2011 (4) TMI 611 - AT - Central Excise

Demand - Concessional penalty u/s 11AC - The statement of the representative of the supplier and the recipient company show that, on the preponderance of probability, the appellant company has merely received the invoices without receipt of the goods - Therefore the penalty on them is warranted - However, the submissions of the learned Advocate that there is no justification for separate penalties both under section 11AC and Rule 25 of the Rules appears reasonable and deserves to be accepted - The penalty of Rs.30,000/- imposed on the appellant company under Rule 25 deserved to be set aside - As per the benefit of concessional penalty under proviso to section 11AC should be extended in the light of the decision of the Hon ble High Court in the case of K.P.Pouches Pvt.Ltd. vs. Union of India (2008 -TMI - 30328 - HIGH COURT OF DELHI) - Appellant company is given an option to pay 25% of the penalty alongwith interest within a period of thirty days from today.

Summary

Issues:
1. Imposition of penalties under section 11AC and Central Excise Rules on the appellant company.
2. Validity of the statement by the proprietor admitting to issuing fake invoices.
3. Justification of penalties imposed on the appellant director.
4. Benefit of concessional penalty under proviso to section 11AC.

Analysis:
1. The case involved two appeals arising from a common order passed by the Commissioner (Appeals) regarding the issuance of fake invoices by M/s. Sulabh Impex Incorporation. The appellant company was found to have received invoices without actual receipt of goods, leading to penalties under section 11AC and Central Excise Rules.

2. The proprietor, in his statement, admitted to issuing fake invoices without supplying goods, supported by fake bills of entry. Although the appellant director did not fully accept the statement, he paid the duty involved. The Tribunal noted that the appellant company had only challenged the penalties imposed, not the demand itself, given the admission of invoice issuance without goods supply.

3. The Tribunal considered the justification for penalties imposed on the appellant company and director. It was found that while penalties under section 11AC were upheld, the penalty under Rule 25 of Central Excise Rules was set aside. The appellant company was given the option to pay 25% of the penalty along with interest within a specified period.

4. The appellant sought the benefit of a concessional penalty under the proviso to section 11AC, citing a relevant court decision. The Tribunal acknowledged the submissions and allowed the appeal filed by the appellant director, setting aside the penalty under Rule 25, and providing the appellant company with the option to pay a reduced penalty amount within a specified timeframe.

This detailed analysis of the judgment highlights the key issues addressed by the Appellate Tribunal CESTAT, New Delhi, regarding the penalties imposed on the appellant company and director in a case involving fake invoices and non-receipt of goods.