4. Exercise of discretion in determining penalty quantum. Issue 1: Interpretation of penalty provisions under Central Excise Act, 1944 The judgment addressed the imposition of penalties under Rule 25 and Rule 26 of the Central Excise Rules. It discussed the case of an appellant who was involved in facilitating the evasion of duty by issuing fake invoices. The Tribunal held that penalties under Rule 25 were applicable to individuals covered by its provisions, while penalties under Rule 26 could be imposed on persons even before the amendment if their role was covered under the unamended rule. The judgment cited relevant case laws and principles of statutory interpretation to support the decision regarding penalty imposition. Issue 2: Applicability of penalty rules to acts committed prior to the amendment The appellant argued that since the period of issuing invoices was before 1.3.2007, the penalty rule introduced on that date (Rule 26(2)) could not be invoked against them. The judgment referred to previous court orders that established the non-applicability of amended provisions to acts committed before the amendment. It was held that the amended provisions would not apply to acts committed prior to their enforcement. Issue 3: Distinction in culpability for penalty imposition The appellant contended that even if liable to pay duty, they should not be treated the same as the person who wrongfully availed of the credit. They argued for the application of the doctrine of proportionality in determining the extent of penalty based on culpability. The judgment acknowledged the need to consider the distinction in culpability between those directly evading duty and those enabling the evasion. It highlighted the importance of assessing mitigating or aggravating circumstances to determine the appropriate penalty. Issue 4: Exercise of discretion in determining penalty quantum The judgment emphasized that the penalty prescribed was not the minimum, granting discretion to the authority to consider mitigating or aggravating factors. It cited a Supreme Court observation regarding the exercise of discretion in imposing an appropriate penalty based on individual circumstances. As the Tribunal had not addressed the issue of penalty quantum, the matter was remanded for fresh consideration to determine the suitable penalty amount. The parties were directed to appear before the Tribunal for further proceedings on the specified date. This detailed analysis of the judgment provides insights into the interpretation of penalty provisions, the applicability of rules to past acts, the consideration of culpability for penalty imposition, and the exercise of discretion in determining penalty quantum.
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