2008 (8) TMI 684 - AT - Central Excise

Stay/Dispensation of pre-deposit of Penalty - Rule 25 of Central Excise Rules - present dispute is prior to 1-3-2007 - Held that - the applicants issued invoices without supplying any goods on the strength of which credit has been availed by their customers. The applicants are duty bound to maintain time and correct stock of excisable goods and they are duty bound to issue invoices which shall contain description, classification, time and duty of removal, rate of duty, quantity and value of goods and duty payable thereon - In these circumstances, as the applicant being a registered dealer has not complied with the condition of the Central Excise Rules, prima facie, we find that it is not a fit case for total waiver of penalty. The applicants are directed to deposit 25% of the penalties imposed within a period of eight weeks - decided partly in favor of applicant.

Summary

Issues:
Application for waiver of pre-deposit of penalties under Rule 25 of Central Excise Rules. Interpretation of contravention of Central Excise Rules and Cenvat Credit Rules. Compliance of maintaining daily stock account under Rule 10 of Central Excise Rules by registered dealers. Authority to issue modvatable invoices without actual supply of goods by registered dealers.

Analysis:
The applicant filed applications seeking waiver of penalties imposed under Rule 25 of Central Excise Rules. The penalties were imposed for issuing invoices without supplying any inputs, leading customers to avail credit based on these invoices. The contention was that no contravention of Central Excise Rules occurred, but rather of the Cenvat Credit Rules, which did not have a penal clause for such contraventions before 1-3-2007. The Tribunal noted that the penalties under Rule 25 were not sustainable for the period before the introduction of a specific penalty rule on 1-3-2007.

The Revenue argued that the applicants, registered under Central Excise Rules as dealers, issued modvatable invoices without receiving raw materials and without maintaining proper stock accounts as required by Rule 10 of Central Excise Rules. This action was deemed a contravention of the provisions, as dealers are obligated to maintain accurate stock records and issue invoices correctly detailing goods, duty, quantity, and value. The Revenue emphasized that the applicants' actions violated the Central Excise Rules.

The Tribunal found that the applicants, as registered dealers, were authorized to issue modvatable invoices for goods supplied. However, in this case, the applicants issued invoices without actual supply of goods, enabling customers to avail credit. As registered dealers, they were obligated to maintain accurate stock records and issue proper invoices, which they failed to do. Consequently, the Tribunal directed the applicants to deposit 25% of the penalties within eight weeks, with the remaining amount waived for appeal hearing purposes. The case was adjourned for compliance reporting.

In conclusion, the judgment addressed the waiver of penalties under Rule 25 of Central Excise Rules, the distinction between contraventions of Central Excise Rules and Cenvat Credit Rules, the obligation of registered dealers to maintain stock accounts under Rule 10, and the responsibility of dealers to issue accurate invoices. The decision balanced the enforcement of rules with the opportunity for partial penalty waiver based on compliance.