2015 (9) TMI 1475 - AT - Central Excise

Imposition of penalty under Rule 25 of the Central Excise Rules, 2002 - second stage dealer - brass pipes - copper ingots - Held that - there was no movement of goods in the chain of supply from the manufacture to the ultimate buyer, who availed the fraudulent cenvat credit of Central Excise duty indicated in the invoices. The appellant has also not specifically provided any evidence to counter the allegation of the Central Excise Department that the disputed goods have been received by it and supplied to the buyers, entitling them to take cenvat credit - imposition of penalty justified - appeal dismissed - decided against appellant.

Summary

Issues:
Imposition of penalty under Rule 25 of the Central Excise Rules, 2002 based on fraudulent transactions involving brass pipes and copper ingots.

Analysis:
The appellant, a second stage dealer registered with the Central Excise Department, appealed against a penalty of Rs. 2,404,902 imposed under Rule 25 of the Central Excise Rules, 2002. The case involved the appellant purchasing brass pipes from a first stage dealer, who in turn claimed to have sourced them from a manufacturer. However, a search revealed discrepancies, with the manufacturer found incapable of producing brass pipes, and the first stage dealer supplying copper ingots instead of brass pipes to the appellant. The Central Excise Authorities imposed penalties on both the appellant and the first stage dealer based on these findings.

The appellant's advocate argued that the appellant had received brass pipes with valid documents from the first stage dealer and had supplied them to customers, disputing the imposition of penalties under Rule 25. On the contrary, the Department representative contended that the transactions were fraudulent, with no actual goods involved, aiming to defraud government revenue. Citing legal precedents, the Department justified the penalties under Rule 25.

After hearing both sides, the tribunal noted the lack of evidence showing the movement of goods in the supply chain, leading to fraudulent cenvat credit claims. As the appellant failed to refute the Department's allegations and considering the legal precedents cited, the tribunal upheld the penalties imposed under Rule 25 by the Commissioner (Appeals). The tribunal emphasized that passing cenvat credit without actual goods supply attracts penalties as per the law.

In conclusion, the tribunal found no merit in the appellant's case and dismissed the appeal, affirming the imposition of penalties under Rule 25 of the Central Excise Rules, 2002.