2011 (7) TMI 970 - AT - Central Excise

Penalty - whether penalty could be levied on the person who did not actually deliver the goods and merely issued a fake invoice which enabled wrong availing of cenvat credit and the extent of penalty which could be levied. - appellant contended that he got enriched only to the extent of 1 to 3% of the credit passed on and that, therefore, they cannot be held to be equal partners in the commission of offence - held that - merely because the monetary benefit differs from offender to offender in relation to the offence relating to the same act by various persons that cannot be a criteria to hold that the gravity of offence would differ from person to person in such cases. - penalty confirmed.

Issues:
1. Remand by the Hon'ble High Court to determine the quantum of penalty afresh.
2. Applicability of penalty for issuing fake invoices enabling wrong availing of cenvat credit.
3. Jurisdiction to levy penalty equal to the amount of duty evaded.
4. Discretion of the Tribunal in fixing the quantum of penalty.
5. Differentiation between manufacturers and registered dealers in penalty imposition.
6. Factors to be considered while imposing penalty.
7. Gravity of the offence in passing on credit without accompanying goods.

Analysis:
1. The judgment involves a remand by the Hon'ble High Court to determine the quantum of penalty afresh. The High Court observed that the quantum of penalty, when in the discretion of the Tribunal, must consider all facts and circumstances. The matters were heard together, and the appellants were given directions to appeal before the Tribunal for further proceedings. The High Court's order emphasized the need to consider all aspects before determining the penalty amount.

2. The issue of applicability of penalty for issuing fake invoices enabling wrong availing of cenvat credit was addressed. The High Court held that penalties could be levied on those involved in selling or dealing with goods liable to confiscation, even if the acts were committed before the introduction of certain provisions. The judgment highlighted that issuing invoices without delivering goods with the intent to enable duty evasion is a serious violation, justifying penalty imposition.

3. The judgment discussed the jurisdiction to levy penalty equal to the amount of duty evaded. It was noted that the Tribunal needed to consider the distinction in culpability between those who evade duty and those who enable it. The discretion in imposing penalties was emphasized, with the need to assess mitigating or aggravating circumstances to determine the appropriate penalty amount.

4. The discretion of the Tribunal in fixing the quantum of penalty was a significant aspect of the judgment. The advocates for the appellants argued for a reduced penalty based on the benefit received from the illegal acts. However, the Tribunal emphasized that the gravity of the offense must be considered, regardless of the individual benefit obtained, and upheld the equal amount of penalty imposed.

5. The differentiation between manufacturers and registered dealers in penalty imposition was discussed. Rule 25 of the Central Excise Rules did not make such a distinction, emphasizing that penalties must be commensurate with the gravity of the violation. The Tribunal highlighted that relevant factors must be considered while exercising discretion in fixing penalty amounts.

6. The judgment detailed the factors to be considered while imposing penalties, emphasizing the gravity of the offense and the need for proportionate punishment. The Tribunal highlighted that the nature of the violation and its impact were crucial in determining the penalty amount. The judgment underscored the importance of considering all relevant circumstances before imposing penalties.

7. Lastly, the judgment addressed the gravity of the offense in passing on credit without accompanying goods. The Tribunal emphasized that such acts constituted a major violation of the law, justifying the imposition of equal penalties. The judgment dismissed the appeals, upholding the penalty amounts directed by the adjudicating authorities, based on the severity of the violations committed.

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