2011 (7) TMI 298 - AT - Central Excise

Penalty under Section 11AC - Credit avail on the basis of fake invoices - There was no clear finding of the Commissioner (Appeals) or the original adjudicating authority regarding any verification of the invoices concerned to prove that they are fake - Accordingly the case is remanded for denovo adjudication by the original adjudicating authority by giving necessary opportunity to the appellant as well as the Revenue to putforth their case.

Summary

Issues:
1. Imposition of penalty and duty liability with an option for reduced penalty.
2. Lack of clear finding on verification of fake invoices.
3. Requirement for denovo adjudication based on judgments cited.

Analysis:

Issue 1: Imposition of penalty and duty liability with an option for reduced penalty
The appeal pertains to the imposition of penalty and duty liability on M/s. Jagdamba Printers Pvt. Ltd. for availing cenvat credit on fake invoices. The Commissioner (Appeals) confirmed the duty but granted the assessee an option to pay a reduced penalty of 25%. The appeal by the Revenue challenges this decision, contending that the Commissioner (Appeals) should not have allowed the reduced penalty. The appellate authority cited the judgment of the Hon'ble Supreme Court in the case of Sony India Ltd. Vs. CCE Delhi, emphasizing that there is no discretionary power to reduce the penalty imposed under Section 11AC. The Tribunal directed a reexamination of the case, highlighting the need for compliance with the Supreme Court's ruling.

Issue 2: Lack of clear finding on verification of fake invoices
A crucial aspect highlighted in the judgment is the absence of a clear finding by the Commissioner (Appeals) or the original adjudicating authority regarding the verification of the invoices to establish their authenticity. The lack of conclusive evidence regarding the authenticity of the invoices raises concerns about the basis for imposing penalties and duties. The Tribunal emphasized the importance of conducting a proper verification of the invoices to determine their validity, underscoring the need for a thorough examination of the facts in the case.

Issue 3: Requirement for denovo adjudication based on judgments cited
In the interest of justice and in line with the judgments cited, the Tribunal ordered a denovo adjudication of the case by the original adjudicating authority. The decision to remand the case for fresh adjudication within a specified timeframe of ninety days reflects the Tribunal's commitment to ensuring a fair and comprehensive review of the matter. The denovo adjudication process aims to provide both the appellant and the Revenue with the opportunity to present their arguments effectively, aligning with the principles of natural justice and due process.

This comprehensive analysis of the judgment underscores the significance of legal principles, procedural fairness, and adherence to judicial precedents in the resolution of complex legal issues related to penalty imposition, duty liability, and verification of invoices in taxation matters.