2010 (7) TMI 866 - AT - Central Excise

Summary

Issues:
Appeal against imposition of penalty under Rule 25 of Central Excise Rules, 2002 without invoking Section 11AC.

Detailed Analysis:

1. Background and Imposition of Penalty:
The appellant appealed against the imposition of a penalty of Rs. 2,93,182 under Rule 25 of the Central Excise Rules, 2002, without invoking Section 11AC. The appellant was accused of issuing Cenvatable invoices as a second stage dealer without physically supplying the goods, enabling the beneficiary to avail inadmissible CENVAT credit. The lower authority confirmed the demand against the manufacturer who availed the credit and imposed a penalty on the appellant as well.

2. Contention of the Appellant:
The appellant argued that Rule 25 of the Central Excise Rules, 2000 is not applicable to a dealer and that Section 11AC was not invoked in the show-cause notice.

3. Arguments by the Learned DR:
The Learned DR contended that Rule 25 should be read with Section 11AC as it begins with "subject to the provisions of Section 11AC of the Act." The DR cited Tribunal decisions in support of the penalty imposed under Rule 25.

4. Judgment and Legal Analysis:
The Tribunal noted that Section 11AC was not invoked in the case, and the lower authority and Commissioner (Appeals) exceeded the show-cause notice's scope. The Tribunal disagreed with the DR's argument that Rule 25 automatically applies whenever invoked, highlighting the lack of satisfactory answers on the contravened sub-rule. The Tribunal differentiated the cited cases, stating they were not applicable to the present case, leading to the conclusion that the penalty under Rule 25 on the appellant was not legally sustainable.

5. Conclusion:
In light of the above analysis, the Tribunal allowed the appeal and set aside the impugned order, ruling in favor of the appellant. The judgment emphasized the importance of correctly invoking relevant provisions and rules while imposing penalties under Central Excise laws.

This detailed analysis of the judgment provides a comprehensive understanding of the legal issues involved and the Tribunal's decision in this case.