2017 (3) TMI 1619 - AT - Central Excise

Validity of second SCN - imposition of penalty - initially the SCN were issued and no penalty was imposed on the appellant, on the same facts and investigation, the second SCN issued imposing penalty - Held that - As on the same investigation, the SCN was issued and no penalty imposed on the appellant. Therefore, on the same investigation another SCN cannot be issued to the appellant - as SCN is not maintainable against the appellant, no penalty is imposable on the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues:
Impugned order imposing penalty on the appellant based on being the mastermind of a fraud scheme involving fake invoices.

Analysis:
The appellant appealed against an order imposing a penalty of ?44,90,777. The case involved the appellant, who was the authorized signatory of a company issuing fake invoices to avail inadmissible Cenvat credit. Initially, a show cause notice was issued to all parties involved, including the appellant, but no penalty was imposed as another individual was identified as the mastermind. Subsequently, it was alleged that the appellant was the mastermind, leading to a second show cause notice and the imposition of a penalty equivalent to the duty amount. The appellant challenged this penalty.

The appellant argued that since a previous show cause notice had been adjudicated with no penalty imposed on them, issuing a second notice based on the same investigation was not maintainable. On the other hand, the respondent contended that the penalty was justified due to the appellant's role as the mastermind. After hearing both parties, the tribunal examined the case history. It was noted that the initial show cause notice had identified another individual as the mastermind, and no penalty was imposed on the appellant. Therefore, issuing a subsequent notice to the appellant based on the same investigation was deemed impermissible. Consequently, the tribunal set aside the impugned order imposing the penalty on the appellant.

In conclusion, the tribunal allowed the appeal and provided any consequential relief. The judgment emphasized the principle that a show cause notice cannot be maintained against an individual if a previous notice based on the same investigation had already been adjudicated without imposing a penalty.