Home Case Index All Cases Central Excise Central Excise + AT Central Excise - 2011 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2011 (5) TMI 722 - AT - Central ExciseStay application - The case made out is that they manufactured goods of good quality described it as defective goods issued invoices to one party but sold the goods to somebody else. So the goods which were sold to the actual buyer was cleared other than under a proper invoice prescribed under the central Excise rules. So clearly the provisions of Rule 25 are applicable against the Appellant. - 50% stay granted. Stay Applications - whether any penalty can be imposed under provisions of Rule 25 of Central Excise Rules, 2002, on a dealer who just received fake invoices, took fraudulent Cenvat credit and issued fake invoices to pass on such fraudulent credit to others - penalty cannot be imposed under Rule 25 in such cases - requirement of pre-deposit waived for admission of the appeal - stay on collection of such penalty during the pendency of the appeal
Issues Involved:
1. Alleged fraudulent declaration and sale of defective goods. 2. Applicability of Rule 25 of the Central Excise Rules, 2002. 3. Validity of penalties imposed on the appellant firm and its partner. 4. Penalties on registered dealers for issuing fraudulent invoices. Issue-Wise Detailed Analysis: 1. Alleged fraudulent declaration and sale of defective goods: The Appellant firm, a manufacturer of steel products, was accused by the department of declaring a substantial portion of their production as defective and showing its sale to furnace units during 2004-2005. The department alleged that the goods were sold to buyers without proper invoices, facilitating fraudulent credit of duty shown to be paid. The Show Cause Notice (SCN) highlighted discrepancies such as a significant drop in the yield of good quality products and the sale of defective goods at prices equal to or higher than normal goods. 2. Applicability of Rule 25 of the Central Excise Rules, 2002: The Appellants argued that Rule 25, which is invoked when goods are liable to confiscation, was not applicable as the case involved no actual goods but only invoices. The Tribunal, however, found this argument without merit, stating that the Appellants manufactured good quality goods, described them as defective, and issued invoices to one party while selling the goods to another, thus violating the provisions of Rule 25. 3. Validity of penalties imposed on the appellant firm and its partner: The SCN proposed penalties under Rule 25 of the Central Excise Rules, 2002, read with Rules 13 and 15 of the Cenvat Credit Rules, 2004. The Tribunal directed the appellant firm to deposit 50% of the penalty imposed for the admission of the appeal, finding the department's case prima facie strong based on the evidence presented, including expert opinions and buyer statements. 4. Penalties on registered dealers for issuing fraudulent invoices: Several registered dealers, including M/s. Reena Ispat Udyog, M/s. Surinder Kumar Bharat Bhushan, and M/s. Prayag Ispat Project, were penalized for issuing fraudulent invoices to pass on Cenvat credit. The Tribunal found that the question of imposing penalties under Rule 25 on dealers who only dealt with invoices was debatable. Consequently, it waived the requirement of pre-deposit for admission of their appeals and stayed the collection of penalties during the pendency of the appeals. Conclusion: The Tribunal's judgment addressed multiple interconnected appeals and stay applications, primarily focusing on the fraudulent declaration of defective goods and the applicability of Rule 25. The appellant firm was directed to deposit 50% of the penalty, while the registered dealers received waivers on pre-deposit requirements. The comprehensive analysis upheld the department's case against the Appellant firm while providing relief to the dealers pending further adjudication.
|