2009 (12) TMI 797 - AT - Central Excise

Summary

Issues:
Penalties imposed under Rule 25 of Central Excise Rules, 2002, Rule 15 of Cenvat Credit Rules, 2004, and Rule 26 of Central Excise Rules, 2002.

Analysis:
The appellant challenged penalties imposed under three different rules. The appellant's counsel argued that Rule 25 of the Central Excise Rules did not apply as the appellant was a registered dealer, not a manufacturer, and maintained records. The Adjudicating Authority's conclusion that the appellant did not receive inputs was deemed incorrect. Regarding Rule 15 of Cenvat Credit Rules, it was noted that this rule applies to those who have availed Cenvat credit under Rule 3, which the appellant had not. The penalty under Rule 26 of the Central Excise Rules was found to be inapplicable as the infraction occurred before the rule's enactment and was not invoked in the show cause notice. The Tribunal held that the appellant had made a prima facie case for waiver of pre-deposit of the penalties imposed, allowing the applications for waiver and staying the recovery until the appeals' disposal.

The case originated from an investigation against other companies, with the appellant allegedly involved in receiving invoices without material delivery. The department argued that the appellant violated Rule 25 by not accounting for goods received and only making dispatch entries. It was contended that the appellant, as a registered dealer, should have properly accounted for goods and violated Cenvat Credit Rules by taking credit without receiving inputs. The department asserted that the appellant's actions led to violations for which penalties were rightly imposed. However, the Tribunal found the penalties imposed under the mentioned rules not applicable or incorrectly applied in the appellant's case.

In conclusion, the Tribunal found that the penalties imposed on the appellant were not justified under the relevant rules. The appellant's status as a registered dealer, lack of Cenvat credit availed, and the timing of the infraction in relation to Rule 26 of the Central Excise Rules were crucial factors in the Tribunal's decision to allow the waiver of pre-deposit and stay the recovery of penalties until the appeals' final disposal.