2011 (3) TMI 866 - AT - Central Excise

Penalty - Cenvat credit had been taken on the basis of the bogus invoices - It has, however, been pleaded that since the appellant had received the goods from M/s. Rajdhani Metals and as such, they had no knowledge that the invoices being issued by M/s. Ganpati Trade Links were bogus, no penalty should be imposed on them. It has also been pleaded that Shri Abhay Jain stated that he had taken the cash from Shri Sunil Kumar Mittal and had paid same to M/s. Rajdhani Metals. This plea of the appellant is not acceptable as even if the actual supply of scrap was from M/s. Rajdhani Metals, the same could happen only on instruction, from the appellant. - Decided against the assessee.

Summary

Issues:
1. Disallowance of Cenvat credit and imposition of penalty on the appellant based on allegedly bogus invoices issued by M/s. Ganpati Trade Links.
2. Accusation against the appellant for taking credit on the basis of cenvatable invoices without knowledge of the alleged bogus nature of the invoices.
3. Dispute regarding the appellant's justification for the imposition of penalty in the case of alleged receipt of goods from a different supplier, M/s. Rajdhani Metals.

Analysis:
1. The appellant, a registered dealer, availed Cenvat credit amounting to Rs.34,498/- based on invoices for brass scrap from M/s. Ganpati Trade Links, which were later found to be bogus. The Assistant Commissioner disallowed the credit and imposed a penalty. The Commissioner (Appeals) upheld the decision, leading to the current appeal. The Tribunal noted that the invoices were indeed bogus, as confirmed by the statements of Shri Sunil Kumar Mittal, the proprietor of M/s. Ganpati Trade Links. The appellant's argument of receiving goods from M/s. Rajdhani Metals did not absolve them of liability, as the supply would have been on their instruction. Thus, the disallowance of credit and penalty imposition were upheld, and the appeal was dismissed.

2. The appellant contended that they were unaware of the alleged bogus nature of the invoices issued by M/s. Ganpati Trade Links, as they had received the goods from M/s. Rajdhani Metals. However, the Tribunal found that even if the actual supply was from a different supplier, it would have been on the appellant's instruction, indicating their involvement. Therefore, lack of knowledge about the bogus nature of the invoices did not absolve the appellant of liability for taking wrongful Cenvat credit. The Tribunal upheld the penalty imposed on the appellant based on this reasoning.

3. The appellant argued that since they received the goods from M/s. Rajdhani Metals, they should not be penalized for the alleged bogus invoices from M/s. Ganpati Trade Links. However, the Tribunal rejected this argument, stating that any supply from M/s. Rajdhani Metals would have been on the appellant's instruction, indicating their involvement in the transaction. Therefore, the Tribunal found no justification for overturning the penalty imposed on the appellant, leading to the dismissal of the appeal.