2003 (9) TMI 467 - Commissioner - Central Excise

Summary

Issues:
1. Fraudulent credit taken by M/s. Senthil Engineering Company (SEC).
2. Clearances made without sufficient balance leading to duty evasion.
3. Imposition of penalty under Section 11AC of Central Excise Act.
4. Refraining from imposing penalty under Rule 173Q of Central Excise Rules.

Analysis:
1. The case involved M/s. Senthil Engineering Company (SEC) fraudulently taking credit of Rs. 90,000 in their PLA account and clearing goods under fraudulent credit against invoice numbers 286, 287, 289. The Divisional Preventive Unit registered an offense case due to clearances made without sufficient balance, constituting an offense of duty evasion.

2. The statements of individuals involved, including the Manager of M/s. Venkateswara Electrical Industries Pvt. Ltd. (VEI) and SEC, highlighted the forgery committed by an individual named Shri Vellaisamy. Despite the amount being paid in favor of VEI, the credit was not reflected in VEI's PLA account, showcasing discrepancies in the transactions. The Lower Adjudicator confirmed the demand and imposed a penalty under Section 11AC of the Central Excise Act.

3. The judgment emphasized the gravity of the situation, labeling the actions as forgery, fraud, and chicanery. Citing legal precedents, the judgment noted that fraud nullifies everything, and forgery is an unpardonable offense. The Commissioner expressed astonishment at the Lower Adjudicator's failure to impose a penalty under Rule 173Q of the Central Excise Rules, deeming it imperative and mandatory. Consequently, a penalty of Rs. 50,000 was imposed under Rule 173Q of CER, 1944.

4. The Commissioner, in a poetic analogy, conveyed the severity of the situation to the Appellant, ultimately rejecting the appeal and ordering the Appellant to pay Rs. 50,000 as a penalty under Rule 173Q of CER, 1944. The judgment underscored the legal principles that fraud and forgery cannot be condoned, emphasizing the need for accountability in such cases.