2009 (10) TMI 812 - AT - Central Excise

Summary

Issues:
1. Imposition of penalty under Rule 25 of the Central Excise Rules, 2002 without invoking it in the show cause notice.
2. Failure of the appellant to issue invoices for goods sold.
3. Appellant's obligation to account for duty paid goods received.

Issue 1: Imposition of penalty under Rule 25 of the Central Excise Rules, 2002 without invoking it in the show cause notice.

The case involved an appeal against penalties imposed under Rule 25 of the Central Excise Rules, 2002. The appellant argued that since Rule 25 was not specifically invoked in the show cause notice, the penalty could not be sustained. The appellant relied on legal precedents, including a Supreme Court decision, to support this argument. However, the Tribunal rejected this contention, emphasizing that the nature of the violation was clearly disclosed in the show cause notice. The Tribunal held that the failure to mention the specific rule or sub-rule did not prejudice the appellant as long as the violation was adequately communicated. The Tribunal distinguished the cited legal precedents, stating that the facts of those cases were different from the present case. Ultimately, the Tribunal upheld the penalty under Rule 25, concluding that the appellant had failed in its obligation as a registered dealer.

Issue 2: Failure of the appellant to issue invoices for goods sold.

The appellant was found to have sold goods without issuing invoices, leading to a shortage of inputs in their records. The Tribunal considered this behavior highly irresponsible and a violation of the Central Excise Rules. The Tribunal highlighted that a registered dealer is obligated to account for goods received and their disposal as permitted by the rules. The failure to issue invoices for goods sold was deemed a clear violation of Rule 11 of the Central Excise Rules. The Tribunal noted that the appellant's explanation for the shortage of inputs, including selling goods without bills, was unacceptable. The Tribunal emphasized that accounting for goods received and disposed of is a fundamental requirement for registered dealers, and the appellant's actions did not align with this obligation.

Issue 3: Appellant's obligation to account for duty paid goods received.

As a registered dealer, the appellant had a duty to properly account for duty paid goods received and pass on the Cenvat credit as required. The Tribunal observed that despite the appellant's records showing a significant quantity of inputs, no trace of these inputs was found during an inspection. The appellant's admission of selling goods without bills and the absence of proper accounting for the goods received raised serious concerns about their compliance with regulatory requirements. The Tribunal reiterated that accounting for goods received and their disposal is essential for registered dealers, and the appellant's failure to do so constituted a violation of their obligations. Consequently, the Tribunal upheld the penalty imposed by the Commissioner (Appeals) under Rule 25 of the Central Excise Rules, 2002.

In conclusion, the Tribunal rejected the appeal and upheld the penalty imposed on the appellant under Rule 25 of the Central Excise Rules, 2002. The judgment emphasized the importance of complying with regulatory requirements, including proper accounting for duty paid goods received and sold. The Tribunal's decision highlighted the serious consequences of failing to fulfill obligations as a registered dealer under the Central Excise Rules.