2016 (8) TMI 1249 - AT - Central Excise

Penalty - appellant is a registered dealer but found non-existent at the time of visit - Held that - the evidence produced by the appellant is having evidential value - the Revenue has produced inculpatory statement of various witnesses. Those witnesses have not been examined from Section 9D of the Central Excise Act 1944. In that circumstances the statements of witnesses have no evidential value. In these circumstances benefit of doubt goes in favour of the appellants therefore the impugned order deserves no merits - penalty set aside. With regard to the registration certificate as the appellants itself have stopped working since 2008. Therefore the order of withdrawal registration certificate stands confirmed w.e.f. 2008. Appeal allowed - decided in favor of appellant.

Summary

Issues involved: Imposition of penalty on registered dealer for non-existence at premises, misuse of registration for fraudulent activities, cancellation of registration certificate, imposition of penalty under Rule 26 of Central Excise Rules, 2002.

The judgment by the Appellate Tribunal CESTAT CHANDIGARH involved the imposition of penalties on two appellants who were registered dealers but found non-existent at their premises during a visit. The investigation revealed that the appellants were not operating from the said premises, leading to allegations of misusing their registration to issue invoices for fraudulent Cenvat credit. Show cause notices were issued for cancellation of registration and penalty under Rule 26 of the Central Excise Rules, 2002. The registration was canceled, and penalties were imposed. The appellants challenged this decision.

In the hearing, the appellants' counsel argued that between 2003-2008, the appellants were operating as registered dealers at the premises, supported by the landlord's income tax returns showing rent received from the appellants. The income tax returns were assessed, indicating the appellants' existence at the premises until 2008. The Revenue failed to produce contrary evidence regarding the premises' rental status. The Revenue presented witness statements under Section 9D of the Central Excise Act, 1944, but as the witnesses were not examined, their statements held no evidential value. Consequently, the benefit of doubt favored the appellants, leading to the setting aside of the imposed penalties.

Regarding the registration certificate, since the appellants ceased operations in 2008, the withdrawal of the registration certificate was confirmed from that year onwards. Consequently, the appeals were disposed of, with any consequential relief granted. The judgment emphasized the importance of evidence and proper examination of witnesses in establishing facts and determining penalties or cancellations in such cases.